Skip to Content
OpenStax Logo
Principles of Accounting, Volume 2: Managerial Accounting

Index

Principles of Accounting, Volume 2: Managerial AccountingIndex
  1. Preface
  2. 1 Accounting as a Tool for Managers
    1. Why It Matters
    2. 1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
    3. 1.2 Distinguish between Financial and Managerial Accounting
    4. 1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
    5. 1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
    6. 1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Thought Provokers
  3. 2 Building Blocks of Managerial Accounting
    1. Why It Matters
    2. 2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
    3. 2.2 Identify and Apply Basic Cost Behavior Patterns
    4. 2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
    5. Key Terms
    6. Summary
    7. Multiple Choice
    8. Questions
    9. Exercise Set A
    10. Exercise Set B
    11. Problem Set A
    12. Problem Set B
    13. Thought Provokers
  4. 3 Cost-Volume-Profit Analysis
    1. Why It Matters
    2. 3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
    3. 3.2 Calculate a Break-Even Point in Units and Dollars
    4. 3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
    5. 3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
    6. 3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  5. 4 Job Order Costing
    1. Why It Matters
    2. 4.1 Distinguish between Job Order Costing and Process Costing
    3. 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
    4. 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
    5. 4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
    6. 4.5 Compute the Cost of a Job Using Job Order Costing
    7. 4.6 Determine and Dispose of Underapplied or Overapplied Overhead
    8. 4.7 Prepare Journal Entries for a Job Order Cost System
    9. 4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
    10. Key Terms
    11. Summary
    12. Multiple Choice
    13. Questions
    14. Exercise Set A
    15. Exercise Set B
    16. Problem Set A
    17. Problem Set B
    18. Thought Provokers
  6. 5 Process Costing
    1. Why It Matters
    2. 5.1 Compare and Contrast Job Order Costing and Process Costing
    3. 5.2 Explain and Identify Conversion Costs
    4. 5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
    5. 5.4 Explain and Compute Equivalent Units and Total Cost of Production in a Subsequent Processing Stage
    6. 5.5 Prepare Journal Entries for a Process Costing System
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  7. 6 Activity-Based, Variable, and Absorption Costing
    1. Why It Matters
    2. 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
    3. 6.2 Describe and Identify Cost Drivers
    4. 6.3 Calculate Activity-Based Product Costs
    5. 6.4 Compare and Contrast Traditional and Activity-Based Costing Systems
    6. 6.5 Compare and Contrast Variable and Absorption Costing
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  8. 7 Budgeting
    1. Why It Matters
    2. 7.1 Describe How and Why Managers Use Budgets
    3. 7.2 Prepare Operating Budgets
    4. 7.3 Prepare Financial Budgets
    5. 7.4 Prepare Flexible Budgets
    6. 7.5 Explain How Budgets Are Used to Evaluate Goals
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  9. 8 Standard Costs and Variances
    1. Why It Matters
    2. 8.1 Explain How and Why a Standard Cost Is Developed
    3. 8.2 Compute and Evaluate Materials Variances
    4. 8.3 Compute and Evaluate Labor Variances
    5. 8.4 Compute and Evaluate Overhead Variances
    6. 8.5 Describe How Companies Use Variance Analysis
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  10. 9 Responsibility Accounting and Decentralization
    1. Why It Matters
    2. 9.1 Differentiate between Centralized and Decentralized Management
    3. 9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
    4. 9.3 Describe the Types of Responsibility Centers
    5. 9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  11. 10 Short-Term Decision Making
    1. Why It Matters
    2. 10.1 Identify Relevant Information for Decision-Making
    3. 10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
    4. 10.3 Evaluate and Determine Whether to Make or Buy a Component
    5. 10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
    6. 10.5 Evaluate and Determine Whether to Sell or Process Further
    7. 10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
    8. Key Terms
    9. Summary
    10. Multiple Choice
    11. Questions
    12. Exercise Set A
    13. Exercise Set B
    14. Problem Set A
    15. Problem Set B
    16. Thought Provokers
  12. 11 Capital Budgeting Decisions
    1. Why It Matters
    2. 11.1 Describe Capital Investment Decisions and How They Are Applied
    3. 11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
    4. 11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
    5. 11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
    6. 11.5 Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  13. 12 Balanced Scorecard and Other Performance Measures
    1. Why It Matters
    2. 12.1 Explain the Importance of Performance Measurement
    3. 12.2 Identify the Characteristics of an Effective Performance Measure
    4. 12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
    5. 12.4 Describe the Balanced Scorecard and Explain How It Is Used
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  14. 13 Sustainability Reporting
    1. Why It Matters
    2. 13.1 Describe Sustainability and the Way It Creates Business Value
    3. 13.2 Identify User Needs for Information
    4. 13.3 Discuss Examples of Major Sustainability Initiatives
    5. 13.4 Future Issues in Sustainability
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Thought Provokers
  15. Financial Statement Analysis
  16. Time Value of Money
  17. Suggested Resources
  18. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
  19. Index
A
absorption costing6.5 Compare and Contrast Variable and Absorption Costing
accounting rate of return (ARR)11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
activity base6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
activity-based costing6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method, 6.3 Calculate Activity-Based Product Costs
After-tax income12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
allocated costs9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers, 10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
Alternatives11.1 Describe Capital Investment Decisions and How They Are Applied
annuities due11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
annuity11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
Asset turnover12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
attainable standard8.1 Explain How and Why a Standard Cost Is Developed
Automation1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Average fixed cost (AFC)2.2 Identify and Apply Basic Cost Behavior Patterns
Average variable cost (AVC)2.2 Identify and Apply Basic Cost Behavior Patterns
avoidable cost10.1 Identify Relevant Information for Decision-Making
B
balanced scorecard12.4 Describe the Balanced Scorecard and Explain How It Is Used
balanced scorecard (BSC)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Baseline criteria11.1 Describe Capital Investment Decisions and How They Are Applied
batch-level cost6.3 Calculate Activity-Based Product Costs
board of directors1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
bottleneck10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
break-even point3.2 Calculate a Break-Even Point in Units and Dollars
bribery1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
Brundtland Commission Report13.1 Describe Sustainability and the Way It Creates Business Value
budget7.1 Describe How and Why Managers Use Budgets
budget analyst1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
budgeted balance sheet7.3 Prepare Financial Budgets
budgeted income statement7.2 Prepare Operating Budgets
business sustainability13.1 Describe Sustainability and the Way It Creates Business Value
business value13.1 Describe Sustainability and the Way It Creates Business Value
C
capital asset budget7.3 Prepare Financial Budgets
Capital assets12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
capital budgeting11.1 Describe Capital Investment Decisions and How They Are Applied
capital expenditure budget7.3 Prepare Financial Budgets
Capital investment11.1 Describe Capital Investment Decisions and How They Are Applied
carbon footprint13.1 Describe Sustainability and the Way It Creates Business Value
carbon output13.1 Describe Sustainability and the Way It Creates Business Value
cash budget7.3 Prepare Financial Budgets
cash collections schedule7.3 Prepare Financial Budgets
Cash flow11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
cash inflow11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
cash outflow11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
cash payments schedule7.3 Prepare Financial Budgets
cash-management accountant1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Centralization9.1 Differentiate between Centralized and Decentralized Management
Certified Financial Analyst (CFA)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Certified Fraud Examiner (CFE)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Certified Government Auditing Professional (CGAP)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Certified Internal Auditor (CIA)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Certified Management Accountant (CMA)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Certified Public Accountant (CPA)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
charitable giving13.1 Describe Sustainability and the Way It Creates Business Value
chief executive officer (CEO)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
chief financial officer (CFO)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Chili’s4.1 Distinguish between Job Order Costing and Process Costing
CITGO4.1 Distinguish between Job Order Costing and Process Costing
climate change13.1 Describe Sustainability and the Way It Creates Business Value
Collaboration1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Commercial awareness1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Common fixed costs6.5 Compare and Contrast Variable and Absorption Costing
composite unit3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
Compounding11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
constraint10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
Continuous improvement1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Contribution margin3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
contribution margin income statement3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
contribution margin per unit3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
contribution margin ratio3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
Controllable costs9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
controllable factors12.1 Explain the Importance of Performance Measurement
controller1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Controlling1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
conversion costs2.2 Identify and Apply Basic Cost Behavior Patterns, 4.1 Distinguish between Job Order Costing and Process Costing, 5.1 Compare and Contrast Job Order Costing and Process Costing
corporate social responsibility13.1 Describe Sustainability and the Way It Creates Business Value
Corporate social responsibility (CSR)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
cost accountants1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
cost approach9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
cost behaviors2.2 Identify and Apply Basic Cost Behavior Patterns
cost center9.3 Describe the Types of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
cost driver2.2 Identify and Apply Basic Cost Behavior Patterns, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 6.2 Describe and Identify Cost Drivers
cost equation2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
cost of goods manufactured4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
cost of goods sold4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
cost per unit6.3 Calculate Activity-Based Product Costs
cost pool6.3 Calculate Activity-Based Product Costs
cost-volume-profit (CVP) analysis3.2 Calculate a Break-Even Point in Units and Dollars
costs of goods sold5.1 Compare and Contrast Job Order Costing and Process Costing
D
Decentralization9.1 Differentiate between Centralized and Decentralized Management
differential analysis10.1 Identify Relevant Information for Decision-Making
differential cost10.1 Identify Relevant Information for Decision-Making
differential revenue10.1 Identify Relevant Information for Decision-Making
Direct labor2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
direct labor budget7.2 Prepare Operating Budgets
direct labor rate variance8.3 Compute and Evaluate Labor Variances
direct labor time variance8.3 Compute and Evaluate Labor Variances
direct labor variance8.3 Compute and Evaluate Labor Variances
Direct material6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
Direct materials2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
direct materials budget7.2 Prepare Operating Budgets
direct materials price variance8.2 Compute and Evaluate Materials Variances
direct materials quantity variance8.2 Compute and Evaluate Materials Variances
direct materials variance8.2 Compute and Evaluate Materials Variances
discount cash flow model11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
Discounting11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
discretionary cost center9.3 Describe the Types of Responsibility Centers
Dow4.1 Distinguish between Job Order Costing and Process Costing
E
Economic value added (EVA)12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
effective communication1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
Enrolled Agent (EA)1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
enterprise resource planning (ERP)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Environmental sustainability13.1 Describe Sustainability and the Way It Creates Business Value
equity issues13.1 Describe Sustainability and the Way It Creates Business Value
equivalent units5.1 Compare and Contrast Job Order Costing and Process Costing
estimated activity base4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
ethics1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
Evaluating1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
expense recognition principle4.1 Distinguish between Job Order Costing and Process Costing, 5.1 Compare and Contrast Job Order Costing and Process Costing, 6.5 Compare and Contrast Variable and Absorption Costing
external users1.2 Distinguish between Financial and Managerial Accounting
F
factory-level cost6.3 Calculate Activity-Based Product Costs
favorable variance8.1 Explain How and Why a Standard Cost Is Developed
financial accounting1.2 Distinguish between Financial and Managerial Accounting
Financial Accounting Standards Board (FASB)1.2 Distinguish between Financial and Managerial Accounting
financial analyst1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
financial budget7.1 Describe How and Why Managers Use Budgets
finished goods inventory4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts, 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
Fixed assets12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
fixed cost2.2 Identify and Apply Basic Cost Behavior Patterns
Fixed costs3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin, 10.1 Identify Relevant Information for Decision-Making
fixed factory overhead variance8.4 Compute and Evaluate Overhead Variances
flexible budget7.4 Prepare Flexible Budgets, 8.4 Compute and Evaluate Overhead Variances
flow of goods through production4.1 Distinguish between Job Order Costing and Process Costing
Foreign Corrupt Practices Act (FCPA)1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
full-cost accounting13.1 Describe Sustainability and the Way It Creates Business Value
future value11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
future value (FV)11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
G
GAAP1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards, 6.5 Compare and Contrast Variable and Absorption Costing
generally accepted accounting principles (GAAP)1.2 Distinguish between Financial and Managerial Accounting
Global Reporting Initiative (GRI)13.3 Discuss Examples of Major Sustainability Initiatives
globalization1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
goal congruence9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
goals1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
Government agencies1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
H
H&R Block4.1 Distinguish between Job Order Costing and Process Costing
high-low method2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
hurdle rate11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
I
ideal standard8.1 Explain How and Why a Standard Cost Is Developed
Incremental expenses11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
incremental net income11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
Incremental revenues11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
indirect labor2.2 Identify and Apply Basic Cost Behavior Patterns, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
indirect material2.2 Identify and Apply Basic Cost Behavior Patterns, 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
Indirect materials4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
initial investment11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
Institute of Management Accountants (IMA)1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
intangible goods1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
intangible products2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
Integrated Reporting13.3 Discuss Examples of Major Sustainability Initiatives
internal auditor1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
internal rate of return (IRR)11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
internal users1.2 Distinguish between Financial and Managerial Accounting
inventory account4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
Invested capital12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
investment center9.3 Describe the Types of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
irrelevant cost10.1 Identify Relevant Information for Decision-Making
irrelevant revenue10.1 Identify Relevant Information for Decision-Making
J
job cost sheet4.1 Distinguish between Job Order Costing and Process Costing, 4.5 Compute the Cost of a Job Using Job Order Costing
job order cost system4.5 Compute the Cost of a Job Using Job Order Costing
Job order costing4.1 Distinguish between Job Order Costing and Process Costing, 4.1 Distinguish between Job Order Costing and Process Costing, 4.1 Distinguish between Job Order Costing and Process Costing
joint costs10.5 Evaluate and Determine Whether to Sell or Process Further
Just-in-time (JIT) manufacturing1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
K
Kaizen1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Kellogg’s4.1 Distinguish between Job Order Costing and Process Costing
L
lean business model1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
Lean Six Sigma (LSS)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
life-cycle13.1 Describe Sustainability and the Way It Creates Business Value
loss leader4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
Lower-level management9.1 Differentiate between Centralized and Decentralized Management
lump sum11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
M
management control system9.1 Differentiate between Centralized and Decentralized Management
Managerial accounting1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management, 1.2 Distinguish between Financial and Managerial Accounting
manufacturing2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
manufacturing costs4.1 Distinguish between Job Order Costing and Process Costing, 5.1 Compare and Contrast Job Order Costing and Process Costing
manufacturing organization2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
Manufacturing overhead2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
manufacturing overhead budget7.2 Prepare Operating Budgets
manufacturing overhead costs6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
margin of safety3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
market price approach9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
Marshalls4.1 Distinguish between Job Order Costing and Process Costing
master budget7.1 Describe How and Why Managers Use Budgets
materiality13.3 Discuss Examples of Major Sustainability Initiatives
materials requisition form4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
merchandising2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
merchandising firm2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
metric12.1 Explain the Importance of Performance Measurement
metrics12.4 Describe the Balanced Scorecard and Explain How It Is Used
Mid-level management9.1 Differentiate between Centralized and Decentralized Management
minimum required rate of return12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
mission statement1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
Mixed costs2.2 Identify and Apply Basic Cost Behavior Patterns
monetary accounting information1.2 Distinguish between Financial and Managerial Accounting
multi-product environment3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
multiplier effect3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
N
negotiated price approach9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
Net present value (NPV)11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
non-renewable resources13.1 Describe Sustainability and the Way It Creates Business Value
Non-time value methods11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
nonmonetary accounting information1.2 Distinguish between Financial and Managerial Accounting
Nonprofit (not-for-profit) organizations1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
normal capacity10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
O
objectives1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
Operating assets12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
operating budget7.1 Describe How and Why Managers Use Budgets
Operating budgets7.2 Prepare Operating Budgets
operating expense11.1 Describe Capital Investment Decisions and How They Are Applied
operating income12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
Operating leverage3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
operating overhead4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
opportunity costs10.1 Identify Relevant Information for Decision-Making
ordinary annuity11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
organizational chart1.3 Explain the Primary Roles and Skills Required of Managerial Accountants, 9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
Outsourcing1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting, 10.3 Evaluate and Determine Whether to Make or Buy a Component
overapplied overhead4.6 Determine and Dispose of Underapplied or Overapplied Overhead
overhead4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
overhead costs4.1 Distinguish between Job Order Costing and Process Costing
overhead rate4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
overhead variances8.4 Compute and Evaluate Overhead Variances
P
P/E ratio13.2 Identify User Needs for Information
Paris Climate Agreement13.1 Describe Sustainability and the Way It Creates Business Value
payback method (PM)11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
performance measurement system12.1 Explain the Importance of Performance Measurement
performance measures12.1 Explain the Importance of Performance Measurement
period cost4.1 Distinguish between Job Order Costing and Process Costing
Period costs2.2 Identify and Apply Basic Cost Behavior Patterns, 5.1 Compare and Contrast Job Order Costing and Process Costing
Pet Smart4.1 Distinguish between Job Order Costing and Process Costing
planning1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
predetermined overhead allocation rate4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
predetermined overhead rate6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
preference decision11.1 Describe Capital Investment Decisions and How They Are Applied
present value11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
Present value (PV)11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
price-earnings ratio13.2 Identify User Needs for Information
Primary users13.2 Identify User Needs for Information
Prime costs2.2 Identify and Apply Basic Cost Behavior Patterns, 4.1 Distinguish between Job Order Costing and Process Costing, 5.1 Compare and Contrast Job Order Costing and Process Costing
process costing4.1 Distinguish between Job Order Costing and Process Costing, 4.1 Distinguish between Job Order Costing and Process Costing, 5.1 Compare and Contrast Job Order Costing and Process Costing
Product costs2.2 Identify and Apply Basic Cost Behavior Patterns, 5.1 Compare and Contrast Job Order Costing and Process Costing
product-level cost6.3 Calculate Activity-Based Product Costs
production budget7.2 Prepare Operating Budgets
production cost report5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
Productive assets12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
profit center9.3 Describe the Types of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
profit margin percentage9.3 Describe the Types of Responsibility Centers
Q
qualitative factor10.1 Identify Relevant Information for Decision-Making
qualitative factors12.4 Describe the Balanced Scorecard and Explain How It Is Used
quantitative factor10.1 Identify Relevant Information for Decision-Making
quantitative factors12.4 Describe the Balanced Scorecard and Explain How It Is Used
R
radio-frequency identification (RFID)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
raw materials inventory4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts, 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
relevant cost10.1 Identify Relevant Information for Decision-Making
relevant range2.2 Identify and Apply Basic Cost Behavior Patterns, 3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin, 10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
relevant revenue10.1 Identify Relevant Information for Decision-Making
renewable energy13.1 Describe Sustainability and the Way It Creates Business Value
reporting1.2 Distinguish between Financial and Managerial Accounting, 1.2 Distinguish between Financial and Managerial Accounting, 1.2 Distinguish between Financial and Managerial Accounting
Residual income (RI)9.3 Describe the Types of Responsibility Centers, 12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
Responsibility accounting9.3 Describe the Types of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
responsibility centers9.3 Describe the Types of Responsibility Centers
Return on investment9.3 Describe the Types of Responsibility Centers
return on investment (ROI)12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
revenue center9.3 Describe the Types of Responsibility Centers, 12.1 Explain the Importance of Performance Measurement
Robinson-Patman Act10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
rolling budget7.1 Describe How and Why Managers Use Budgets
S
sales budget7.2 Prepare Operating Budgets
Sales margin12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
sales mix3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
Sarbanes-Oxley Act of 2002 (SOX)1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
scatter graph2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
screening decision11.1 Describe Capital Investment Decisions and How They Are Applied
SEC1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
secondary users13.2 Identify User Needs for Information
segment10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
segments9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
Selling and administrative (S&A) expenses5.1 Compare and Contrast Job Order Costing and Process Costing
Selling and administrative costs4.1 Distinguish between Job Order Costing and Process Costing
selling and administrative expense budget7.2 Prepare Operating Budgets
sensitivity analysis3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
service2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
service industries4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
service organization2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
Sherwin Williams4.1 Distinguish between Job Order Costing and Process Costing
short-term decision analysis10.1 Identify Relevant Information for Decision-Making
social contract13.2 Identify User Needs for Information
Sony4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
special orders10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
split-off point10.5 Evaluate and Determine Whether to Sell or Process Further
spoilage5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
Stakeholders12.4 Describe the Balanced Scorecard and Explain How It Is Used, 13.1 Describe Sustainability and the Way It Creates Business Value
standard8.1 Explain How and Why a Standard Cost Is Developed
standard cost8.1 Explain How and Why a Standard Cost Is Developed
static budget7.4 Prepare Flexible Budgets
stepped cost2.2 Identify and Apply Basic Cost Behavior Patterns
Stockholders12.4 Describe the Balanced Scorecard and Explain How It Is Used
strategic goals9.1 Differentiate between Centralized and Decentralized Management
strategic plan12.1 Explain the Importance of Performance Measurement
strategic planning1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
sunk cost10.1 Identify Relevant Information for Decision-Making
sustainability1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting, 13.1 Describe Sustainability and the Way It Creates Business Value
Sustainability Accounting Standards Board (SASB)13.3 Discuss Examples of Major Sustainability Initiatives
sustainability report13.1 Describe Sustainability and the Way It Creates Business Value
sustainable development13.1 Describe Sustainability and the Way It Creates Business Value
T
tangible goods1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
tangible products2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
target pricing3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
technology1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
theory of constraints (TOC)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
time tickets4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
time value of money11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
Titleist4.1 Distinguish between Job Order Costing and Process Costing
total contribution margin3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
total cost2.2 Identify and Apply Basic Cost Behavior Patterns
total direct labor variance8.3 Compute and Evaluate Labor Variances
total direct materials cost variance8.2 Compute and Evaluate Materials Variances
total fixed costs2.2 Identify and Apply Basic Cost Behavior Patterns
Total quality management (TQM)1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
total variable costs2.2 Identify and Apply Basic Cost Behavior Patterns
total variable overhead cost variance8.4 Compute and Evaluate Overhead Variances
Traditional allocation6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method, 6.4 Compare and Contrast Traditional and Activity-Based Costing Systems
transfer pricing9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
treasurer1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
triple bottom line13.1 Describe Sustainability and the Way It Creates Business Value
Turkey Hill4.1 Distinguish between Job Order Costing and Process Costing
U
unavoidable cost10.1 Identify Relevant Information for Decision-Making
Uncontrollable costs9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
uncontrollable factors12.1 Explain the Importance of Performance Measurement
underapplied overhead4.6 Determine and Dispose of Underapplied or Overapplied Overhead
unfavorable variance8.1 Explain How and Why a Standard Cost Is Developed
unit contribution margin3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin, 10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
unit contribution margin per production restraint10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
unit-level cost6.3 Calculate Activity-Based Product Costs
Upper management9.1 Differentiate between Centralized and Decentralized Management
V
variable cost2.2 Identify and Apply Basic Cost Behavior Patterns
Variable costing6.5 Compare and Contrast Variable and Absorption Costing
Variable costs3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin, 10.1 Identify Relevant Information for Decision-Making
variable overhead efficiency variance8.4 Compute and Evaluate Overhead Variances
variable overhead rate variance8.4 Compute and Evaluate Overhead Variances
variance8.1 Explain How and Why a Standard Cost Is Developed
Variance analysis7.5 Explain How Budgets Are Used to Evaluate Goals, 8.5 Describe How Companies Use Variance Analysis
W
weighted average cost of capital (WACC)12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
Whistleblowers1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
work in process inventory4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing, 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts, 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
Z
Zero-based budgeting7.1 Describe How and Why Managers Use Budgets
Previous
Order a print copy
Citation/Attribution

Want to cite, share, or modify this book? This book is Creative Commons Attribution-NonCommercial-ShareAlike License 4.0 and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters
Citation information

© Dec 20, 2019 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License 4.0 license. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.