1. Fundamentals of Cost Accounting 3e William N. Lanen University of Michigan Shannon W. Anderson Rice University Michael W. Maher University of California at Davislan27114_fm_i-xxx.indd i 11/20/09 12:48:14 PM 2. FUNDAMENTALS OF COST ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2011, 2008, 2006 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 WVR/WVR 1 0 9 8 7 6 5 4 3 2 1 0 ISBN 978-0-07-352711-6 MHID 0-07-352711-4 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Director of development: Ann Torbert Development editor: Emily A. Hatteberg Vice president and director of marketing: Robin J. Zwettler Marketing director: Sankha Basu Marketing manager: Kathleen Klehr Vice president of editing, design and production: Sesha Bolisetty Senior project manager: Susanne Riedell Senior production supervisor: Debra R. Sylvester Interior designer: JoAnne Schopler Senior photo research coordinator: Jeremy Cheshareck Senior media project manager: Allison Souter Cover design: JoAnne Schopler Typeface: 10.5/12 Times New Roman Compositor: MPS Limited, A Macmillan Company Printer: World Color Press Inc. Library of Congress Cataloging-in-Publication Data Lanen, William N. Fundamentals of cost accounting / William N. Lanen, Shannon W. Anderson, Michael W. Maher. 3rd ed. p. cm. Includes index. ISBN-13: 978-0-07-352711-6 (alk. paper) ISBN-10: 0-07-352711-4 (alk. paper) 1. Cost accounting. I. Anderson, Shannon W. II. Maher, Michael, 1946- III. Title. HF5686.C8M224 2011 657.42dc22 2009044025 www.mhhe.comlan27114_fm_i-xxx.indd ii 11/20/09 12:48:14 PM 3. Dedication To my wife, Donna, and my children, Cathy and Tom, for encouragement, support, patience, and general good cheer throughout the years. Bill I dedicate this book to my husband Randy, my children Evan and David, and my parents, Max and Nina Weems. Your support and example motivate me to improve. Your love and Gods grace assure me that it isnt necessary. Shannon I dedicate this book to my children, Krista and Andrea, and to my extended family, friends, and colleagues, who have provided their support and wisdom over the years. Michaellan27114_fm_i-xxx.indd iii 11/20/09 12:48:14 PM 4. About the Authors William N. Lanen William Lanen is Professor of Accounting at the University of Michigan Business School. He holds degrees in economics from the University of California, Berkeley, and Purdue University and earned a PhD in accounting from the Wharton School of the University of Pennsylvania. Bill teaches management accounting in both the BBA and MBA programs at the University of Michigan. He also teaches management accounting in Global MBA Programs and Executive Education Programs in Asia, Europe, and Latin America. Before coming to the University of Michigan, Bill was on the faculty at the Wharton School of the University of Pennsylvania, where he taught various nancial and managerial accounting courses at the undergraduate, MBA, and Executive MBA levels. He has received teaching awards at both the University of Michigan and the Wharton School. Bill is an Associate Editor of Management Science and serves on the Editorial Boards of The Accounting Review and the Journal of Management Accounting Research. He has published in Journal of Accounting Research; Journal of Accounting and Economics; Accounting, Organizations and Society; and The Accounting Review. Bill is past-president of the Management Accounting Section of the American Accounting Association. ivlan27114_fm_i-xxx.indd iv 11/20/09 12:48:14 PM 5. Shannon W. Anderson Michael W. Maher Shannon Anderson is an Associate Professor of Michael Maher is a Professor of Management at the Management at the Jones Graduate School of Busi- University of California-Davis. He previously taught ness at Rice University and a Principle Fellow at the at the University of Michigan, the University of University of Melbourne. She previously taught at Chicago, and the University of Washington. He also the University of Michigan and worked as an engi- worked on the audit staff at Arthur Andersen & Com- neer at General Motors Corporation. She received a pany and was a self-employed nancial consultant for doctorate and masters degree in business economics small businesses. He received his BBA from Gonzaga at Harvard University and a BSE in civil engineer- University, which named him Distinguished Alumnus ing with a concentration in operations research at in 1989, and his MBA and PhD from the University of Princeton University. Washington, and he earned the CPA from the state of Washington. Shannons research, which focuses on the design and implementation of performance measurement and Michael is a past-president of the Management cost control systems, spans the elds of management Accounting Section of the American Accounting accounting and operations research. Her research Association and has served on the editorial boards of on activity-based costing won the 2006 American The Accounting Review, Accounting Horizons, Accounting Associations Notable Contribution Journal of Management Accounting Research, and Award and the 2003 AAA Management Account- Management Accounting. He is coauthor of two ing Sections Notable Contribution to the Literature leading textbooks, Principles of Accounting and Mana- Award. She and Bill won the 2006 AAA Management gerial Accounting. Maher has coauthored Accounting Sections Notable Contribution to the several additional books and monographs, including Literature Award for their study of the performance Internal Controls in U.S. Corporations and Manage- impact of electronic data interchange (EDI) systems. ment Incentive Compensation Plans, and published articles in many journals, including Management Shannon currently serves as an Editor of the Account- Accounting, The Journal of Accountancy, The ing Review and on the Editorial Boards of Account- Accounting Review, Journal of Accounting Research, ing, Organizations and Society; Production and Financial Executive, and The Wall Street Journal. Operations Management; and Management Account- ing Research. She has also served on numerous com- For his research on internal controls, Michael was mittees for the American Accounting Association and awarded the American Accounting Associations the Management Accounting Section of the American Competitive Manuscript Award and the AICPA Accounting Association. Her research, which has been Notable Contribution to Literature Award. He also funded in part by competitive grants from the AICPA, received the award for the Outstanding Tax the Institute of Internal Auditors, and the Institute of Manuscript. He received the Annual Outstanding Management Accountants, has been published by the Teacher Award three times from his students at Accounting Review, Accounting Organizations and the University of Californias Graduate School of Society, Production and Operations Management, Management and has twice received a special award Management Science, and the Journal of Manage- for outstanding service. Mahers current research ment Accounting Research. She is also coauthor of includes studies in health care costs and corporate the award-winning book, Implementing Management corruption. Innovations. vlan27114_fm_i-xxx.indd v 11/20/09 12:48:15 PM 6. Providing A Clear View For a student, taking a cost accounting course can be like nding yourself in tall grass: surrounded by dense concepts and far from the path to mastery. Fundamentals of Cost Accounting gives students a clear view by lifting them above the overgrowth. By focusing on the fundamental concepts that students will need and employing a conversational writing style that keeps them engaged throughout the course, Fundamentals focuses students on comprehension rather than memorization and provides a context for their learning. The material is presented from both a preparer and a user perspective, allowing instructors to provide both accounting majors and nonmajors with an effective and relevant understanding of cost accounting topics. In this third edition, the text continues to provide the following core features: Well written, clear and concise. . . . Gives students the basics but eliminates a lot of the in-depth material that tends to confuse students and have them lose sight of the important concepts. The Critical Analysis and discussion questions at the end of the chapter are excellent discussion points for either in-class discussion or written take-home problems. Michael Fedoryshyn St. John Fisher College vilan27114_fm_i-xxx.indd vi 11/20/09 12:48:15 PM 7. Readability Fundamentals of Cost Accounting con- tinues to be praised as one of the most Relevance Each chapter of Fundamentals of Cost readable texts on the market. Lanen, Anderson, and Maher employ a conver- Accounting opens with a real dilemma sational writing style that students can faced by a manager in a variety of ser- understand, making concepts and topics vice and manufacturing companies. The more accessible. Throughout the text, Debrief feature links the topics in the exhibits and illustrations provide visuals chapter to the decision dilemma faced to further assist students in understand- by the manager in the opening vignette. ing how complex topics t together in a In Action boxes in the text highlight logical way. related issues reported in the business press and the authors own experiences with companies where they have worked Conciseness Short, readable chapters that focus on or conducted research. core cost accounting concepts give Lanen, NEW to this edition, the authors have Anderson, and Maher a leg up on the tied the chapter opening vignette to an In competition. While other texts tend to tack Action box to demonstrate the relevance on topics and t concepts into chapters in of cost accounting to the real world. seemingly arbitrary ways, Fundamentals of Cost Accounting presents basic topics in a coherent sequence, helping students to see the integration of the concepts quickly and easily. . . . an excellent text for instructors who are looking for a cost accounting text to follow a nancial accounting text. It provides coverage of traditional methods & techniques and has great explanations of measurement and interpretation issues. Roy Regel University of MontanaMissoula . . . [A] great text that shows many different ways to view cost accountingnot just a number-crunching text. Terry Elliott Morehead State University viilan27114_fm_i-xxx.indd vii 11/20/09 12:48:16 PM 8. Step into the R eal World 5 Chapter Five Cost Estimation LEARNING OBJECTIVES After reading this chapter, you should be able to: L.O.1 Understand the reasons for estimating xed and variable costs. Ive read several books on cost analysis and worked about, of all things, the costs of text messaging [see the L.O.2 Estimate costs using engineering estimates. through decision analysis problems in some of my col- In Action item The Variable Cost of a Text Message lege classes. Now that I own my own business, I real- on the next page]. The article talked about the low vari- L.O.3 Estimate costs using account analysis. ize that there was one important thing that I always able costs of sending text messages and the implica- took for granted in doing those problems. We were al- tions for pricing services. Although I am in a different L.O.4 Estimate costs using statistical analysis. ways given the data. Now I know that doing the analy- industry, the basic principles still apply. sis once you have the data is the easier part. How are L.O.5 Interpret the results of regression output. the costs determined? How do I know if they are xed Charlene Cooper owns Charlenes Computer Care (3C), a or variable? I am trying to decide whether to open a network of computer service centers located throughout the L.O.6 Identify potential problems with regression data. new store and I need answers to these questions. South. Charlene is thinking about opening a new center and I thought about the importance of being able to de- has asked you to help her make a decision. She especially termine xed and variable costs after reading an article wants your help estimating the costs to use in the analysis. Chapter Opening Vignettes Do your students sometimes wonder how Why Estimate Costs? the course connects with their future? When managers make decisions, they need to compare the costs (and benets) among alternative actions. Therefore, managers need to estimate the costs associated with each Each chapter opens with a vignette where alternative. We saw in Chapter 4 that good decisions require good information about costs; the better these estimates, the better the decision managers will make. In this a decision-maker needs cost accounting chapter, we discuss how to estimate the cost data required for decision making. Cost es- timates can be an important element in helping managers make decisions that add value information to make a better decision. This to the company. sets the stage for the rest of the chapter and encourages students to think of concepts in a business context. The Debrief Debrief Do your students understand how After considering lan27114_ch05_154-197.indd 154 the cost estimates in Exhibit 5.8, Charlene Although there is a range in the estimates, all of 10/24/09 12:02:33 AM commented: the estimates are below my expected revenues. to apply the concepts in each This means I am not going to spend more time on This exercise has been very useful for me. First, I learned about different approaches to estimating reconciling the cost estimates because I know that chapter to become better decision regardless of which estimate I think is best, my de- the cost of a new center. More important, I learned cision will be the same. makers? All chapters now end with about the advantages and disadvantages of each approach. a Debrief feature that links the When I look at the numbers in Exhibit 5.8, I have condence in my decision to open a new center. topics in the chapter to the decision problem faced by the manager in the opening vignette. lan27114_ch05_154-197.indd 155 10/24/09 12:02:45 AM viiilan27114_fm_i-xxx.indd viii 11/20/09 12:48:16 PM 9. Cost-Volume-Prot Analysis and Airline Pricing In Action In Action Do your students Cost-volume-prot analysis helps managers evaluate the im- The Sabre study showed that when planes are 62 percent full, Alohas costs are $50 per seat, pact of alternative product pricing strategies on prots. It can need help con- also be useful for evaluating competitors pricing strategies Hawaiians are $55, and go!s are $67. necting theory to and efforts to grow market share, as in the following exam- However, managers at the parent company of go! (Mesa ples: Airlines) disputed the estimates with a CVP analysis of their application? The In Aloha Airlines CEO David Banmiller and C. Thomas own: Action examples are Nulty, senior vice president for marketing and sales, Jonathan Ornstein, Mesas chief executive ofcer, said drawn from contem- explain that their airline must charge $50 per seat to yesterday that Alohas cost estimates are way off when break even when planes are 62 percent full. it comes to his airline. He said go!s expenses per pas- porary journals and Hawaiian Airlines, Aloha Airlines and go! are each senger are about $40 when the planes are 80 percent losing money when they sell interisland tickets below full. the authors own ex- $50, according to a study commissioned by Aloha Airlines. periences and illus- Why would somebody come in and charge $19, and Note: Aloha Airlines is no longer in business. Source: Rick Daysog, Below-Cost Fares Puzzle Aloha Airlines trate how to apply $29, and $39 when their costs were substantially higher? CEO, Honolulu Advertiser, December 21, 2006. Why would somebody do it? said Banmiller. cost accounting methods and tools. lan27114_ch03_080-109.indd 81 10/22/09 10:33:50 PM Critical Analysis and Discussion Questions 13-7. Preparing a budget is a waste of time. The strategic plan is what we work to accomplish. How would you respond to this comment? End-of-Chapter Material 13-8. In the In Action feature, Using the Budget to Help Manage Cash Flow, smaller rms were Being able to assign end-of-chapter more likely to nd the budget extremely or very important than larger rms. Why might this be the case? material with condence is important. 13-9. What are the advantages and disadvantages of starting the budgeting process early in the year versus later in the year prior to the budget year? The authors have tested the end-of- 13-10. Would the budgeting plans for a company that uses a just-in-time (JIT) inventory system be chapter material over time to ensure different than those for a company that does not? Why? 13-11. Government agencies are limited in spending by budget categories, not just by an overall quality and consistency with the spending limit. What purpose does this serve? What problems does it create? 13-12. What is the difference between the planning and the control functions of the budget? What chapter content. problems do these differences create? 13-13. When might the master budget start with a forecast of something other than sales, for ex- ample, production? Why? 13-14. In some organizations (rms, universities, government agencies), spending appears to in- crease as the end of the budgeting period approaches, even if there are no seasonal differ- ences. What might cause this? 13-15. Our cash budget shows a surplus for the quarter, so we do not have to think about arrang- ing any bank nancing. Comment on this statement. accounting Exercises 13-16. Estimate Sales Revenues (L.O. 3) SVI is a large securities dealer. Last year, the company made 150,000 trades with an average com- mission of $60. Because of the general economic climate, SVI expects trade volume to decline by 15 percent. In addition, employees at a local manufacturing plant have historically constituted 10 percent of SVIs volume. The plant just closed and all employees have closed their accounts. S Offsetting these factors is the observation that the average commission per trade is likely to increase by 15 percent because trades are expected to be larger in the coming year. Required Estimate SVIs commission revenues for the coming year. Integrative Cases Integrative Cases Cases can generate classroom 8-49. Show Cost Flows: FIFO Method, Over- or Underapplied Overhead (L.O. 5) Vermont Company uses continuous processing to produce stuffed bears and FIFO process costing discussion or be the basis for good team to account for its production costs. It uses FIFO because costs are quite unstable due to the vola- tile price of ne materials it uses in production. The bears are processed through one department. projects. These integrative cases, which Overhead is applied on the basis of direct labor costs, and the application rate has not changed over the period covered by the problem. The Work-in-Process Inventory account showed the following rely on cost accounting principles from lan27114_ch13_472-513.indd 497 balances at the start of the current period: 11/3/09 6:36:38 PM previous chapters as well as the current Direct materials . . . . . . . . . . . . . . . . . $131,000 chapter, ask students to apply the Direct labor . . . . . . . . . . . . . . . . . . . . . 260,000 Overhead applied . . . . . . . . . . . . . . . . 325,000 different techniques they have learned to a realistic situation. These costs were related to 52,000 units that were in process at the start of the period. lan27114_ch08_268-309.indd 305 10/27/09 9:52:14 PM ixlan27114_fm_i-xxx.indd ix 11/20/09 12:48:20 PM 10. Whats New Chapter 1 Cost Accounting: Information for Decision Making Enhanced development of the role of the Third Third in the value chain in value creation. Updated In Action items, including discussion of ethical issues. New material on lean accounting. Edition? New end-of-chapter material on the role of cost accounting in decision making. Chapter 2 Cost Concepts and Behavior New In Action item discussing how the Our primary goal in the third edition remains economic climate affects the decision about the same as in the previous two editionsto where to locate manufacturing sites. offer a cost accounting text that lets the student Two new critical analysis assignments. see the development of cost accounting Five new exercises and problems. tools and techniques as a natural response to decision making. We emphasize the intuition Chapter 3 Fundamentals of Cost-Volume- behind concepts and work to minimize the Prot Analysis need to memorize. We believe that students New In Action item illustrating CVP analysis in who develop this intuition will, rst, develop a service industry (airlines). an appreciation of what cost accounting is New Integrative Case. about and, second, will have an easier time Eight new exercises and problems. understanding new developments that arise during their careers. Each chapter clearly Chapter 4 Fundamentals of Cost Analysis for establishes learning objectives, highlights Decision Making numerous real-world examples, and identies New In Action item on decision making in a where ethical issues arise and how to think about small business. these issues. Each chapter includes at least one Two new Integrative Cases. integrative case that illustrates the links among Eight new questions, exercises, and problems the topics. in end-of-chapter material. We present the material from the perspective Chapter 5 Cost Estimation of both the preparer of information as well as New In Action items involving text messaging those who will use the information. We do this so and major league baseball. that both accounting majors and those students Revised discussion of using Microsoft Excel to planning other careers will appreciate the issues estimate regression (updated for Ofce 2007). in preparing and using the information. The Revised questions, exercises, and problems in opening vignettes now tie to one of the In Action end-of-chapter material. features in the chapter to highlight the relevance of cost accounting to todays business problems. Chapter 6 Fundamentals of Product and As in the second edition, all chapters end with a Service Costing Debrief that links the topics in the chapter to the New Integrative Case. decision problem faced by the manager in the New and updated questions, exercises, and opening vignette. problems in end-of-chapter practice material. The end-of-chapter material has increased by Chapter 7 Job Costing over 10 percent, and more than 50 percent of New In Action items on cost allocation and the material retained from the second edition has government contracts, including ethical been revised. Throughout the revision process, implications. we have retained the clear writing style that is New Integrative Case. frequently cited as a strength of the text. Eight new questions, exercises, and problems in end-of-chapter material. xlan27114_fm_i-xxx.indd x 11/20/09 12:48:21 PM 11. Chapter 8 Process Costing Chapter 13 Planning and Budgeting New In Action feature on equivalent units and New In Action item illustrating using the budget fraud. to control cash ow. New Integrative Case. Five new questions, exercises, and problems. Revisions of most exercises and problems. Chapter 14 Business Unit Performance Chapter 9 Activity-Based Costing Measurement Revised cost diagrams to provide consistent Six new questions, exercises, and problems. formatting. Chapter 15 Transfer Pricing New In Action item illustrating the cost Moved discussion of Perfect Intermediate hierarchy in a service (airline) example. Markets with Quality Differences to appendix New Integrative Case. to improve ow of material. Chapter 10 Fundamentals of Cost New In Action item based on Weyerhaeuser. Management Five new questions, exercises, and problems. New In Action item on cost of customers Chapter 16 Fundamentals of Variance Analysis based on social networking sites. Six new questions, exercises, and problems. Six new exercises, problems, and cases in end- of-chapter material. Chapter 17 Additional Topics in Variance Analysis Chapter 11 Service Department and Joint Cost Allocation New introductory paragraph to link the example from Chapter 16 more clearly. New learning objective and discussion on using the reciprocal method for decision Six new questions, exercises, and problems. making. Chapter 18 Nonnancial and Multiple New In Action feature on outsourcing Measures of Performance information services. New In Action feature on the protability of Three new problems on decision making and loyal customers. cost allocations. New discussion of productivity and measuring Chapter 12 Fundamentals of Management productivity. Control Systems Six new questions, exercises, and problems. New In Action item on compensation at AIG Appendix Capital Investment Decisions: An and Goldman Sachs. Overview New material motivating this overview chapter. Revised questions, exercises, and problems. Three new questions, exercises, and problems. xilan27114_fm_i-xxx.indd xi 11/20/09 12:48:21 PM 12. Total Teaching Package for Instructors Use these McGraw-Hill digital assets and course Create and deliver assignments easily with management tools to enhance your classroom, selectable end-of-chapter questions and test online, or hybrid course. bank items. Streamline lesson planning, student progress McGraw-Hill TM reporting, and assignment grading to make Connect Accounting classroom management more efcient than ever. Go paperless with the eBook and online submission and grading of student assignments. Less Managing. More Teaching. Greater Learning. McGraw-Hill Connect Accounting is an online assignment and assessment solution that connects students with the tools and resources Smart grading. theyll need to achieve success. When it comes to studying, time is precious. McGraw-Hill Connect Accounting helps pre- Connect Accounting helps students learn more pare students for their future by enabling faster efciently by providing feedback and practice learning, more efcient studying, and higher material when they need it, where they need retention of knowledge. it. When it comes to teaching, your time also is McGraw-Hill Connect Accounting precious. The grading function enables you to: features Have assignments scored automatically, giving Connect Accounting offers a number of powerful students immediate feedback on their work and tools and features to make managing assignments side-by-side comparisons with correct answers. easier, so faculty can spend more time teaching. Access and review each response; manually With Connect Accounting, students can engage change grades or leave comments for students to with their coursework anytime and anywhere, review. making the learning process more accessible Reinforce classroom concepts with practice tests and efcient. Connect Accounting offers you the and instant quizzes. features described below. Instructor library. Simple assignment management. The Connect Accounting Instructor Library is your With Connect Accounting, creating assignments repository for additional resources to improve is easier than ever, so you can spend more time student engagement in and out of class. You can teaching and less time managing. The assignment select and use any asset that enhances your lecture. management function enables you to: The Connect Accounting Instructor Library includes: xiilan27114_fm_i-xxx.indd xii 11/20/09 12:48:21 PM 13. PowerPoint presentations A powerful search function to pinpoint and Accounting videos connect key concepts in a snap. Instructors Manual In short, Connect Accounting offers you and Student study center. your students powerful tools and features that The Connect Accounting Student Study Center is will optimize your time and energies, enabling the place for students to access additional resources. you to focus on course content, teaching, and The Student Study Center: student learning. Connect Accounting also offers a wealth of content resources for both Offers students quick access to lectures, practice materials, an eBook, and more. instructors and students. This state-of-the- art, thoroughly tested system supports you in Provides instant practice material and study preparing students for the world that awaits. questions, easily accessible on the go. Gives students immediate feedback on their work. 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Students can replay any Collect data and generate reports required by part of any class with easy-to-use browser-based many accreditation organizations, such as AACSB viewing on a PC or Mac. and AICPA. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. With Tegrity Campus, students quickly recall key moments by using Tegrity Campuss unique search feature. This search helps students ef- ciently nd what they need, when they need it, across an entire semester of class recordings. Help turn all your students study time into learning moments immediately supported by your lecture. To learn more about Tegrity watch a 2-minute Flash demo at http://tegritycampus.mhhe.com. Assurance of Learning Ready Many educational institutions today are focused on the notion of assurance of learning, an important element of some accreditation standards. Fundamentals of Cost Accounting is designed McGraw-Hill Connect Plus Accounting. specically to support your assurance of learning McGraw-Hill reinvents the textbook learning initiatives with a simple, yet powerful solution. experience for the modern student with Connect Each test bank question for Fundamentals Plus Accounting. A seamless integration of an of Cost Accounting maps to a specic chapter eBook and Connect Accounting, Connect Plus learning outcome/objective listed in the text. You Accounting provides all of the Connect Accounting can use our test bank software, EZ Test and EZ features plus the following: Test Online, or in Connect Accounting, to eas- An integrated eBook, allowing for anytime, ily query for learning outcomes/objectives that anywhere access to the textbook. directly relate to the learning objectives for your Dynamic links between the problems or course. You can then use the reporting features questions you assign to your students and the of EZ Test to aggregate student results in a similar location in the eBook where that problem or fashion, making the collection and presentation of question is covered. assurance of learning data simple and easy. xiiilan27114_fm_i-xxx.indd xiii 11/20/09 12:48:23 PM 14. AACSB Statement Resource Center stores your essential course The McGraw-Hill Companies is a proud corporate materials to save you prep time before class. member of AACSB International. Understanding The Instructors Manual, Solutions, PowerPoint the importance and value of AACSB accreditation, Slides, and sample syllabi are now just a couple Fundamentals of Cost Accounting, 3e, recognizes of clicks away. the curricula guidelines detailed in the AACSB standards for business accreditation by Instructors Resource CD-ROM: connecting selected questions in the text and ISBN-13: 978-007-726921-0 ISBN-10: 007-726921-7 test bank to the six general knowledge and skill guidelines in the AACSB standards. Instructors Resource Manual The statements contained in Fundamentals Prepared by Chiaho Chang, Montclair State of Cost Accounting, 3e, are provided only as a University guide for the users of this textbook. The AACSB Each chapter and appendix includes: leaves content coverage and assessment within the purview of individual schools, the mission of the Chapter Learning Objectives school, and the faculty. While Fundamentals of Cost Chapter Outline Accounting, 3e, and the teaching package make no Comments and observations concerning the claim of any specic AACSB qualication or evalu- chapter content, methods of presentation, ation, we have within Fundamentals of Cost Ac- and usefulness of specic assignment counting, 3e, labeled selected questions according material to the six general knowledge and skills areas. Many real-world examples not found in the text, including Internet assignments, sample Test Bank assignment schedules, and suggestions for Prepared by Jay Holmen, University of Wisconsin using each element of the supplement Eau Claire package With an abundance of objective questions and Available on the Instructor CD-ROM and the short exercises, this is a valuable resource for in- password-protected side of the Online Learning structors who prepare their own quizzes and ex- Center. aminations. Available on the Instructors Resource CD-ROM and the password-protected side of the Solutions Manual Online Learning Center. Prepared by William Lanen, University of Michigan Solutions to all Discussion Questions, Exercises, Online Learning Center (OLC) Problems, Cases, and Comprehensive Problems. www.mhhe.com/lanen3e Available on the Instructors Resource CD-ROM We offer an Online Learning Center (OLC) that and the password-protected Instructor side of the follows Fundamentals of Cost Accounting chap- Online Learning Center. ter by chapter. It doesnt require any building or maintenance on your part. Its ready to go the Excel Spreadsheet Templates moment you and your students type in the URL. This resource includes solutions to mhhe.com/lanen3e As your students study, they can refer to the OLC spreadsheet problems found in the Web site for such study resources as: text end-of-chapter material. Available on the password-protected Instructor side of the Online Self-grading quizzes Learning Center. iPod downloadable content PowerPoint presentations PowerPoint Presentations Videos Prepared by Olga Quintana, University of Miami Coral Gables Online Learning Center Instructor This resource is available on the Instructors Site (www.mhhe.com/lanen3e) Resource CD-ROM and the Online Learning Password-protected instructor supplements Center. are available online. A secured Instructor xivlan27114_fm_i-xxx.indd xiv 11/20/09 12:48:23 PM 15. Total Study Package for Students Use these McGraw-Hill digital resources to help Excel Spreadsheet Templates you get a good grade in Cost Accounting An icon denotes selected end-of-chapter problems that come with Excel spreadsheet templates for McGraw-Hill you to use while solving them. Connect Accounting See page xii for details. PowerPoint Slides Separate from the instructor PowerPoint slides, McGraw-Hill accounting this short and manageable supplement focuses Connect Plus Accounting on the most important topics in the chapter and See page xiii for details. is perfect as a refresher for right before a big test Online Learning Center or as a reference during homework or study time. www.mhhe.com/lanen3e The student PowerPoint deck is available on the Go online and nd Online Quizzing, PowerPoint Online Learning Center. Presentations, Excel Templates, Connect Accounting, and Text Updates. McGraw-Hill Customer Care Contact Information iPod (and other MP3 devices) Audio At McGraw-Hill, we understand that getting the and Visual Downloads most from new technology can be challenging. In your car, at your job, wherever you are: Thats why our services dont stop after you listen or watch chapter-by-chapter MP3 (audio) purchase our products. You can e-mail our and MP4 (video) material (depends on device). 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Lecture presentations, quizzes, and topical www.mhhe.com/lanen3e. videos available for Excel templates allow stu- download to your dents to practice account- Writing icons designate iPod, Zune, or MP3. ing like real professionals. end-of-chapter problem material that has a writing component. xvlan27114_fm_i-xxx.indd xv 11/20/09 12:48:23 PM 16. Acknowledgments A special thank you to the following individuals who helped develop and critique the ancillary package: Chiaho Chang, Montclair State University; Jeannie Folk, College of DuPage; Jay Holmen, University of Wisconsin Eau Claire; Olga Quintana, University of Miami Coral Gables; Quent Below, Roane State Commu- nity College; Beth Woods, Accuracy Counts. We are grateful for the outstanding support of McGraw-Hill/Irwin. 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Hinchliffe, Florida Atlantic University David Remmele, University of Wisconsin Whitewater M. Zafar Iqbal, Cal State Poly UniversityPomona Gerald Rosson, Lynchburg College Richard Kelsey, NOVA Southeastern University David Satava, University of Houston Larry N. Killough, Virginia Tech Kathy Sauer, Aakers Business College Larissa Kyj, Rowan University Richard Sauoma, University of California, Randall E. LaSalle, West Chester University of Los Angeles Pennsylvania Margaret Shackell-Dowell, University of Notre Dame P. Michael McLain, Hampton University Karen Shastri, University of Pittsburgh Kathleen Metcalf, Muscatine Community College Donald Simmons, Frostburg State University Karen Nunez, North Carolina State University Kenneth Sinclair, Lehigh University Marge OReilly-Allen, Rider University James Smith, Saint Cloud State University Tamara Phelan, Northern Illinois University Toni Smith, University of New Hampshire Jeanette Ramos-Alexander, New Jersey City University Carol Springer, Georgia State University Anwar Salimi, Cal State Poly UniversityPomona Scott Steinkamp, College of Lake County Kathleen Sevigny, Bridgewater State College Dennis Stovall, Grand Valley University Kenneth Sinclair, Lehigh University Ronald Stunda, Birmingham-Southern College Ola Smith, Western Michigan University Norman Sunderman, Angelo State University Cynthia Sneed, Jacksonville State University Kim Tan, California State UniversityStanislaus Swaminathan Sridaran, Northwestern University James Thompson, Oklahoma City University Verlindsey Stewart, J.F. Drake State Technical Robin Turner, Rowan-Cabarrus Community College College Michael Tyler, Barry University Kim Tan, California State University Karen Varnell, Tarleton State University Stanislaus Stephen Wehner, Columbia College Debra Warren, Chadron State College Randi Whitney, University of Oregon Thomas Zeller, Loyola University at Chicago xviiilan27114_fm_i-xxx.indd xviii 11/20/09 12:48:23 PM 19. Brief Contents Introduction and Overview