Accounting Principles, Managerial Concepts Seventh Canadian Edition

Chapter 19
Managerial Accounting 2


Managerial Accounting Fuels Decision-Making 2


Managerial Accounting Basics 4


Comparing Managerial and Financial Accounting 4


Ethical Standards 4


Management Functions 5


Managerial Accounting Today 6


Managerial Cost Concepts 8


Manufacturing Costs 8


Product versus Period Costs 10


Manufacturing Costs in Financial Statements 12


Balance Sheet 12


Income Statement 13


Cost Concepts 14


Cost of Goods Manufactured 14


Chapter 20


Cost-Volume-Profit Relationships 42


Cheaper Nights, Bigger Profits 42


Cost-Behaviour Analysis 44


Variable Costs 44


Fixed Costs 45


Relevant Range 45


Mixed Costs 46


Importance of Identifying Variable and Fixed Costs 48


Cost-Volume-Profit Analysis 49


CVP Income Statement 50


Break-Even Analysis 52


Applying Cost-Volume-Profit Analysis 55


CVP Income Statement Revisited 59


Effects on Income 62


Rationale for Variable Costing 64


Chapter 21


Budgetary Planning 82


A Lesson in Post-Secondary Budgeting 82


Budgeting Basics 84


Benefits of Budgeting and Budgeting Basics 84


The Master Budget 86


Preparing the Operating Budgets 88


Sales Budget 88


Production Budget 88


Direct Materials Budget 89


Direct Labour Budget 90


Manufacturing Overhead Budget 91


Selling and Administrative Expenses Budget 91


Budgeted Income Statement 92


Preparing the Financial Budgets 93


Capital Expenditures Budget 94


Cash Budget 94


Budgeted Balance Sheet 97


Budgeting in Nonmanufacturing Companies 98


Merchandisers 98


Service Companies 99


Not-for-Profit Organizations 99


Chapter 22


Budgetary Control and Responsibility Accounting 126


Striving for a Healthy Balance Sheet 126


The Concept of Budgetary Control and Static Budget Reports 128


Budgetary Control 128


Static Budget Reports 129


Flexible Budgets 131


Why Flexible Budgets? 131


Developing the Flexible Budget 133


Flexible Budget—A Case Study 133


Flexible Budget Reports 135


Management by Exception 136


Concept of Responsibility Accounting 137


Controllable vs. Noncontrollable Revenues and Costs 138


Responsibility Reporting System 138


Types of Responsibility Centres 141


Cost Centres 142


Profit Centres 142


Investment Centres 144


Performance Evaluation 146


Chapter 23


Incremental Analysis and Capital Budgeting 170


Making Room for Profit 170


Incremental Analysis 172


How Incremental Analysis Works 172


Relevant Costs 173


Sunk and Future Costs 173


Types of Incremental Analysis 174


Capital Budgeting 180


Quantitative Techniques in Capital Budgeting 181


Discounted Cash Flow 184


Index I-1