I-1

Company Index

Note: TF refers to the relevant Topic Focus section.

AAberdeen Group, 3-11, 11-7Accenture, 4-5, 5-6, 5A-6Adelphia, 1-19, 1-27ADP, LLC, 8-14Advanced Disposal Services, Inc., 10-5Albertson, 8-26Alcan Aluminum, 10-22Alcoa, 4-17Allen-Edmonds, 1-17Amazon, 3-31–32, 7-6, 8-4, TF5-7Amazon.com, 9-3, 13-7AMD, 8-14, 8-18American Airlines, 3-24American Airlines Group, Inc., 4-7American Honda Motor Company, 5-24, 5A-22Apple Inc., 1-26, 10-8–9, 12-6, 13-4, 13-6, 13-32APQC, 11-21, 11-22Armstrong Laing Group, 7-4AstraZeneca, 10-27, 10-28

BBabycakes, 5-2, 5A-2Bacardi Ltd., 6-5Bain & Company, 8-29, 11-11Bank of America, 13-32Bank of Floyd, 1-23Barnes & Noble.com, 10-7Barnes & Noble Marketing Services, LLC, 10-7Barnes and Noble, Inc., 13-6Barnes and Noble Café LLC, 10-7Bausch & Lomb, 10-22Bayer, 1-26Baylor University Press, 13-7Beaver Creek, 9-3Bellagio Casino, 7-16Berkshire Hathaway, 13-4Berner Food and Beverage, 8-22Best Buy, 4-8Bloomingdale’s, 8-26Blue Bell Creameries, 12-21Blue Nile, Inc., 3-39–40, 5-9, 5A-9BMW, TF3-6BMW Financial Services, 1-14Boeing Co., 3-17, 4-4Bonobos, TF5-6Booz Allen Hamilton, TF5-16BP America, 10-18Brinker International, Inc., 4-34Build-A-Bear Workshop, 1-26Burlington Northern Santa Fe Corp., 13-4

CCampbell Soup, 9-17, 10-9Caterpillar, Inc., 9-22, 12-39Cathay Pacific Airlines, 13-32CBS Corp., 10-3Cerberus Capital, 8-26Chevron, 9-4, 9-22Chili’s Grill and Bar, 4-34Chipotle Mexican Grill, 12-35Chrysler, TF3-6Circadian Technologies, 6-24–25Citroën, 8-29City of Nashville, 9-5Coca-Cola Co., 10-22, TF2-5, TF5-7Competitive Technologies, 1-23ConocoPhillips, 9-5Crate & Barrel, 9-3Creator, 4-22Crocs, Inc., 12-38

DDaimler Benz, TF3-6Darden Restaurants, Inc., 12-34–35Dartmouth-Hitchcock Medical Center, 11-22Debelis Corp., 6-18Dell Computers, 4-8, 4-9, 8-14Deloitte LLP, 5-6, 5A-6, 11-4–5Design Within Reach, Inc., 1-6Deutsche Lufthansa AG, 13-32DHL Express, 2-5Diamonds.com, 5-9, 5A-9Dickey’s Barbecue Pit, 6-9Dole Food Company, 4-11Domino’s Pizza, 11-7Dr Pepper, 11-12Duke University Hospitals, 1-14Dun & Bradstreet, 12-29Dunkin’ Donuts, 11-11DuPont, 1-14, 10-13, 10-15DuPont Safety and Construction, 2-15

EE. I. du Pont de Nemours and Company. See DuPontE.Land World Ltd., 13-11Eli Lilly & Co., 10-22Enron, 1-19, 1-23Ericsson, 12-12Ethan Allen Interiors, Inc., 4-7, 4-33ExxonMobil Corp., 9-3, 13-32

FFacebook, 13-32Federated Department Stores, 8-26FedEx, 13-6Fidelity Investments, TF5-6–7Filene’s, 8-26Ford Motor Co., 10-11, 11-20–21, 12-38Friendly Ice Cream Corp., 4-33Fulbright & Jaworski, 4-18

GGap, Inc., 12-38GE (General Electric), 1-14, 8-29, 9-22, 12-29General Mills, Inc., 9-17General Motors Corp., 8-26, 8-29, 10-3, 10-5, 13-4Glaxo SmithKline, 10-27, 10-28GLK Foods, LLC, 1-7–8Goodyear, 8-14Google, 1-19Guardsmark, LLC, 1-20Guideshops, TF5-6

HHackett Group, 11-14HCA, Inc., 12-11Healthful Foods, Inc., 4-46Heineken NV, 5-6, 5A-6Hershey, 4-14Hertz, 1-23Hewlett-Packard (HP), 8-18Hialeah Metal Spinning, 9-5Hilton Hotels, 1-14H.J. Heinz, 13-4Home Depot, 10-3, 12-38Honda Motor Co., 4-4, 4-8, 4-9, 5-24, 5A-22, 8-3–5, 13-32Hormel Foods, 9-3, 9-17, 10-28HSBC, 7-24

IIBISWorld, 12-30IBM, 12-38IBM Watson Health, 11-16ImClone, 1-27

Instagram, 8-4Intel, 7-22, 8-14

JJC Penney Co., Inc., 1-13, 10-22JetBlue Airways, 12-9John Deere, 4-8, 4-9John Wiley & Sons, 4-8, 4-9, 13-6Josten’s, 4-4, 10-9JP Morgan Chase, 13-32Justin’s, 6-16

KKaiser Aluminum Corp., 10-24KB Home, 12-21Kellogg Co., 1-6, 5-6, 5A-6, 9-17Kent International, Inc., 8-15Kia, 3-22Kitchen United, 3-13K’Nex, 8-14Kohl’s, 11-32Kraft Heinz Co., 5-6, 5A-6The Kroger Co., 1-10K-Swiss, 13-11

LL&L Products, 4-5Lands’ End, 4-8, 4-9Lexmark, 11-30Lexus, 3-22L. L. Bean, 11-21Lockheed Martin, 6-24Logitech, 12-35Lord & Taylor, 8-26Los Angeles Stadium, 9-13LVMH Moet Hennessy Louis Vuitton SA, 10-5

MMcDonald’s Corp., 11-5, 12-24, 12-40–41Macy’s, 1-4, 8-10, 8-26, 12-38Maggiano’s Little Italy, 4-34Mars Incorp., 4-3Mattel, Inc., 8-17Mayo Clinic, 4-18, 7-16, 9-3Mazda, 11-20–21Mega Millions, 9-11Merck & Co., Inc., 4-7Merrill Lynch, 1-27Michael Kors, 5-43, 5A-37Michelin, 8-14Mondelez International, Inc., 5-6, 5A-6, 9-17

NNational Beverage Corp., 13-33NBC Universal, 13-32Nebraska Medical Center, 11-22Neiman Marcus, 11-32Newell Brands, 10-9New York Times, 4-8, 4-9Nike, Inc., 9-3, 12-39Nokia, 12-12NOOK Digital, LLC, 10-7Nordstrom, 12-38

OOfficeMax, 13-6Opel, 4-4, 4-8, 8-29, 10-3Oracle Corp., 1-17Oxford University Library Services, 7-4

PPanera Bread, 1-4Papa John’s International, Inc., 1-5Paramount Pictures, 4-46–47

bindex.indd 1 9/12/19 5:15 PM

COPYRIG

HTED M

ATERIAL

I-2 SUBJECT IN DE X

PayPal Holdings, Inc., 5-43Penguin Random House, 1-26PepsiCo, 4-8, 4-9, 10-24Peugeot, 8-29Philips Electronics, 1-14Phillips, TF2-2Pixar, 4-4Porsche, TF3-6PricewaterhouseCoopers, 4-18,

10-24Procter & Gamble, 1-15, 8-29ProFlowers.com, 1-15PSA Groupe, 8-29

QQualcomm, 12-12

RRand Corp., 10-18Rawlings Sporting Goods, 10-9Robinsons-May, 8-26Rocket Co., 4-34Rockford Consulting, 11-30Roper Industries, Inc., 13-34Royal Canadian Mounted Police, 1-14Rubbermaid, Inc., 10-22Rubbermaid Commercial Products, 10-9

SSaab, 10-3Safeway, Inc., 12-39Samsung, 1-4SAP, 1-17

Sears, 11-7Service Thread, 9-227 For All Mankind, 3-11Siemens A. G., 10-22Simon & Schuster, 10-3Singapore Airlines, 3-17Six Flags Entertainment Corp.,

12-35Smithfield Foods, 10-27Sony Corp., 1-4Southwest Airlines, 11-2, 11-30, 12-9Sprint, 10-22Starbucks, 4-4, 11-10, TF4-2Starn Tool & Manufacturing, 7-3Steinway Musical Instruments, Inc., 4-32–33,

12-17, 12-38Sterling Publishing Co., Inc., 10-7Stern Stewart & Co., 10-22Stihl, TF3-6StockDiagnostics.com, 13-11Stouffer’s, 4-8, 4-9Strawbridge, 8-26

TTarget Corp., 12-40Tenet Healthcare Corp., 12-11Tenneco Automotive, Inc., 10-24Tesla, Inc., 3-31, 4-22, 4-26Tiffany & Co., 3-39–40Toyota Motor Co., 1-16, 4-8, 4-9, 13-7Toyota North America, Inc., 8-3–5Trane, 1-23Truven Health Analytics, 11-16

UUber, 8-10Under Armour, Inc., 12-39, TF1-5Unilever PLC, 5-6, 5A-6UPS, 1-14U.S. Playing Cards, 10-9U.S. Postal Service, 7-6

VVauxhall, 8-29, 10-3Viacom, Inc., 4-46Volkswagen, 8-4

WWalgreen’s, 5-17, 5A-18Walmart, 1-10, 1-15, 8-4, 8-10, 10-3, 12-24, 13-6, TF5-6Walt Disney Co., 3-24, 12-5Walt Disney World Co., 1-14Wanamaker’s, 8-10Wendy’s International, 1-26, 12-40–41Whirlpool, 8-14WorldCom, 1-19, 1-23, 1-27

XXerox, 11-21

YYouth Villages, 11-16

ZZelco Industries, 3-21Zoological Society of San Diego, 6-5

Subject Index

Note: TF refers to the relevant Topic Focus section.

AABC. See Activity-based costing (ABC)Absorption costing

defined, TF3-2GAAP requirements, TF3-2reconciling income, TF3-6–7versus variable costing, TF3-2–3

Accounting, responsibility, 10-5–7Accounting information, matching to strategic

priorities, 1-12–13Accounting rate of return, 9-27–28Accounts receivable turnover, 12-18Acid-test or quick ratio, 12-17Activities

batch-level, 7-5classification of, 7-5–7customer-level, 7-6defined, 7-4examples of, 7-4, 7-6financing, 13-5identifying, 7-10–11investing, 13-4, 13-5, 13-13–17non-value-added, 7-21–22operating, 13-4, 13-5organization-level, 7-6product-level, 7-6rates, calculating, 7-12–13unit-level, 7-5value-added, 7-21

Activity-based budgeting, 7-25Activity-based costing (ABC)

allocating costs to products and services, 7-13–14defined, 7-3–4

development of, 7-4estimating customer profitability, TF5-2–5ethics (case study), 7-43–44examples of, 7-16, 7-24GAAP and, 7-5–7identifying activities, 7-10–11overhead usage in, 7-4–5rates, calculating, 7-12–13reasons for using, 7-21unit product costs, calculating, 7-14–17

Activity-based managementdefined, 7-21importance of, 7-21–22process improvement, use of, 7-22–23product profitability, reassessing, 7-23–25

Activity-based product costs. See Activity-based costing (ABC)

Activity cost poolscalculating rates, 7-12–13development of, 7-11–12

Actual overhead, 4-27Allocated costs, 8-27Almanac of Business and Industrial Financial Ratios

(Troy), 12-29American Institute of Certified Public Accountants

(AICPA), 1-19American Marketing Association, 1-19American National Standards Institute (ANSI), 5-10,

5A-10Annual Statement Studies: Financial Ratio

Benchmarks, 12-29Annual Survey of Manufactures, 12-30–31Annuities

defined, 9-11present value of, calculating, 9-11–12

ANSI. See American National Standards Institute (ANSI)

Application base, 4-22Applied overhead, 4-21, 4-23, 4-27APQC Open Standards Benchmarking Collaborative,

11-22APQC Process Classification Framework, 11-21Assets

capital, 9-3decrease effect on ROI, 10-16–17depreciable, 9-3long-lived, 9-3pro-forma balance sheet, 5-42–43, 5A-36return on, 9-3, 12-23

Assigned costs, 8-27Average collection period, 12-18Average days to sell inventory, 12-19Avoidable costs, 8-4–5

BBalanced scorecard

C&C Sports example, 11-17–18, 11-28, 11-33–34

case study, 11-33–34cause-and-effect relationships, 11-11, 11-13customer perspective, 11-12–13, 11-14, 11-16, 11-18development of, 1-13–14, 11-10–11financial perspective, 11-13, 11-14, 11-16, 11-18internal business processes perspective,

11-12, 11-14, 11-16learning and growth perspective, 11-11, 11-15–18performance monitoring using, 1-13–14, 11-10–18perspectives, 11-11–14strategy map, C&C Sports example, 11-15–16strategy map, for building, 11-14

bindex.indd 2 9/12/19 5:15 PM

SU BJECT INDEX I-3

Balance sheetscommon-size, 12-8–9horizontal analysis, 12-3pro-forma, 5-42–44, 5A-36–37

Batch-level activities, 7-5Benchmarking

best practices, 11-20Code of Conduct, 11-22companies that use, 11-20, 11-21defined, 11-20

Best practices, 11-20Bill of materials, 4-20Book value, 10-14Bottleneck process, 8-23Bottom-up budget, 5-4–5, 5A-4–5BPR. See Business process reengineering (BPR)Breakeven analysis

breakeven graphs, 3-5–6breakeven point, 3-3–5margin of safety, 3-6

Breakeven graphs, 3-5–6Breakeven point

calculating, 3-3–5multiproduct CVP analysis, 3-18–19

Budgets (budget process). See also Capital budgeting; Cash budgets; Flexible budgets; Master budgets; Operating budgets

activity-based, 7-25behavioral issues, 5-5–6, 5A-5–6bottom-up, 5-4–5, 5A-4–5cost of goods sold, 5-28, 5A-23–24defined, 5-3–4, 5A-3–4description of, 5-4–7, 5A-4–7direct labor, 5-24–25direct materials purchases, 5-21–24ending inventory, 5-26–28, 5A-22–24ethics (case study), 5-62–63, 5A-51–52global, 5-35, 5A-29incremental approach, 5-7, 5A-7information flows, 5-4–5, 5A-4–5inventory, 5A-29–30inventory purchases, 5A-19–22, 5A-29manufacturing overhead budget, 5-25–26padding, 5-6, 5A-6participative, 5-5, 5A-5planning and, 5-3–7, 5A-3–7production, 5-19–21rolling, 5-7, 5A-7sales, 5-16–18, 5A-16–18selling and administrative expense, 5-18–19,

5A-18–19slack in, 5-6, 5A-6static, 6-3–4time frames for creating, 5-7, 5A-7top-down (imposed), 5-4, 5A-4zero-based, 5-6, 5-7, 5A-6, 5A-7

Buffett, W., 5-43, 5A-37Business process reengineering (BPR),

7-22–23

CCapital assets, investing in, 9-3Capital budgeting

accounting rate of return, 9-27–28cash flows, identifying, 9-5–6decisions, 9-2–7defined, 9-3internal rate of return, 9-20–22net present value, 9-15–20payback period, 9-25–27post-implementation audit, 9-6–7quality issues, 9-5surveys on methods used, 9-28time value of money, 9-8–13

Capital projects, screening versus preference decisions, 9-4–5

Cashavailable to spend, 5-32–33, 5A-27excess/needed, 5-37, 5A-31receipts, 5-33–34, 5A-27–28sources, 13-3, 13-5uses of, 13-3, 13-5

Cash budgetsamount available to spend, 5-32–33, 5A-27amount needed/excess, 5-37, 5A-31beginning balance, 5-34, 5A-28cash receipts budget, 5-33–34, 5A-27–28defined, 5-32, 5A-27disbursements, 5-34–37, 5A-28–31ending cash balance, 5-37–38, 5A-32minimum cash balance, 5-37, 5A-31payments for inventory budget, 5A-29–30payments for materials budget, 5-35–36short-term financing, 5-37, 5A-31–32

Cash disbursements, 5-34–37, 5A-28–31Cash flow. See also Discounted cash flow

capital budgeting and identifying, 9-5–6categorizing, 13-3–5financing activities, 13-5investing activities, 13-4, 13-5, 13-13–17operating activities, 13-4, 13-5operating activities (direct method), 13-4, 13-24–28operating activities (indirect method), 13-4, 13-8–11property and equipment, 13-14–15sources, 13-3, 13-5

Cash flow statementsanalyzing, 13-20–22constructing, 13-19–22defined, 13-3financing activities, 13-5investing activities, 13-4, 13-5, 13-13–17operating activities, 13-4, 13-5operating activities (direct method), 13-4, 13-24–28operating activities (indirect method), 13-4, 13-8–11

Cash payments for inventory budget, 5A-29–30Cash payments for materials budget, 5-35–36Cash receipts budget, 5-33–34, 5A-27–28Centralization, 10-3Certified Management Accountant (CMA)

designation, 1-19Code of conduct. See also Code of ethics (behavior)

benchmarking, 11-22Code of ethics (behavior)

components of, 1-19, 1-20description of, 1-18–23IMA, 1-21

Collections from customers, 13-25Committed fixed costs, 2-5Common costs

identifying, 8-26–27traceable fixed costs as, 10-10

Common-size analysis, 12-9Common-size financial statements

balance sheets, 12-8–9foreign currencies, comparison of, 12-12income statements, 12-10–11interpreting, 12-11–12percentages, 12-9preparing, 12-9–12use of, 12-9

Compound interest, present value and, 9-10–11Constrained resources

allocating, 8-20–22contribution margin per, 8-21decision process, 8-24Theory of Constraints, 8-22–23

Contribution format income statement, 2-19–22Contribution margin

breakeven point, 3-3–4calculating, 2-18–19constrained resources and, 8-21defined, 2-18example of, 2-18–19variable cost ratio, 2-21

Contribution margin ratiobreakeven point, 3-3contribution format income, 2-20defined, 2-18multiproduct CVP analysis, 3-18–19

Controlling processes, management’s role with, 1-6–7, 1-8

Cooper, R., 7-4Corporate and Criminal Fraud Accountability Act

(2002), 1-23

Cost accumulation, TF2-5–9Cost-based prices, 10-28–29Cost behavior, 2-2–3

discretionary versus committed fixed costs, 2-5–6fixed costs, 2-4–5mixed costs, 2-6–7step costs, 2-6variable costs, 2-3–4

Cost centers, 10-5Cost estimation

equation for estimating total cost, 2-10high-low method, 2-12–13, 2-15regression analysis, 2-14–15relevant range, 2-15–16scattergraphs, 2-11–12, 2-15

Cost flows, TF2-2–3Costing systems, standard

advantages of, TF4-8defined, TF4-2development and criticism of, TF4-5disposing of variances, TF4-7–8lean accounting versus, TF4-5recording Cost of Goods Sold, TF4-7recording direct labor, TF4-4recording direct materials, TF4-3recording Finished Goods Inventory, TF4-7recording fixed overhead, TF4-5–7recording variable overhead, TF4-4–5

Cost of Goods Sold, recording, TF4-7Cost-plus-based prices, 10-28Cost-plus pricing, 3-22–23Costs. See also Activity-based costing (ABC)

allocated, 8-27assigned, 8-27avoidable, 8-4–5classification of, 4-6common, identification of, 8-26–27difference between expenses and, 2-18fixed, 3-12of goods manufactured, 4-12of goods sold budget, 5-28, 5A-23–24opportunity, 8-17period (nonmanufacturing), 4-5–6product (manufacturing), 4-3–5product cost flows, 4-10–15relevant, 8-4–7standard, 5-11, 5-12, 5A-11, 5A-12total manufacturing, 4-14–15unavoidable, 8-5variable, 3-12

Cost structure and operating leverage, 3-11–14Cost-volume-profit (CVP) analysis

case studies, 3-40defined, 3-8ethics (case study), 3-41limitations of, 3-11, 3-19multiproduct, 3-16–19net income, target, 3-8–9operating income, target, 3-8–9operating leverage and cost structure, 3-11–14what-if analysis, 3-9–10

Credit sales, collection of, 5-33–34, 5A-27–28Current ratio, 12-17Customer-level activities, 7-6Customer net profit, TF5-4Customer perspective, description of,

11-12–13Customer profitability

activity-based costing to estimate, TF5-2–5banking example, TF5-11methods for improving, TF5-6–7

Customer profit margin, TF5-4–5Customers, collections from, 13-25Customers, unprofitable

addressing, TF5-6–7identifying, TF5-2–6

CVP. See Cost-volume-profit (CVP) analysis

DDebt financing, 13-15–16Debt ratio, 12-21Debt-to-equity ratio, 12-22

bindex.indd 3 9/12/19 5:15 PM

Decentralizationadvantages of, 10-4decision making and, 10-4–5disadvantages of, 10-4–5examples, 10-3, 10-5reasons for, 10-3responsibility accounting, 10-5–7

Decision making/processcapital budgeting, 9-2–7decentralization and, 10-4–5ethics (case study), 1-28make-or-buy, 8-14management’s role with, 1-7, 1-8operations, elimination of, 8-28–30outsourcing, 8-15–16, 8-18relevant cost, 8-7screening versus preference decisions, 9-23special orders, 8-9–12viable alternatives and costs, 8-7

Decision modeloutsourcing, 8-15–16, 8-18relevant cost, 8-7Theory of Constraints, 8-24

Degree of operating leverage, 3-12–13Delivery cycle time, 11-24–25Delivery expectations

delivery cycle time, 11-24–25manufacturing cycle efficiency, 11-25–26manufacturing cycle time, 11-25throughput time, 11-25

Depreciable assets, 9-3Differential, 8-3Direct costing. See Variable costingDirect labor

budget, 5-24–25costs, 4-22costs, tracing, 4-20–21defined, 4-4efficiency variance, 6-22–23, 6-24–25ethics (case study), 6-44–46rate variance, 6-22–23recording, TF4-4standards, 5-12–13, 5A-12–13variance analysis of, 6-21–25

Direct labor hours (DLH), 4-4, 4-22Direct materials, 4-3–4

costs, tracing, 4-19–20defined, 4-3ethics (case study), 6-44–46price variance, 6-15–16purchases budget, 5-21–24quantity variance, 6-17recording, TF4-3variance analysis of, 6-14–19

Direct method. See Operating activities (direct method)Disbursements, cash, 5-34–37, 5A-28–31Discounted cash flow

internal rate of return, 9-20–22net present value, 9-15–20

Discounting, 9-10Discount rates

defined, 9-10net present value, 9-16, 9-17

Discretionary fixed costs, 2-5Dividend payout ratio, 12-25Drucker, P., 3-23, 7-4Dun & Bradstreet, 12-29DuPont Model

advantage of, 10-15–16assets, decrease in, 10-16–17asset turnover, 10-15components, 10-15defined, 10-15expenses, decrease in, 10-16profit margin, 10-15sales revenue, increase in, 10-16

Dynamic pricing, 3-24

EEarnings per share, 12-24–25Economic value added (EVA®)

bonus/compensation calculations and, 10-24calculating, 10-22–24

companies using, 10-22, 10-24development of, 10-22invested capital, calculating, 10-23net operating profit, calculating, 10-22–23residual income versus, 10-24weighted-average cost of capital, calculating, 10-23

Elimination of operations. See Operations, elimination of

Employees, payments to, 13-26Ending cash balance, 5-37–38, 5A-32Ending inventory budgets, 5-26–28, 5A-22–24Enterprise resource planning (ERP), 1-17Equipment, cash flow and purchase of, 13-14–15Equity financing, 13-16–17Equivalent units, calculating (case study), TF2-6–8ERP. See Enterprise resource planning (ERP)Estimated overhead, 4-27Ethical behavior, defined, 1-19Ethics

activity-based costing (case study), 7-43–44budgeting (case study), 5-62–63, 5A-51–52code of, 1-18–23cost-volume-profit analysis (case study), 3-41decision making (case study), 1-28defined, 1-19direct materials and labor variances (case study),

6-44–46financial ratios (case study), 12-45net present value (case study), 9-41–42outsourcing (case study), 8-48–49product cost classification (case study), 4-46return on investment (case study), 10-45–46surveys on, 1-22–23whistleblowers, 1-23

Ethics Resource Center, 1-22EVA. See Economic value added (EVA®)Evaluation. See also Performance evaluation/

measures; Segment evaluationmanagement’s role with, 1-7, 1-8

Excel. See Microsoft ExcelExpenses

decrease effect on ROI, 10-16difference between costs and, 2-18fixed, and breakeven point, 3-3

FFactor, 12-20Factory burden, 4-4Factory overhead, 4-4Factory support, 4-4Fair market value, 10-14Favorable variances, 6-4, 6-17, 6-23Financial accounting, managerial accounting

compared to, 1-3–5Financial Accounting Standards Board, 13-8Financial Executives Institute, 1-19Financial leverage, 12-21Financial measures versus nonfinancial measures,

11-4–6Financial perspective

C&C Sports example, 11-18description of, 11-13

Financial Planning Association, 1-19Financial ratios

accounts receivable turnover, 12-18acid-test, 12-17analysis, 12-15–26average collection period, 12-18average days to sell inventory, 12-19current, 12-17debt, 12-21debt-to-equity, 12-22dividend payout, 12-25earnings per share, 12-24–25ethics (case study), 12-45gross margin percentage, 12-23inventory turnover, 12-18–21leverage, 12-21–22limitations of, 12-26liquidity, 12-15–18market measure, 12-24–26price/earnings, 12-25

profitability, 12-22–23, 12-22–24publications on, 12-29quick, 12-17return on assets, 12-23return on common stockholders’ equity, 12-23–24times interest earned ratio, 12-22working capital, 12-17

Financial statementscase studies, 12-41–44common-size, 12-8–12cost classifications in, 4-6GAAP requirements, 12-3horizontal analysis, 12-2–6industry analysis, 12-28–31pro-forma, 5-40–44, 5A-34–37ratio analysis, 12-15–26trend analysis, 12-5–6

Financingdebt, 13-15–16equity, 13-16–17short-term, 5-37, 5A-31–32

Financing activitiescash flow provided by, 13-15–17debt, 13-15–16defined, 13-5equity, 13-16–17sources of cash, 13-5uses of cash, 13-5

Finished Goods Inventorybudget, 5-28defined, 4-10recording, 4-11–14, TF4-7

First-stage allocation, 7-14Fixed costs

high-low method to estimate, 2-12–13regression analysis, 2-14–15scattergraphs to estimate, 2-11–12, 2-15traceable, 10-10versus variable costs, 3-12

Fixed expenses, breakeven point, 3-3Fixed overhead spending variance

description of, 6-30recording, TF4-5–7

Flexible budgetsto analyze static budget variances, 6-6–10case studies, 6-43–44, 6-46–47defined, 6-5example of, 6-6purpose of, 6-6variances, 6-6–10

Ford, H., 1-16Foreign currencies, common-size, financial

statements and comparison of, 12-12Full costing. See Absorption costing

GGAAP. See Generally accepted accounting principles

(GAAP)General and administrative costs, 4-6Generally accepted accounting principles (GAAP)

absorption costing, TF3-2activity-based costing and, 7-5financial statements and, 12-3net operating profit, calculating, 10-22–23pro-forma measures and, 5-43, 5A-37role of, 1-4segment reporting and, 10-10, 10-11

Ghost kitchens, 3-13Global budgeting, 5-35, 5A-29Global Business Ethics Survey, 1-22–23Globalization, transfer pricing, 10-28Goldratt, E., 8-22GPK, TF3-6Gross margin, difference between

markup and, 3-23Gross margin percentage, 12-23

HHigh-low method, 2-12–13, 2-15Horizontal analysis

defined, 12-3example, 12-6

I-4 SUBJECT IN DE X

bindex.indd 4 9/12/19 5:15 PM

Market measure ratiosdefined, 12-34dividend payout ratio, 12-25earnings per share, 12-24–25interpreting, 12-25–26price/earnings ratio, 12-25

Market share strategies, 1-12–13Markups, 3-22, 3-23Master budgets. See also Cash budgets; Operating

budgetscase studies, 5-58–62, 5A-49–52components of, 5-16, 5A-16defined, 5-15–16, 5A-15–16pro-forma financial statements, 5-40–44,

5A-34–37Matching principle, TF3-2Materiality, 6-4Materials. See also Direct materials

bill of, 4-20cash payments for materials budget, 5-35–36ending inventory budgets, 5-26–28, 5A-22–24indirect, 4-4–5standards, 5-11–12, 5A-11–12

Materials requisition slips, 4-19–20Microsoft Excel

comprehensive variance calculations, 6-42–43equivalent units, TF2-15, TF2-16–17internal rate of return, 5-22job order costing, 4-47minimum cash balance, 5-37, 5A-31multiproduct CVP analysis, 3-36, 3-37net present value, 9-19–20present value of annuities, 9-12regression analysis, 2-14–15

Minimum cash balance, 5A-31Minimum transfer price, determining, 10-29–31Mixed costs, 2-6–7

high-low method to estimate, 2-12–13scattergraphs to estimate, 2-11–12

Multiproduct cost-volume-profit analysisbreakeven point, 3-18–19contribution margin and ratio, 3-18–19limitations of, 3-19Microsoft Excel for calculating, 3-36, 3-37profit formula, 3-17sales mix, 3-16–19

NNAICS. See North American Industry Classification

System (NAICS) codeNegotiated prices, 10-29Net income, target, 3-8–9Net initial investment, 9-20Net operating profit, calculating, 10-22–23Net present value (NPV)

amount and timing of cash flows, 9-16assumptions of, 9-20calculations, 9-18–19case studies, 9-40–41defined, 9-16discount rate, 9-16, 9-17of each cash flow, 9-17ethics (case study), 9-41–42Microsoft Excel to calculate, 9-19–20of project, 9-18screening and preference decisions using,

9-23steps in, 9-16

Nonfinancial measures versus financial measures, 11-4–6

Nonmanufacturing costs. See Period (nonmanufacturing) costs

Non-value-added activities, 7-21–33Normal costing system, TF4-2North American Industry Classification System

(NAICS) code, 12-29Norton, D., 1-13–14, 11-11NPV. See Net present value (NPV)

OOffshoring, 8-14, 8-15Operating activities, defined, 13-4

Job cost sheet, 4-18Job order costing

accumulating direct job costs, 4-18–21allocating manufacturing overhead costs,

4-21–23defined, 4-17process costing compared, TF2-4sheet, 4-18

Just-in-time (JIT) inventory, 1-15–17

KKaplan, R., 1-14, 7-4, 11-11Key performance indicators (KPIs), 11-7–8Killer Customers (Shelden and Colvin), TF5-2

LLabor costs

direct, 4-4, 4-20–21, 4-22, 5-12–13, 5A-12–13direct budget, 5-24–25indirect, 4-5standards, 5-12–13, 5A-12–13tracing direct, 4-20–21

Labor hours, direct, 4-4Lagging indicators, 11-3Leading indicators, 11-3–4, 11-5Learning and growth perspective

C&C Sports example, 11-15–16, 11-17–18description of, 11-11

Leveragefinancial, 12-21operating, 3-12–14, 3-27

Leverage ratiosdebt ratio, 12-21debt-to-equity ratio, 12-22defined, 12-34interpreting, 12-22times interest earned ratio, 12-22

Liabilities, pro-forma balance sheet, 5-43–44, 5A-37

Liquidity ratiosaccounts receivable turnover, 12-18acid-test or quick ratio, 12-17average collection period, 12-18average days to sell inventory, 12-19current ratio, 12-17defined, 12-34interpreting, 12-19–21inventory turnover, 12-18–21working capital, 12-17

Long-lived assets, 9-3Long-term planning, 1-6

MMachine hours (MH), 4-22Make-or-buy decisions, 8-14Management (managers)

See also Activity-based managementactivities (case study), 1-27–28roles of, 1-5–8

Management Accounting Competency Framework (IMA), 1-8, 1-9

Management by exception, 6-4Managerial accountants, role of, 1-8–9Managerial accounting

defined, 1-2financial accounting compared to, 1-3–5historical and future information, 1-4internal versus external users, 1-3–4lack of mandated rules, 1-4operating segments, focus on, 1-4timeliness of, 1-5

Manufacturing burden, 4-4Manufacturing costs. See Product costs

(manufacturing)Manufacturing cycle efficiency, 11-25–26Manufacturing cycle time, 11-25Manufacturing overhead

budget, 5-25–26defined, 4-4standards, 5-13, 5A-13

Manufacturing support, 4-4Margin of safety, 3-5–6Market-based prices, 10-27–28

interpreting, 12-4–5preparing, 12-5–6trend analysis, preparing, 12-5–6

Hurdle rate, 9-4

IIdeal standards, 5-10, 5A-10IMA. See Institute of Management Accountants

(IMA)Imposed (top-down) budget, 5-4, 5A-4Income statements

common-size, 12-10–11contribution format, 2-19–22horizontal analysis, 12-4pro-forma, 5-41–42, 5A-35–36segment margin, 10-9–10

Income taxes, payments for, 13-27Incremental analysis, 8-6Indirect labor costs, 4-5Indirect materials, 4-4–5Indirect method. See Operating activities (indirect

method)Industry analysis

publications, 12-28–31, 12-34statistics, 12-30–31

Industry Norms and Key Business Ratios, 12-29Information

accounting information, matching to strategic priorities, 1-12–13

historical versus future, 1-4overload, 8-3relevant, 8-3–5

Information flows, budget process and, 5-4–5, 5A-4–5

Institute of Business Ethics (IBE), 1-19Institute of Management Accountants (IMA)

code of ethics, 1-21defined, 1-2studies by, 1-8

Intellectual property, theft of, 8-18Intermediate product, 10-27Internal business processes perspective

C&C Sports example, 11-16, 11-18description of, 11-12

Internal rate of return (IRR)assumptions of, 5-22defined, 9-20equation, 9-20Microsoft Excel for calculating, 5-22projects with even cash flows, 9-20–21projects with uneven cash flows, 9-21screening and preference decisions using, 9-23

International Organization for Standardization (ISO), 5-9–10

Inventoryaverage days to sell, 12-19budget, 5A-29–30ending budgets, 5-26–28, 5A-22–24just-in-time, 1-15–17purchases budget, 5A-19–22, 5A-29turnover, 12-18–21

Inventory accountsrecording, 4-11–14types of, 4-10

Inventory turnover, 12-18–21Invested capital, calculating, 10-23Investing activities

cash flow provided by, 13-13–17defined, 13-4property and equipment, 13-14–15sources of cash, 13-5uses of cash, 13-5

Investment centers, 10-6IRR. See Internal rate of return (IRR)ISO. See International Organization for

Standardization (ISO)

JJob costs

direct, accumulating, 4-18–21direct labor, 4-20–21, 4-22direct material, 4-19–20

SU BJECT INDEX I-5

bindex.indd 5 9/12/19 5:15 PM

Product costs (manufacturing), 4-3–5See also Activity-based costing (ABC)C&C Sports example, 4-2–3case studies, 4-45classification of, 4-6components of, 4-3defined, 4-3direct labor, 4-4direct materials, 4-3–4ethics and classification of (case study), 4-46overhead, 4-4–5overhead, allocating manufacturing, 4-21–23total, 4-14

Product differentiation, 1-12Production, low-cost, 1-12Production budget, 5-19–21, 5-59Product-level activities, 7-6Product profitability, reassessing, 7-23–25Product standards

direct labor, 5-12–13, 5A-12–13direct materials, 5-11–12, 5A-11–12manufacturing overhead, 5-13

Profitcustomer, margin, TF5-4–5customer net, TF5-4

Profitability index, 9-23Profitability ratios

defined, 12-34gross margin percentage, 12-23interpreting, 12-24return on assets, 12-23return on common stockholders’ equity, 12-23–24

Profit centers, 10-6Profit equation

breakeven point, 3-3contribution margin, 2-18multiproduct CVP analysis, 3-17

Profit margin, in ROI, 10-15Pro-forma balance sheet, 5-42–44Pro-forma financial statements, 5-40–44,

5A-34–37Pro-forma income statement, 5-41–42, 5A-35–36Property, cash flow and purchase of, 13-14–15Public school costs, 2-7

QQualitative issues

capital budgeting and, 9-5outsourcing and, 8-17–18

Quality-adjusted life years (QALYs), 8-23Quick ratio, 12-17

RRatio analysis, 12-15–26

See also Financial ratiosdefined, 12-15

Raw Materials Inventorybudget, 5-27–28defined, 4-10recording, 4-11–14

RecordingCost of Goods Sold, TF4-7direct labor, TF4-4direct materials, TF4-3Finished Goods Inventory, 4-11–14fixed overhead, TF4-5–7product cost flows, 4-11–14Raw Materials Inventory, 4-11–14variable overhead, TF4-4–5Work in Process Inventory, 4-11–14

Regression analysis, 2-14–15Relevant costs

case study, 8-45–47decision model, 8-7identifying, 8-5–6special orders, 8-10–11

Relevant information, 8-3–5Relevant range, 2-15–16Reshoring, 8-15Residual income

calculating, 10-21defined, 10-21

limitations of, 9-26–27projects with even cash flows, 9-25–26projects with uneven cash flows, 9-26

Paymentsto employees, 13-26for income taxes, 13-27for operating costs, 13-26to suppliers, 13-25

Performancedashboard, 11-8methods of monitoring, 1-13–17reports, 6-7

Performance evaluation/measuresbalanced scorecard, 11-10–18benchmarking, 11-20–22choosing the right measures, 11-6–7economic value added, 10-22–24financial versus nonfinancial measures, 11-4–6key performance indicators, 11-7–8lagging indicators, 11-3leading indicators, 11-3–4, 11-5residual income, 10-20–21, 10-24return on investment, 10-13–18segment evaluation, 10-8–11

Performance reports, 6-7Performance standards. See StandardsPeriod (nonmanufacturing) costs

classification of, 4-6general and administrative costs, 4-6selling costs, 4-6

Planningbudget process and, 5-3–7, 5A-3–7enterprise resource, 1-17long-term, 1-6management’s role with, 1-6operational, 1-6short-term, 1-6strategic, 5-3, 5A-3tactical, 5-3, 5A-3

Porter, M., 1-12Practical standards, 5-10, 5A-10The Practice of Management (Drucker), 7-4Preference decisions

defined, 9-4hurdle rate, 9-4internal rate of return and, 9-23net present value and, 9-23screening decisions versus, 9-4–5

Present valuecalculating, 9-10–11compound interest and, 9-10–11defined, 9-10discount rates and, 9-11factor, 9-10future values, 9-11net, 9-18–20of a dollar, 9-9of annuities, 9-11–12sports example, 9-13

Price/earnings ratio, 12-25Prices/pricing

cost-based, 10-28–29cost-plus, 3-22–23cost-plus-based, 10-28discrimination, 8-9dynamic, 3-24influences on, 3-21–22market-based, 10-27–28markup, 3-22, 3-23negotiated, 10-29special order, 8-9–12standard, 5-12, 5A-12target costing, 3-23–24transfer, 10-27–31

Process costing, equivalent units (case study), TF2-17–18

Process improvement, 7-22–23Product cost flows

C&C Sports example, 4-10–15inventory accounts, types of, 4-10recording of, 4-11–14schedule of costs of goods manufactured, 4-14–15

Operating activities (direct method)cash flow provided by, 13-24–28collections from customers, 13-25defined, 13-4example of, 13-28payments for income taxes, 13-27payments for operating costs, 13-26payments to employees, 13-26payments to suppliers, 13-25

Operating activities (indirect method)calculating, 13-8–11cash flow provided by, 13-8–11current liabilities, 13-9defined, 13-4net income, 13-8–9

Operating activitiessources of cash, 13-4, 13-5uses of cash, 13-4, 13-5

Operating budgetscost of goods sold, 5-28, 5A-23–24defined, 5-16, 5A-16direct labor, 5-24–25direct materials purchases, 5-21–24ending inventory, 5-26–28, 5A-22–24inventory purchases, 5A-19–22manufacturing overhead, 5-25–26production, 5-19–21sales, 5-16–18, 5A-16–18selling and administrative expense, 5-18–19,

5A-18–19Operating costs, payments for, 13-26Operating income, target, 3-8–9Operating leverage and cost structure

case study, 3-27description of, 3-11–14

Operational planning, 1-6Operations, elimination of

case study, 8-47–48common costs identification, 8-26–27decision factors and process, 8-28–30examples of, 8-26, 8-29segment margin analysis, 8-27–28

Opportunity costs, 8-17Organization-level activities, 7-6Organizations, centralized versus decentralized,

10-2–7Outsourcing

case study, 8-47–48decision model, 8-15–16, 8-18defined, 8-14ethics (case study), 8-48–49examples, 8-14, 8-15opportunity costs, 8-17quality issues, 8-17–18reasons for using, 8-15theft of intellectual property, 8-18

Overapplied manufacturing overheadclosing to cost of goods sold, 4-26–27defined, 4-26prorating, 4-27–28

Overhead (overhead costs)activity-based costing and, 7-4–5actual, 4-27allocating manufacturing, 4-21–23, 7-14application, 4-21applied, 4-21, 4-23, 4-27budget, 5-25–26estimated, 4-27indirect labor costs, 4-5indirect materials, 4-4–5manufacturing, 4-4, 4-21–23, 5-13, 5-25–26predetermined rate, calculating, 4-22recording fixed, TF4-5–7recording variable, TF4-4–5standards, 5-13, 5A-13underapplied and overapplied, 4-26–28variance analysis of, 6-27–30

PParticipative budgeting, 5-5, 5A-5Payback period

defined, 9-25

I-6 SUBJECT IN DE X

bindex.indd 6 9/12/19 5:15 PM

determining minimum, 10-29–31market-based, 10-27–28negotiated, 10-29selling division with excess capacity, 10-29–30selling division without excess capacity, 10-30–31

Trend analysis, preparing, 12-5–6

UUnadjusted rate of return, 9-27Unavoidable costs, 8-5Underapplied manufacturing overhead

closing to cost of goods sold, 4-26–27defined, 4-26prorating, 4-27–28

Unfavorable variances, 6-4, 6-17, 6-23Unit-level activities, 7-5Unit product costs, calculating, 7-14–17Unprofitable customers

addressing, TF5-6–7identifying, TF5-2–6

Uses of cash, 13-3, 13-5

VValue-added activities, 7-21Variable costing

defined, TF3-2GPK, TF3-6income effects of, TF3-3–6reconciling income, TF3-6–7versus absorption costing, TF3-2–3

Variable costs, 2-3–4high-low method to estimate, 2-12–13,

2-15ratio, 2-21regression analysis, 2-15scattergraphs to estimate, 2-11–12, 2-15versus fixed costs, 3-12

Variable overhead variancesanalysis of, 6-27–30defined, 6-27–28efficiency, 6-29interpreting, 6-29–30recording, TF4-4–5spending, 6-28

Variance analysisdirect labor, 6-21–25direct materials, 6-14–19ethics (case study), 6-44–46overhead, 6-27–30

Variancesdefined, 6-4direct labor, 6-21–25direct materials, 6-14–19disposing of, TF4-7–8to evaluate sales strategy, 6-10–11favorable, 6-4, 6-17, 6-23flexible budget, 6-6, 6-10–11sales price, 6-9–10sales volume, 6-6–8static budget, 6-3–4, 6-6–10unfavorable, 6-4, 6-17, 6-23variable overhead, 6-27–30

Vertical analysis, 12-9

WWeighted-average cost of capital (WACC), calculating,

10-23What-if analysis, 3-5–6, 3-9–10Whistleblowers, 1-23Working capital, 12-17Work in Process Inventory

budget, 5-28defined, 4-10recording, 4-11–14

ZZero-based budgeting, 5-6, 5-7, 5A-6, 5A-7

case study, 8-47–48characteristics of, 8-9–10decision process recap, 8-12example of, 8-12pricing, 8-9–12quality issues, 8-11–12relevant costs, 8-10–11

Sports and Fitness Industry Association (SFIA), 12-31Standard cost, 5-11, 5-12, 5A-11, 5A-12Standard costing systems. See Costing systems,

standardStandard Industrial Classification (SIC) code, 12-29Standard price, 5-12Standards

case study, 5-58, 5A-49defined, 5-9, 5A-9for grading diamonds, 5-9, 5A-9ideal versus practical, 5-10, 5A-10organizations that set, 5-9–10, 5A-9–10product, 5-11–13, 5A-11–13

Statements of cash flow. See Cash flow statementsStatic budgets

defined, 6-3–4flexible budgets to analyze static budget variances,

6-6–10management by exception, 6-4variances, 6-4

Step costs, 2-6Stock

dividend payout ratio, 12-25earnings per share, 12-24–25price/earnings ratio, 12-25

Stockholders’ equity, return on common, 12-23–24Strategic performance, methods of monitoring,

1-13–17Strategic planning, 5-3, 5A-3Strategic priorities, matching accounting information

to, 1-12–13Strategy maps

C&C Sports example, 11-15–16case study, 11-34–35for building a balanced scorecard, 11-14

Sunk costs, 8-5Suppliers, payments to, 13-25Supplies Inventory

defined, 4-10recording, 4-11–14

Supply chain, defined, 1-14Supply chain management, 1-14–15Supply chain operations, 1-14–15Supply Chain Operations Reference (SCOR)

model, 1-15

TTactical planning, 5-3, 5A-3Target costing, 3-23Target net income, 3-9Taylor, F., 7-4Theory of Constraints, 8-22–23Throughput contribution, 8-23Throughput time, 11-25Times interest earned ratio, 12-22Time ticket, 4-20–21Time value of money

compound interest, 9-10–11discount rates, 9-10, 9-11future values, 9-11present value, 9-9–11present value of annuities, 9-11–12

Top-down (imposed) budget, 5-4, 5A-4Total manufacturing costs, 4-14–15Trade associations, 12-31Transfer price

base, selecting a, 10-27–29cost-based, 10-28–29cost-plus-based, 10-28defined, 10-27

economic value added versus, 10-24example, 10-21–22shortcomings of, 10-22

Resources. See Constrained resourcesResponsibility accounting

cost centers, 10-5decentralization and, 10-5–7defined, 10-5investment centers, 10-6profit centers, 10-6

Return of investment, defined, 9-3Return on assets, 9-3, 12-23Return on common stockholders’ equity, 12-23–24Return on investment (ROI)

assets, decrease in, 10-16–17asset turnover, 10-15calculating, 10-14case studies, 10-44–45defined, 9-3, 10-13–14DuPont Model, 10-15–17ethics (case study), 10-45–46example, 10-18expenses, decrease in, 10-16long-term assets, 9-3profit margin, 10-15sales revenue, increase in, 10-16shortcomings of, 10-17–18technology investments, 10-17

Risk Management Association, 12-29Robinson-Patman Act (1936), 8-9, 8-10Robotic process automation (RPA), 7-24ROI. See Return on investment (ROI)Rolling budget, 5-7, 5A-7

SSales

budget, 5-16–18, 5-58–59, 5A-16–18, 5A-49–50forecasting, 5-17, 5A-18mix, 3-16–19variances to evaluate sales strategy, 6-10–11

Sales price variances, 6-9–10Sales revenue, increase effect on ROI, 10-16Sales volume variances, 6-6–8Sarbanes-Oxley Act (2002), 1-19, 1-23Scattergraphs, 2-11–12, 2-15Schedule of cost of goods manufactured, 4-14–15SCOR. See Supply Chain Operations Reference

(SCOR) modelScreening decisions

defined, 9-4hurdle rate, 9-4internal rate of return and, 9-23net present value and, 9-23preference decisions versus, 9-4–5

Securities and Exchange Commission (SEC), 1-4, 12-31

Segment evaluationreporting, 10-10–11segment margin income statements,

10-9–10traceable fixed costs as common costs, 10-10

Segment margin analysis, 8-27–28Segment margin income statements, 10-9–10Segments (business units)

defined, 8-27, 10-8examples, 10-9reporting, 10-10–11

Selling and administrative expense budget, 5-18–19, 5A-18–19

Selling costs, 4-6Sensitivity analysis, 3-5–6, 3-9–10Short-term financing, 5-37, 5A-31–32Short-term planning, 1-6SIC. See Standard Industrial Classification (SIC) codeSimple rate of return, 9-27Sources of cash, 13-3, 13-5Special orders

SU BJECT INDEX I-7

bindex.indd 7 9/12/19 5:15 PM

bindex.indd 8 9/12/19 5:15 PM