Detailed Changes In The Third Edition CHAPTER 1. Basic Cost Concepts for Managers New discussion of the changing role of managerial accountants. New section on organizational structure. New section on business ethics. New material on the value chain. theory of constraints. and balanced scorecard. Revised and added exercises and problems. CHAPTER 2. Job Order Costing Two new Business Insight boxes on job order costing software and use of job order costing by service companies. Revised and added exercises and problems. CHAPTER 3. Process Costing Illustrations 3-5 and 3-12 revised for clarity. Illustrations 3-23 and 3A-12 presented as spreadsheets. Revised and added exercises and problems. CHAPTER 4. Activity-Based Costing Illustration 4-13 revised for clarity. Illustrations presented as spreadsheets where appropriate. Section on classification of activity levels moved from the appendix into the chapter. Section on just-in-time inventory moved into a chapter-end appendix. Revised and added exercises and problems. CHAPTER 5. Cost-Volume-Profit Section on target net income moved forward to better integrate with discussion on break-even analysis. Appendix on variable costing replaced by new chapter on variable costing (Chapter 7). Illustrations presented as spreadsheets where appropriate. Revised and added new exercises and problems. CHAPTER 6. Incremental Analysis Chapter on incremental analysis moved from Chapter 9 to Chapter 6 to reinforce CVP concepts. Added discussion on theory of constraints. New Business Insight box on make-or-buy decision by Superior Industries. Illustrations presented as spreadsheets where appropriate. Revised and added new exercises and problems. CHAPTER 7. Variable Costing: A Decision-Making Perspective Entirely new chapter. created to: Explain the difference between absorption costing and variable costing. Discuss the effect that changes in production level and sales levels have on net income measured under absorption costing versus variable costing. Discuss the relative merits of absorption costing versus variable costing for decision-making. Explain sales mix and its effect on break-even analysis. Understand how operating leverage affects profitability. CHAPTER 8. Pricing Chapter on pricing moved from Chapter 11 to Chapter 8 to reinforce concepts of CVP. New formula added for target cost. New discussion of the use of variable cost pricing. New Business Insight box on the pricing the Levi’s jeans sold to Wal-Mart. Illustrations presented as spreadsheets where appropriate. Revised and added exercises and problems. CHAPTER 9. Budgetary Planning New discussions of participative budgeting and budgetary slack. Two new Business Insight boxes on participative budgeting at Time Warner and cash budgeting by engineering firm Alstom. Illustrations presented as spreadsheets where appropriate. Revised and added exercises and problems. CHAPTER 10. Budgetary Control and Responsibility Accounting Illustrations presented as spreadsheets where appropriate. Revised and added exercise and problems. CHAPTER 11. Standard Costs and Balanced Scorecard New section added on balanced scorecard. Two new Business Insight boxes on the development of shared industrial standards and the use of balanced scorecard at United Airlines. Illustrations presented as spreadsheets where appropriate. Revised and added exercises and problems. CHAPTER 12. Planning for Capital Investments Revised explanation on how to estimate net annual cash flow. New explanation of cash payback when cash flows are uneven. Internal rate of return discussion revised to show trial-and-error procedure. New Business Insight box on purchase of information technology for managing investments by mutual fund American Century. Revised and added exercises and problems. CHAPTER 13. The Statement of Cash Flows Coverage of the indirect and direct methods of preparing the operating activities section revised. shortened. and edited. Coverage of transactions for both the indirect and direct methods condensed from two years’ of transactions to one year. New Business Insight box on misguided cash flow reporting by WorldCom. Inc. & Dynegy. Inc. Revised and added exercises and problems. CHAPTER 14. Financial Analysis: The Big Picture Material on sustainable income deleted. Corporate data updated. Illustrations presented as spreadsheets where appropriate. Revised and added exercises and problems. APPENDIX A: Time Value of Money APPENDIX B: Ethical Standards Cases for Management Decision Making Cases 3 and 4 have been switched to reflect new chapter sequence. New Case 6 added for use with Chapters 5 and 9. New Case 7 added for use with Chapters 5. 9. and 11.

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