Studying cost accounting is one of the best business investments a student can make. Why? Because success in any organization—from the smallest corner store to the largest multinational corporation—requires the use of cost accounting concepts and practices. Cost accounting provides key data to managers for planning and controlling, as well as costing, products, services, and even customers. This book focuses on how cost accounting helps managers make better decisions, as cost accountants increasingly are becoming integral members of their company’s decision-making teams. In order to emphasize this prominence in decision making, we use the “different costs for different purposes” theme throughout this book. By focusing on basic concepts, analyses, uses, and procedures instead of procedures alone, we recognize cost accounting as a managerial tool for business strategy and implementation.
We also prepare students for the rewards and challenges they will face in the professional cost accounting world of today and tomorrow. For example, we emphasize both the development of technical skills such as Excel and big-data analytics to leverage available information technology and the values and behaviors that make cost accountants effective in the workplace.
Each chapter opens with a vignette on a real company situation. The vignettes engage the reader in a business situation or dilemma, illustrating why and how the concepts in the chapter are relevant in business. For example, Chapter 2 describes how teen apparel chain Aéropostale was driven into bankruptcy by the relatively high proportion of fixed costs in its operations. Chapter 5 explains the use of activity-based costing by IBM to evaluate the true cost of data breaches. Chapter 9 highlights Under Armor’s use of a new internal company system to better manage its inventory and supply chain with efficiency and precision to reduce inventory costs. Chapter 15 shows how Starbucks changed its rewards program to better align rewards with customer spending. Chapter 19 shows the impact on Tesla of the rework costs associated with a drastic ramp-up of production to meet unprecedented customer demand. Chapter 24 describes the misalignment between performance measurement and pay at General Electric.
Found in every chapter, these boxes cover real-world cost accounting issues across a variety of industries, including defense contracting, entertainment, manufacturing, retailing, and sports. New examples include the following:
We continue to try to simplify and streamline our presentation of various topics to make it as easy as possible for students to learn the concepts, tools, and frameworks introduced in different chapters. We have introduced a new chapter, Chapter 11, on data analytics to help management accountants use big data to manage both revenue and costs. This chapter follows Chapter 10 on predicting cost behavior. We received positive feedback for the reorganization of Chapters 12 through 16 in the 16th edition and have maintained that order in the 17th edition as Chapters 13 through 17. Chapter 13 on the balanced scorecard and strategic profitability analysis follows Chapter 12 on decision making and relevant information for operational decisions. Chapter 14 is the first of four chapters on cost allocation. We introduce the purposes of cost allocation in Chapter 14 and discuss cost allocation for long-run product costing and pricing. Continuing the same example, Chapter 15 discusses cost allocation for customer costing. Chapter 16 builds on the Chapter 4 example to discuss cost allocation for support departments. Chapter 17 discusses joint cost allocation.
Other examples of streamlined presentations can be found in the following chapters:
Found throughout each chapter, Try It! interactive questions give students the opportunity to apply the concept they just learned. Links in the eText allow students to practice in MyLab Accounting without interrupting their interaction with the eText.
Sample problems, assignable in MyLab Accounting, provide an introduction to the CPA Exam format and an opportunity for early practice with CPA exam-style questions.