About the Author
JOHN J. WILDisadistinguishedprofessor of accountingat theUniversityof Wisconsinat Madison. Hepreviouslyheldappointmentsat MichiganState UniversityandtheUniversityof Manchester in England.HereceivedhisBBA,MS,andPhDfrom the Universityof Wisconsin.
Johnteachesaccountingcoursesat boththe undergraduateandgraduatelevels.Hehasreceived numerousteachinghonors,includingtheMabel W.ChipmanExcellencein-TeachingAwardandthedepartmental Excellence-in-TeachingAward, andheisatwo-timerecipient of theTeachingExcellenceAwardfrom businessgraduatesat theUniversityof Wisconsin.Healsoreceivedthe BetaAlphaPsi andRolandF.SalmonsonExcellence-in-TeachingAward from MichiganStateUniversity.Johnhasreceivedseveral research honors,isapast KPMGPeat MarwickNational Fellow,andisarecipient of fellowshipsfrom theAmericanAccountingAssociationandtheErnst andYoungFoundation.
Johnisanactivemember of theAmericanAccountingAssociationand itssections.Hehasservedonseveral committeesof theseorganizations, includingtheOutstandingAccountingEducator Award,WildmanAward,
Courtesy of John J Wild
National Program Advisory,Publications,andResearchCommittees.John isauthor of Fundamental Accounting Principles, Financial Accounting, Managerial Accounting, and College Accounting,all publishedby McGraw-Hill Education.
John’sresearcharticlesonaccountingandanalysisappear in The Accounting Review; Journal of Accounting Research; Journal of Accounting and Economics; Contemporary Accounting Research; Journal of Accounting, Auditing and Finance; Journal of Accounting and Public Policy; andother journals.Heispast associateeditor of Contemporary Accounting Research andhasservedonseveral editorial boardsincluding The Accounting Review.
Inhisleisuretime,Johnenjoyshiking,sports,boating,travel,people, andspendingtimewithfamilyandfriends.
KEN W. SHAWisanassociateprofessor of accounting andtheKPMG/JosephA.SilvosoDistinguished Professor of Accountingat theUniversityof Missouri. Hepreviouslywasonthefacultyat theUniversityof Marylandat CollegePark.Hehasalsotaught in international programsat theUniversityof Bergamo (Italy) andtheUniversityof Alicante(Spain).He receivedanaccountingdegreefrom BradleyUniversity andanMBAandPhDfrom theUniversityof Wisconsin.HeisaCertified PublicAccountant withworkexperienceinpublicaccounting.Kenteaches accountingat theundergraduateandgraduatelevels.Hehasreceived numerousSchool of Accountancy,Collegeof Business,anduniversitylevel teachingawards.Hewasvotedthe“Most Influential Professor”by four School of Accountancygraduatingclassesandisatwo-timerecipient
Courtesy of Ken W Shaw
of theO’BrienExcellenceinTeachingAward.Heistheadvisor tohis school’schapter of theAssociationof CertifiedFraudExaminers
Kenisanactivemember of theAmericanAccountingAssociationand itssections.Hehasservedonmanycommitteesof theseorganizationsand presentedhisresearchpapersat national andregional meetings.Ken’s researchappearsinthe Journal of Accounting Research; The Accounting Review; Contemporary Accounting Research; Journal of Financial and Quantitative Analysis; Journal of the American Taxation Association; Strategic Management Journal; Journal of Accounting, Auditing, and Finance; Journal of Financial Research; andother journals.Hehasserved ontheeditorial boardsof Issues in Accounting Education; Journal of Business Research; and Research in Accounting Regulation. Keniscoauthor of Fundamental Accounting Principles, Financial and Managerial Accounting, and College Accounting, all publishedbyMcGraw-Hill Education.
Inhisleisuretime,Kenenjoystennis,cycling,music,andcoachinghis children’ssportsteams.
Dear Colleagues and Friends,
As we rolloutthe new edition of Managerial Accounting, we thank each of you who provided suggestions to improve the textbook and its teaching resources. This new edition reflects the advice and wisdom of many dedicated reviewers, symposium and workshop participants, students, and instructors. Throughoutthe revision process, we steered this textbook and its teaching tools in the manner you directed. As you’llfind, the new edition offers a rich setof features—especially digitalfeatures—to improve studentlearning and assist instructor teaching and grading we believe you and your students willlike whatyou find in this new edition
Many talented educators and professionals have worked hard to create the materials for this product, and for their efforts, I’m grateful. I extenda specialthank-youto our contributing andtechnology supplement authors, who have worked so diligently to supportthis product:
Contributing Author: Kathleen O’Donnell, Onondaga Community College
Accuracy Checkers: Dave Krug, Johnson County Community College; Mark McCarthy, East Carolina University; and Beth Kobylarz
LearnSmart Author: AprilMohr, Jefferson Community and Technical College, SW
Interactive Presentations: Jeannie Folk, College of DuPage, and AprilMohr, Jefferson Community and Technical College, SW
PowerPoint Presentations and Instructor Resource Manual: AprilMohr, Jefferson Community and Technical College, SW
DigitalContributor, Connect Content, GeneralLedger Problems, Test Bank, and Exercise PowerPoints: Kathleen O’Donnell, Onondaga Community College
In addition to the invaluable help from the colleagues listed above, we thank the entire team at McGraw-HillEducation:Tim Vertovec, Steve Schuetz, Natalie King, Michelle Williams, Erin Chomat, Kris Tibbetts, Rebecca Mann, MichaelMcCormick, LoriKoetters, Peggy Hussey, Xin Lin, Kevin Moran, Debra Kubiak, Sarah Evertson, Brian Nacik, and DarylHorrocks. we could nothave published this new edition withoutyour efforts.
John J. Wild Ken W. Shaw
HelpsStudents
Master KeyConcepts
Once a student has finished reading the chapter, how well he or she retains the material can depend greatly on the questions, brief exercises, exercises, and problems that reinforce it. This book leads the way in comprehensive, accurate assignments.
Comprehensive Need-to-Know Problemspresent bothaproblem and acompletesolution,allowingstudentstoreviewtheentireproblem-solving processandachievesuccess.Theproblemsdrawonmaterial from the entirechapter.
Chapter Summariesprovidestudentswitharevieworganizedby learningobjectives.ChapterSummariesareacomponent oftheCAPmodel (asdiscussedinthe“InnovativeTextbookFeatures”section),whichrecaps eachconceptual,analytical,andprocedural objective.
Key Termsareboldedinthetext andrepeatedat theendofthechapter.A completeglossaryofkeytermsisavailableonlinethroughConnect.
Multiple Choice Quizquestionsquicklytest chapterknowledge beforeastudent movesontocompleteQuickStudies,Exercises,and Problems.
Quick Studyassignmentsareshort exercisesthat oftenfocusonone learningobjective.Most areincludedinConnect.Thereareat least 10–15 QuickStudyassignmentsperchapter.
Exercisesareoneofthisbook’smanystrengthsandacompetitive advantage.Thereareat least 10–15perchapter,andmost areincludedin Connect.
Problem Sets A & Bareprovenproblemsthat canbeassignedas homeworkorforin-classprojects.All problemsarecodedaccordingtothe CAPmodel (seethe“InnovativeTextbookFeatures”section),andSet Ais includedinConnect.
Beyond the Numbersexercisesaskstudentstouseaccountingfigures andunderstandtheirmeaning.Studentsalsolearnhowaccountingapplies toavarietyofbusinesssituations.Thesecreativeandfunexercisesareall neworupdatedandaredividedintoninetypes:
ReportinginAction
ComparativeAnalysis
EthicsChallenge
CommunicatinginPractice
TakingIt totheNet
Team orkinAction
HittingtheRoad
Entrepreneurial Decision
Global Decision
Serial Problemsuseacontinuousrunningcasestudytoillustratechapter conceptsinafamiliarcontext.TheSerial Problem canbefollowed continuouslyfrom thefirst chapterorpickedupat anylaterpoint inthe
book; enoughinformationisprovidedtoensurestudentscanget right to work.
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General Ledger Problemsenablestudentstoseehotransactionsare enteredinthejournal,post totheledger,listedinatrial balance,and reportedinfinancial statements.Studentscantrackanamount inany financial statement all theaybacktotheoriginal journal entry.Critical thinkingcomponentsthenchallengestudentstoanalyzethebusiness activitiesintheproblem.
Excel SimulationsalloyoutopracticeyourExcel skills,suchasbasic formulasandformatting,ithinthecontext ofaccounting.Thesequestions featureanimated,narratedHelpandShoMetutorials(henenabledbyyour instructor).
The End of the Chapter Is Only the BeginningOurvaluableand provenassignmentsaren’t just confinedtothebook.From problemsthat requiretechnological solutionstomaterialsfoundexclusivelyonline,this book’send-of-chaptermaterial isfullyintegratedithitstechnology package.
Content Revisions Enhance Learning
Thisedition’srevisionsaredrivenbyfeedbackfrom instructorsand students.Theyinclude:
Manynew,revised,andupdatedassignmentsthroughout,including entrepreneurial andreal-worldassignments.
ManyNeed-to-Know(NTK) demonstrationsaddedtoeachchapter at keyjuncturestoreinforcelearning.
UpdatedSustainabilitysectionfor eachchapter,withexampleslinkedto thenewchapter-openingcompany.
Newannual reportsandcomparative(BTN) assignments: Apple, Google,andSamsung.
Revisedart program,visual infographics,andtext layout.
Updatedratio/tool analysisusingdatafrom well-knownfirms.
RevisedGeneral Ledger assignmentsfor most chapters.
Newandrevisedentrepreneurial examplesandelements.
Newtechnologycontent integratedandreferencedthroughout.
RevisedGlobal Viewsectionmovedtotheveryendof eachchapter followingassignments.
Chapter 1
NEWopener NatureBoxandentrepreneurial assignment.
Simplifieddiscussiononpurposeof managerial accounting.
Addedreferencestomorereal-worldcompanies.
Addeddiscussionof enterpriseriskmanagement.
RevisedExhibit 1.1toshowcommonmanagerial decisions.
Simplifieddiscussiononnatureof managerial accounting.
Newsectiononcareersinmanagerial accountingandimportanceof managerial accountingfor nonaccountants.
Newexhibit onmanagerial accountingsalaries.
Addedexampleoncost of iPhone.
Newsectionheadandreviseddiscussionfor nonmanufacturingcosts.
Addedgraphicstocost flowexhibit.
Reducednumber of overheaditemsinexhibit for cost of goods manufacturedstatement.
Addedsectiononcomputingcost per unit.
Updated“trends”sectiontoincludegigeconomy(Uber),triplebottom line,andISO9000standards.
Expandeddiscussionof sustainabilityandSASB.
ExpandedSustainabilitysectionwithDecisionInsight chart and NatureBoxexample.
AddedDiscussionQuestionontriplebottom line.
AddedtwoQuickStudiesonrawmaterialsactivityfor 3MCo.
AddedExercisesonsustainabilityreportingfor StarbucksandHyatt.
Chapter 2
NEWopener NehaAssar andentrepreneurial assignment.
Simplifieddiscussionof cost accountingsystems.
Simplifieddirect material anddirect labor cost flowsandentries.
Addedtimeperiodinformationtographicon4-stepoverheadprocess.
Simplifieddiscussionof recordingoverheadcosts.
Addedjournal entryfor depreciationexpenseonequipment inNTK2-5.
Revisedexhibitsfor postingof direct materials,direct labor,andoverhead togeneral ledger accountsandjobcost sheets.
Addedsectiononusingjobcost sheet for managerial decisions.
Addedentriesfor transfersof coststoFinishedGoodsInventoryandto COGS.
Expandeddiscussionof joborder costingfor servicefirms.
Newexhibit andcost flowsfor servicefirms.
ExpandedSustainabilitysection,includingUSPSandNehaAssar examples.
NewNTKonusingthejobcost sheet.
AddednewQuickStudyandnewExerciseoncostingfor servicefirms.
Chapter 3
NEWopener Stanceandentrepreneurial assignment.
Revisedexhibit oncost flowsinjoborder andprocesscostingsystems.
Revisedexhibit onproductiondataandphysical flowof units.
Addedtransfer tofinishedgoodsandupdatedendingbalancetoWIPTaccount for secondprocess.
Newsectiononusingprocesscost summaryfor decisions.
Addeddiscussionof therawmaterialsyieldto“trends”section.
Revisedexhibit anddiscussionof assigningcost usingFIFO.
Expandeddiscussionof hybridandoperationcosting.
ExpandedSustainabilitydiscussion,includingGeneral MillsandStance examples.
AddedDiscussionQuestiononsustainablerawmaterialssourcing.
Chapter 4
NEWopener GrandyOatsandentrepreneurial assignment.
Reviseddiscussionof whyoverheadcostsmust beassigned.
Reviseddiscussionsof plantwideanddepartmental methods.
Newexhibit onoverheadallocationusingplantwidemethod.
Reviseddiscussionof applyingactivity-basedcosting.
Revisedexhibit of overheadallocationusingactivity-basedcosting.
Reviseddiscussionof advantagesanddisadvantagesof activity-based costing.
Revisedandreorganizeddiscussionof advantagesanddisadvantagesof ABC.
Expandeddiscussionof leanoperationsandleanaccounting.
RevisedSustainabilitysectiononsupplychainmanagement.
NewNTKonactivitylevels.
RevisedGlobal ViewonToyota’sleanmanufacturing.
Chapter 5
NEWopener Sweetgreenandentrepreneurial assignment.
Newexhibit onbuildingblocksof CVPanalysis.
Reviseddiscussiononusesof CVPanalysis.
Reviseddiscussionof fixedandvariablecosts.
Addeddatapointstomarginof fixedandvariablecost exhibit.
Newgraphiconexamplesof fixed,variable,andmixedcosts.
Reviseddiscussiononstep-wiseandcurvilinear costs.
Revisedcost datafor measuringcost behavior.
Reorganizedbreak-evensectionintothreemethods.
Reviseddiscussionsof contributionmarginincomestatement andCVP charts.
Movedmarginof safetytosectiononapplyingCVP.
Addeddiscussionof salesmixandbreak-evenfor Amazon.
Reviseddiscussionof assumptionsinCVP.
RevisedSustainabilitysectionwithNike,CVPanalysis,andSweetgreen example.
Expandedappendixonvariableandabsorptioncosting.
AddedDiscussionQuestion,four QuickStudies,and1Exerciseon variableandabsorptioncosting.
RevisedGlobal ViewonBMW’si3break-evenpoint.
Chapter 6
NEWopener Riffraff andentrepreneurial assignment.
Reviseddiscussionof variableandabsorptioncosting.
Reviseddiscussionof incomeimplicationsof variableandabsorption costing.
Newgraphicsonrelationsbetweenproduction,sales,andincomeeffects.
AddedT-accountstoexhibitsof absorptionandvariablecostingincome.
Reviseddiscussionandexhibitsof product cost assignmentstofinancial statements.
Newgraphiconrelationbetweenchangesininventoryandincomeeffects.
Reviseddiscussionof planningproduction.
Reviseddiscussionof controllingcosts.
Addedcalculationof break-evenusingvariablecostingincomestatement.
Addedexhibit onvariablecostingincomestatement for servicefirm.
Addedexampleof special order decisionfor servicefirm.
AddedNTKproblem onpricingandspecial offer.
AddedtwonewQuickStudiesonsustainability.
RevisedSustainabilitysectiononPuma’senvironmental profit andloss account.
Chapter 7
NEWopener TaTaTopper andentrepreneurial assignment.
Reviseddiscussion,withnewexhibit,of budgetingasamanagement tool.
Reviseddiscussiononbenefitsof budgeting.
Addednewgraphiconbenefitsof budgeting.
Reviseddiscussionof budgetingandhumanbehavior.
NewDecisionInsight onzero-basedbudgeting.
NewNTKonthebenefitsandpotential costsof budgeting.
Revisedmaster budget processexhibit toreflect typesof activities.
Addedgraphicsshowingformulastocomputedirect materials requirementsanddirect labor cost.
Reviseddiscussionsof direct materials,direct labor,andfactory overheadbudgets.
Addeddiscussionandexhibitsof estimatedcashreceiptswithalternative collectiontiminganduncollectibleaccounts.
AddedT-account tocashbudget exhibit.
NewNTKsonthecashbudget.
Addedmarginpoint ontheimpact of credit anddebit cardfeesoncash receipts.
Addedsectionwithexhibit onbudgetingfor servicecompanies.
NewSustainabilitysectionwithdiscussionof Johnson& Johnsonand exhibit andTaTaTopper example.
AddedDiscussionQuestionandQuickStudyonsustainabilityand budgeting.
AddedExerciseonbudgetedcashpaymentsonaccount.
