PART ONE: INTRODUCTION TO COST MANAGEMENT

Chapter 1: Cost Management and Strategy: An Overview

• New Real-World Focus examples, including surveys of current practice
• Update of section on ethics for new IMA Code of Professional Conduct
• New self-study question, and new exercises and problems focusing on strategy and on ethics

Chapter 2: Implementing Strategy: The Balanced Scorecard and the Value Chain

• New Real-World Focus examples, including surveys of current practice
• Enhanced material on implementing the balanced scorecard (BSC)
• New exercises and problems with an emphasis on strategy and the balanced scorecard

Chapter 3: Basic Cost Management Concepts

• Clarification of the discussion on cost drivers
• Coverage of risk preferences removed from Chapter 3 and now enhanced in Chapter 17
• New Real-World Focus examples, including an extensive example of cost terms used in agriculture
• New discussion of the cost of capacity
• New exercises and problems

Chapter 4: Job Costing

• Coverage of departmental overhead rates moved from Chapter 5; related exercise and problem material added on departmental overhead rates
• Clarification of normal spoilage with the addition of an example in the text
• New Real-World Focus examples
• New exercises and problems with a focus on service industries

Chapter 5: Activity-Based Costing and Management

• Significant revision to shorten and focus this chapter; customer profitability analysis has been shortened and is now more focused
• Coverage of departmental overhead rates is moved to Chapter 4; learning objectives are condensed and focused; the strategic role of ABC/M is enhanced and moved to the front of the chapter
• All new illustrations in the text, including examples in service and governmental organizations
• New exhibits to clarify the two-stage procedure under volume-based and activity-based costing
• Several new Real-World Focus examples, including surveys of current practice
• New coverage of the cost of capacity and the role of ABC costing in managing the cost of capacity
• Several new exercises and problems, with a focus on the cost of capacity
• New exercises and problems that include resource consumption as well as activity consumption cost drivers
• New coverage of time-driven ABC costing
• New coverage of multiple-activity ABC costing
• New exercises and problems focusing on strategy, the cost of capacity, resource consumption cost drivers, and ethics

PART TWO: MANAGEMENT PLANNING AND DECISION MAKING

Chapter 6: Cost Estimation

• New discussion of simple vs. multiple linear regression
• New coverage of time-series vs. cross-sectional regression
• Several new Real-World Focus examples
• Expanded coverage of the learning curve, with discussion of the general learning model
• New exercises and problems with a focus on interpreting regression results, including those from cross-sectional regression analysis

Chapter 7: Cost-Volume-Profit Analysis

• Notation is clarified and changed to closely correspond with symbols used in Chapter 6
• New Real-World Focus examples
• New problems and examples
• Expanded coverage of Excel’s Goal Seek option for conducting sensitivity analysis
• Clarification of the coverage of activity-based CVP and multiple-product CVP

Chapter 8: Strategy and the Master Budget

• Completely new set of Real-World Focus examples
• Additional end-of-chapter material dealing with ethical considerations, budgeting for not-for-profit organizations, and sensitivity analysis
• Explicit linkage to financial accounting (accounting for sales discounts)
• Inclusion of additional Excel-based assignments

Chapter 9: Decision Making with Relevant Costs and a Strategic Emphasis

• Updated Real-World Focus examples
• New exercises and problems with a focus on strategy and on applications in the service industries

Chapter 10: Cost Planning For The Product Life Cycle: Target Costing, Theory Of Constraints, and Strategic Pricing

• New coverage of quality function deployment (QFD), including several illustrations
• New and updated Real-World Focus examples
• New exercises and problems with a focus on strategy and on the service industries
• Additional coverage of Takt time with a new illustration and problem material

PART THREE: PROCESS COSTING AND COST ALLOCATION

Chapter 11: Process Costing

• Additional coverage of backflush costing with a new illustration and problem material
• New problem material with a focus on service industries

Chapter 12: Cost Allocation: Service Departments and Joint Product Costs

• New Real-World Focus examples
• New problems

PART FOUR: OPERATIONAL CONTROL

Chapter 13: The Flexible Budget and Standard Costing: Direct Materials and Direct Labor

• Expanded introductory discussion of control systems in general and operational control systems in particular
• Expanded discussion of the difference between standard costs and a standard cost system
• Presentation of General Model for Analyzing Variable Cost Variances (Exhibit 13.7)
• Broader mix of end-of-chapter assignment material (including additional Excel-based assignments, ethics, and behavioral considerations)
• Movement of journal-entry material to an appendix

Chapter 14: The Flexible Budget: Factory Overhead

• New discussion of the difference between the product-costing and control purposes of standard costs for factory overhead
• Expanded discussion of the variance-disposition question
• New diagrammatical approach for overhead variance analysis (Exhibits 14.4 and 14.5), and associated end-of-chapter assignment material
• New alternative diagrammatical approach for overhead variance analysis (Exhibit 14.18)
• Expanded set of Excel-based end-of-chapter assignment material
• Significant expansion of Real-World Focus items

Chapter 15: The Flexible Budget: Further Analysis of Productivity and Sales

• Significant revision including new material and a new focus on the flexible budget; the chapter is now integrated into the flexible budget concept used in the prior two chapters, and there is a new emphasis on the strategic role of the analysis of sales performance and productivity
• The coverage of strategic profitability analysis has been removed and replaced by a framework that is consistent with the flexible budget approach
• Duplication between Chapters 15 and 13 removed for the new edition
• New Real-World Focus examples
• New end-of-chapter exercise and problem material with a focus on the application of the flexible budget concept in the analysis of productivity and sales performance

Chapter 16: The Management and Control of Quality

• Development of comprehensive framework (Exhibit 16.3) for managing and controlling quality, which is used to anchor the discussion of all topics covered in the chapter
• New discussion regarding the role of the management accounting in the management and control of quality
• Expanded discussion of non-financial performance indicators
• New discussion of Six-Sigma, including implementation issues and the application of Six Sigma to the accounting/finance function
• Many new Real-World Focus items
• New discussion of the application of COQ to Environmental Quality
• Greatly expanded mix of end-of-chapter assignment material
• Repositioning of Taguchi Loss Function Analysis to an Appendix

PART FIVE: MANAGEMENT CONTROL

Chapter 17: Management Control and Strategic Performance Measurement

• Coverage of risk preferences repositioned to this chapter from Chapter 3; this material, including related assignment material, has been updated and enhanced
• New and updated Real-World Focus examples, including surveys from practice
• New coverage of the role of strategy in the determination of the cost, profit, or revenue SBU, with new exhibit to illustrate the differences across these responsibility units
• Extended coverage of the implementation of the balanced scorecard (BSC) for performance measurement

Chapter 18: Strategic Investment Units and Transfer Pricing

• New coverage and illustration of the relationship between the components of return on assets: return on sales and asset turnover
• New Real-World Focus examples
• New exercises and problems with a focus on economic profit, residual income, and EVA
• New coverage of intangible assets and the use of ROA for innovative companies

PART SIX: ADVANCED TOPICS IN COST MANAGEMENT

Chapter 19: Management Compensation, Business Analysis, and Business Valuation

• New and updated Real-World Focus examples, including surveys from practice
• Updated discussion of reporting requirements for stock options
• Significant revision of the coverage on business valuation; new focus on determining the market value of equity
• Expanded coverage of the discounted cash flow method (DCF) for valuing a firm

Chapter 20: Capital Budgeting

• Expanded discussion of the strategic role of capital budgeting
• New discussion of the role of the management accountant in the capital budgeting process
• Reference to the Analytic Hierarchy Process (AHP) in conjunction with the capital budgeting process
• Consistent with the revisions in Chapter 19, reorientation of material to provide greater focus on discounted-cash-flow (DCF) decision models
• Expanded discussion of the calculation of the weighted-average cost of capital (WACC)
• Many new Real-World Focus examples pertaining to the capital budgeting process
• New discussion regarding sensitivity analysis
• Integration of Excel-based financial formulas for solving capital budgeting problems
• Advanced issues in capital budgeting analysis was repositioned to an Appendix
• Expanded discussion of behavioral considerations associated with the capital-budgeting process