What’s New This Edition?

We thank our reviewers and focus group participants for their suggestions for the fifth edition. Many of these suggestions motivated the changes described below:

Chapter 1

• Removed coverage of cash flow from chapter and end-of-chapter materials. Limiting cash flow coverage to Chapter 14 allows more flexibility as to when this subject can be covered in the course.

• New Curious Accountant opening with new high-profile companies and products (Razor Scooters).

• Updated exercises, problems, and cases.

Chapter 2

• Added material relating to the coverage of mixed cost including formulas for computing total mixed cost and an exhibit containing examples of mixed costs.

• Added formulas for the determination of total cost in the coverage of the high-low, visual scattergraph, and regression methods of estimating fixed and variable cost. Added appropriate requirements to the end-of-chapter exercises and problems

• Added coverage of the R 2 statistic related to the use of the regression method of determining estimated fixed and variable cost. Added coverage of multiple regression. Added appropriate requirements to the end-of-chapter exercises and problems.

• Added a footnote to distinguish operating leverage from financial leverage.

• New Curious Accountant opening featuring new high-profile companies and products (Ruby Tuesday).

• Updated exercises, problems, and cases.

Chapter 3

• Moved the equation method to the front of the chapter. Introduced the contribution margin per unit method as a derivation of the equation method, thereby allowing an instructor the freedom to choose either as the predominate approach to CVP analysis.

• Moved multiple product CVP analysis from the appendix to the main body of the chapter.

• New Curious Accountant opening featuring new high-profile companies and products (Liz Claiborne, Inc.).

• New Focus on International Issues.

• New Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 4

• Added several opening paragraphs that included simple examples explaining why allocations are necessary.

• Added coverage of common cost and the controllability concept.

• Added coverage explaining the use of cost pools.

• Updated Curious Accountant.

• Updated Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 5

• Updated Curious Accountant.

• Updated focus on international issues.

• New Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 6

• New Curious Accountant featuring new high-profile companies and products (American Express).

• New Focus on International Issues.

• New Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 7

• Updated Curious Accountant.

• Updated exercises, problems, and cases.

Chapter 8

• The section of material covering the static versus flexible budgets has been rewritten to demonstrate the computational procedures used to calculate the budgets.

• Redesigned Exhibit 8.1 to facilitate understanding.

• The section of material covering the manufacturing overhead fixed cost variances has been rewritten to enhance clarity.

• Updated Curious Accountant.

• Updated exercises, problems, and cases.

Chapter 9

• New Curious Accountant featuring new high-profile companies and products (Berkshire Hathaway, Inc.).

• New Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 10

• Updated Curious Accountant.

• Updated Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 11

• Updated Reality Bytes.

• Updated exercises, problems, and cases.

Chapter 12

• Updated Curious Accountant.

• Updated exercises, problems, and cases.

Chapter 13

• New Curious Accountant featuring new high-profile companies and products (DaimlerChrysler).

• Updated exercises, problems, and cases.

Chapter 14

• This chapter has been totally rewritten. The new chapter covers both the indirect and direct methods of reporting cash flow from operating activities. The text and end-of-chapter materials are arranged to allow professors to cover either method independently. The approach does not require the use of debits and credits.

• New Curious Accountant featuring new high-profile companies and products (Vonage).

• New Focus on International Issues.

• New Reality Bytes.

• Updated exercises, problems, and cases.