What's New in the Third Edition?

Our primary goal in the third edition remains the same as in the previous two editions––to offer a cost accounting text that lets the student see the development of cost accounting tools and techniques as a natural response to decision making. We emphasize the intuition behind concepts and work to minimize the need to "memorize." We believe that students who develop this intuition will, first, develop an appreciation of what cost accounting is about and, second, will have an easier time understanding new developments that arise during their careers. Each chapter clearly establishes learning objectives, highlights numerous real-world examples, and identifies where ethical issues arise and how to think about these issues. Each chapter includes at least one integrative case that illustrates the links among the topics.

We present the material from both the perspective of the preparer of information as well as those who will use the information. We do this so that both accounting majors and those students planning other careers will appreciate the issues in preparing and using the information. The opening vignettes now tie to one of the In Action features in the chapter to highlight the relevance of cost accounting to today's business problems. As in the second edition, all chapters end with a Debrief that links the topics in the chapter to the decision problem faced by the manager in the opening vignette.

The end-of-chapter material has increased by over 10 percent, and more than 50 percent of the material retained from the second edition has been revised. Throughout the revision process, we have retained the clear writing style that was frequently cited as a strength of the text.

Chapter 1 Cost Accounting: Information for Decision Making

• Enhanced development of the role of the value chain in value creation.
• Updated In Action items, including discussion of ethical issues.
• New material on lean accounting.
• New end-of-chapter material on the role of cost accounting in decision making.

Chapter 2 Cost Concepts and Behavior

• New In Action item discussing how the economic climate affects the decision about where to locate manufacturing sites.
• Two new critical analysis assignments.
• Five new exercises and problems.

Chapter 3 Fundamentals of Cost-Volume-Profit Analysis

• New In Action item illustrating CVP analysis in a service industry (airlines).
• New Integrative Case.
• Eight new exercises and problems.

Chapter 4 Fundamentals of Cost Analysis for Decision Making

• New In Action item on decision making in a small business.
• New Integrative Cases (two total).
• Eight new questions, exercises, and problems in end-of-chapter material.

Chapter 5 Cost Estimation

• New In Action items involving text messaging and major league baseball.
• Revised discussion of using Microsoft Excel to estimate regression (updated for Office 2007).
• Revised questions, exercises, and problems in end-of-chapter material.

Chapter 6 Fundamentals of Product and Service Costing

• New Integrative Case.
• New and UPDATED questions, exercises, and problems in end-of-chapter practice material.

Chapter 7 Job Costing

• New In Action items on cost allocation and government contracts, including ethical implications.
• New Integrative Case.
• Eight new questions, exercises, and problems in end-of-chapter material.

Chapter 8 Process Costing

• New In Action feature on equivalent units and fraud.
• New Integrative Case.
• Revisions of most exercises and problems.

Chapter 9 Activity-Based Costing

• Revised cost diagrams to provide consistent formatting.
• New In Action item illustrating the cost hierarchy in a service (airline) example.
• New Integrative Case.

Chapter 10 Fundamentals of Cost Management

• New In Action item on cost of customers based on social networking sites.
• Six new exercises, problems, and cases in end-of-chapter material.

Chapter 11 Service Department and Joint Cost Allocation

• New learning objective and discussion on using the reciprocal method for decision making.
• New In Action feature on outsourcing information services.
• Three new problems on decision making and cost allocations.

Chapter 12 Fundamentals of Management Control Systems

• New In Action item on compensation at AIG and Goldman Sachs.
• New material motivating this overview chapter.
• Three New questions, exercises, and problems.

Chapter 13 Planning and Budgeting

• New In Action item illustrating using the budget to control cash flow.
• Five new questions, exercises, and problems.

Chapter 14 Business Unit Performance Management

• Six new questions, exercises, and problems.

Chapter 15 Transfer Pricing

• Moved discussion of "Perfect Intermediate Markets with Quality Differences" to appendix to improve flow of material.
• New In Action item based on Weyerhaeuser.
• Five new questions, exercises, and problems.

Chapter 16 Fundamentals of Variance Analysis

• Six new questions, exercises, and problems.

Chapter 17 Additional Topics in Variance Analysis

• New introductory paragraph to link the example from Chapter 16 more clearly.
• Six new questions, exercises, and problems.

Chapter 18 Nonfinancial and Multiple Measures of Performance

• New In Action feature on the profitability of loyal customers.
• New discussion of productivity and measuring productivity.
• Six new questions, exercises, and problems.

Appendix Capital Investment Decisions: An Overview

• Revised questions, exercises, and problems.