Accounting for Managers: Interpreting accounting information for decision-making

C Covaleski, Dirsmith and Samuel (1996). Managerial accounting

• of Accounting........................................ 3 Recording Financial Transactions and the Limitations


• Business events, transactions and the accounting system


• The double entry: recording transactions


• Extracting financial information from the accounting system


• Principles and limitations of accounting.......................


• Cost terms and concepts..................................


• Conclusion


• References............................................


• Rational-Economic Assumptions 4 Management Control, Management Accounting and its


• Management control systems


• Management planning and control systems and management accounting


• Non-financial performance measurement......................


• Strategic management accounting...........................


• A theoretical framework for management accounting


• Conclusion...........................................


• References............................................


• Decision-Making...................................... 5 Interpretive and Critical Perspectives on Accounting and


• Alternative paradigms...................................


• The interpretive paradigm and the social construction perspective


• Culture, control and accounting.............................


• The radical paradigm and critical accounting


• Power and accounting


• Conclusion...........................................


• References............................................


• of Accounting........................................ 6 Constructing Financial Statements and the Framework


• Financial accounting


• Reporting profitability


• Reporting financial position


• Accruals accounting.....................................


• Depreciation..........................................


• Reporting cash flow.....................................


• Working capital........................................


• Managing debtors......................................


• Managing stock........................................


• Managing creditors


• A theoretical perspective on financial statements................. CONTENTS ix


• Agency theory.........................................


• Conclusion


• References............................................


• and Control............................................ Using Accounting Information for Decision-Making, Planning


• Perspectives 7 Interpreting Financial Statements and Alternative Theoretical


• Interpreting financial statements............................


• Ratio analysis


• Profitability...........................................


• Liquidity.............................................


• Gearing..............................................


• Activity/efficiency......................................


• Shareholder return......................................


• Interpreting financial information using ratios


• Case study: Ottakar’s – interpreting financial statements


• Alternative theoretical perspectives on financial statements.........


• Social and environmental reporting..........................


• Intellectual capital......................................


• Institutional theory


• Case study: Carrington Printers – an accounting critique...........


• Creative accounting and ethics


• Conclusion


• References............................................


• 8 Marketing Decisions....................................


• Marketing strategy......................................


• Cost behaviour


• Cost – volume – profit analysis


• Alternative approaches to pricing


• Cost-plus pricing.......................................


• Target rate of return pricing


• Optimum selling price...................................


• Special pricing decisions..................................


• Transfer pricing........................................


• Segmental profitability...................................


• Case study: Retail Stores PLC – the loss-making division...........


• Case study: SuperTech – using accounting information to win sales


• Conclusion x ACCOUNTING FOR MANAGERS


• References............................................


• 9 Operating Decisions....................................


• The operations function


• Managing operations – manufacturing........................


• Managing operations – services.............................


• Accounting for the cost of spare capacity


• Capacity utilization and product mix.........................


• Theory of Constraints....................................


• Operating decisions: relevant costs


• Make versus buy?


• Equipment replacement..................................


• Relevant cost of materials.................................


• Other costing approaches.................................


• Total quality management


• Cost of quality.........................................


• utilization Case study: Quality Printing Company – pricing for capacity


• on costs and prices..................................... Case study: Vehicle Parts Co. – the effect of equipment replacement


• Conclusion...........................................


• References............................................


• 10 Human Resource Decisions...............................


• The cost of labour


• Relevant cost of labour...................................


• Business processes and activity-based costs


• unused capacity....................................... Case study: The Database Management Company – labour costs and


• Case study: Trojan Sales – the cost of losing a customer............


• Conclusion


• References............................................


• 11 Accounting Decisions...................................


• Cost classification


• Calculating product/service costs...........................


• Shifts in management accounting thinking.....................


• Alternative methods of overhead allocation


• Contingency theory.....................................


• International comparisons.................................


• Management accounting in Japan


• Behavioural implications of management accounting..............


• Case study: Quality Bank – the overhead allocation problem CONTENTS xi


• Conclusion


• References............................................


• 12 Strategic Investment Decisions


• Strategy


• Investment appraisal


• Accounting rate of return.................................


• Payback


• Case study: Goliath Co. – investment evaluation.................


• Conclusion: a critical perspective............................


• References............................................


• Appendix: Present value factors


• 13 Performance Evaluation of Business Units


• measurement......................................... The decentralized organization and divisional performance


• Return on investment....................................


• Residual income


• Controllability.........................................


• Case study: Majestic Services – divisional performance measurement


• Transfer pricing........................................


• Transaction cost economics................................


• Conclusion: a critical perspective............................


• References............................................


• 14 Budgeting............................................


• What is budgeting?


• The budgeting process...................................


• Retail budget example: Sports Stores Co-operative Ltd.............


• Manufacturing budget example: Telcon Manufacturing............


• Cash forecasting


• Cash forecasting example: Retail News Group


• Theoretical perspectives on budgeting........................


• Case study: Svenska Handelsbanken – is budgeting necessary?


• Conclusion


• References............................................


• 15 Budgetary Control......................................


• What is budgetary control?................................


• Flexible budgeting......................................


• Variance analysis.......................................


• Variance analysis example: Wood’s Furniture Co................. xii ACCOUNTING FOR MANAGERS


• Reconciling the variances.................................


• Criticism of variance analysis


• Cost control...........................................


• Conclusion


• References............................................


• Supporting Information................................. PART III


• Reading 16 Research in Management Accounting, Conclusions and Further


• Research and theory in management accounting.................


• Conclusion: revisiting the rationale..........................


• References............................................


• Further reading........................................


• 17 Introduction to the Readings..............................


• costs............................................ A Cooper and Kaplan (1988). How cost accounting distorts product


• control: An overview of its development................... B Otley, Broadbent and Berry (1995). Research in management


• theories.......................................... research: The contributions of organizational and sociological


• of the emergence of a new organizational reality D Dent (1991). Accounting and organizational cultures: A field study


• Glossary of Accounting Terms................................


• Appendices: Questions and Case Studies


• Appendix 1: Questions...................................


• Appendix 2: Solutions to Questions..........................


• Appendix 3: Case Studies.................................


• Appendix 4: Solutions to Case Studies........................


• Author Index.............................................


• Subject Index