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Cover of Principles of Accounting, Volume 2: Managerial Accounting

Principles of Accounting, Volume 2: Managerial Accounting

by Mitchell Franklin, Patty Graybeal and Dixon Cooper

Published by OpenStax

BusinessCollege

Principles of Accounting is designed to meet the scope and sequence requirements of a two-semester accounting course that covers the fundamentals of financial and managerial accounting. Due to the comprehensive nature of the material, we are offering the book in two volumes. This book is specifically designed to appeal to both accounting and non-accounting majors, exposing students to the core concepts of accounting in familiar ways to build a strong foundation that can be applied across business fields. Each chapter opens with a relatable real-life scenario for today’s college student. Thoughtfully designed examples are presented throughout each chapter, allowing students to build on emerging accounting knowledge. Concepts are further reinforced through applicable connections to more detailed business processes. Students are immersed in the “why” as well as the “how” aspects of accounting in order to reinforce concepts and promote comprehension over rote memorization.

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Attribution

Adapted from Principles of Accounting, Volume 2: Managerial Accounting by Mitchell Franklin, Patty Graybeal, and Dixon Cooper, published by OpenStax (Rice University) under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Access the original for free at https://openstax.org/details/books/principles-managerial-accounting. Changes: converted to CuraCourse lessons, with interactive practice added.

Table of contents

94 pages in 15 modules. Sign up to read and adopt them.

  1. Preface1 page
    1. Preface
  2. 1Accounting as a Tool for Managers7 pages
    1. Why It Matters
    2. 1.1Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
    3. 1.2Distinguish between Financial and Managerial Accounting
    4. 1.3Explain the Primary Roles and Skills Required of Managerial Accountants
    5. 1.4Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
    6. 1.5Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
    7. Practice
  3. 2Building Blocks of Managerial Accounting5 pages
    1. Why It Matters
    2. 2.1Distinguish between Merchandising, Manufacturing, and Service Organizations
    3. 2.2Identify and Apply Basic Cost Behavior Patterns
    4. 2.3Estimate a Variable and Fixed Cost Equation and Predict Future Costs
    5. Practice
  4. 3Cost-Volume-Profit Analysis7 pages
    1. Why It Matters
    2. 3.1Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
    3. 3.2Calculate a Break-Even Point in Units and Dollars
    4. 3.3Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
    5. 3.4Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
    6. 3.5Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
    7. Practice
  5. 4Job Order Costing10 pages
    1. Why It Matters
    2. 4.1Distinguish between Job Order Costing and Process Costing
    3. 4.2Describe and Identify the Three Major Components of Product Costs under Job Order Costing
    4. 4.3Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
    5. 4.4Compute a Predetermined Overhead Rate and Apply Overhead to Production
    6. 4.5Compute the Cost of a Job Using Job Order Costing
    7. 4.6Determine and Dispose of Underapplied or Overapplied Overhead
    8. 4.7Prepare Journal Entries for a Job Order Cost System
    9. 4.8Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
    10. Practice
  6. 5Process Costing7 pages
    1. Why It Matters
    2. 5.1Compare and Contrast Job Order Costing and Process Costing
    3. 5.2Explain and Identify Conversion Costs
    4. 5.3Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
    5. 5.4Explain and Compute Equivalent Units and Total Cost of Production in a Subsequent Processing Stage
    6. 5.5Prepare Journal Entries for a Process Costing System
    7. Practice
  7. 6Activity-Based, Variable, and Absorption Costing7 pages
    1. Why It Matters
    2. 6.1Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
    3. 6.2Describe and Identify Cost Drivers
    4. 6.3Calculate Activity-Based Product Costs
    5. 6.4Compare and Contrast Traditional and Activity-Based Costing Systems
    6. 6.5Compare and Contrast Variable and Absorption Costing
    7. Practice
  8. 7Budgeting7 pages
    1. Why It Matters
    2. 7.1Describe How and Why Managers Use Budgets
    3. 7.2Prepare Operating Budgets
    4. 7.3Prepare Financial Budgets
    5. 7.4Prepare Flexible Budgets
    6. 7.5Explain How Budgets Are Used to Evaluate Goals
    7. Practice
  9. 8Standard Costs and Variances7 pages
    1. Why It Matters
    2. 8.1Explain How and Why a Standard Cost Is Developed
    3. 8.2Compute and Evaluate Materials Variances
    4. 8.3Compute and Evaluate Labor Variances
    5. 8.4Compute and Evaluate Overhead Variances
    6. 8.5Describe How Companies Use Variance Analysis
    7. Practice
  10. 9Responsibility Accounting and Decentralization6 pages
    1. Why It Matters
    2. 9.1Differentiate between Centralized and Decentralized Management
    3. 9.2Describe How Decision-Making Differs between Centralized and Decentralized Environments
    4. 9.3Describe the Types of Responsibility Centers
    5. 9.4Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
    6. Practice
  11. 10Short-Term Decision Making8 pages
    1. Why It Matters
    2. 10.1Identify Relevant Information for Decision-Making
    3. 10.2Evaluate and Determine Whether to Accept or Reject a Special Order
    4. 10.3Evaluate and Determine Whether to Make or Buy a Component
    5. 10.4Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
    6. 10.5Evaluate and Determine Whether to Sell or Process Further
    7. 10.6Evaluate and Determine How to Make Decisions When Resources Are Constrained
    8. Practice
  12. 11Capital Budgeting Decisions7 pages
    1. Why It Matters
    2. 11.1Describe Capital Investment Decisions and How They Are Applied
    3. 11.2Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
    4. 11.3Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
    5. 11.4Use Discounted Cash Flow Models to Make Capital Investment Decisions
    6. 11.5Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions
    7. Practice
  13. 12Balanced Scorecard and Other Performance Measures6 pages
    1. Why It Matters
    2. 12.1Explain the Importance of Performance Measurement
    3. 12.2Identify the Characteristics of an Effective Performance Measure
    4. 12.3Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
    5. 12.4Describe the Balanced Scorecard and Explain How It Is Used
    6. Practice
  14. 13Sustainability Reporting6 pages
    1. Why It Matters
    2. 13.1Describe Sustainability and the Way It Creates Business Value
    3. 13.2Identify User Needs for Information
    4. 13.3Discuss Examples of Major Sustainability Initiatives
    5. 13.4Future Issues in Sustainability
    6. Practice
  15. Appendices3 pages
    1. AFinancial Statement Analysis
    2. BTime Value of Money
    3. CSuggested Resources