To download more slides, ebook, solutions and test bank, visit

Apple iPod® Content
Our innovative approach allows you to download audio and video presentations directly onto
your iPod and take learning materials with you wherever you go. Whether it’s in the car, on the
train, or waiting between classes—it’s easy to get a quick refresher on key course content. Now
review and study time is as easy as putting in headphones! Visit the Wild Online Learning
Center at www.mhhe.com/wildMA2e to learn more about available iPod content.

CourseSmart

accounting

McGraw-Hill Connect™
Accounting

Visit the Online Learning Center at www.mhhe.com/wildMA2e to purchase access to
McGraw-Hill Connect Plus Accounting.

2010 EDITION

Managerial Accounting
John J. Wild
Ken W. Shaw

2010
EDITION

Has your instructor chosen
to use McGraw-Hill Connect in your Accounting class? If so,
you have the option of purchasing Connect Plus Accounting

which includes an Interactive Online Version of the Textbook
at 55% of the cost of the printed text. Connect Plus software gives you 24/7 direct access to an online edition of the
text while you work assignments within the Connect system
at your own pace and on your own schedule. Simply click
the “eBook Hint” links to jump directly to relevant content
in the online edition of the text.

iPod Content Available

MD DALIM #994494 11/18/08 CYAN MAG YELO BLK

CourseSmart is a new way to
find and buy eTextbooks. At
CourseSmart you can save up to 50% of the cost of your print
textbook, reduce your impact on the environment, and gain
access to powerful web tools for learning. You can search,
highlight, take notes and share with friends, as well as print
the pages you need. Try a free chapter to see if it’s right for
you. Visit www.CourseSmart.com and search by title, author,
or ISBN.

Managerial Accounting

For the Price-Conscious Student on the Go… Looking for easy,
interactive, and eco-friendly ways to study? We have the answers:

Media Integrated
®

Wild

Shaw

ISBN 978-0-07-337958-6
MHID 0-07-337958-1

90000

9 780073 379586
www.mhhe.com

www.mhhe.com/wildMA2e


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Managerial
Accounting
2010 Edition

John J. Wild
University of Wisconsin at Madison

Ken W. Shaw
University of Missouri at Columbia

Boston Burr Ridge, IL Dubuque, IA New York
San Francisco St. Louis Bangkok Bogotá Caracas Kuala Lumpur
Lisbon London Madrid Mexico City Milan Montreal New Delhi

Santiago Seoul Singapore Sydney Taipei Toronto


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To my wife Gail and children, Kimberly, Jonathan, Stephanie, and Trevor.
To my wife Linda and children, Erin, Emily, and Jacob.

MANAGERIAL ACCOUNTING: 2010 EDITION
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas,
New York, NY, 10020. Copyright © 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this
publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system,
without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or
other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 DOW/DOW 0 9
ISBN
MHID

978-0-07-337958-6
0-07-337958-1

Vice president and editor-in-chief: Brent Gordon
Editorial director: Stewart Mattson
Publisher: Tim Vertovec
Executive editor: Steve Schuetz
Senior developmental editor: Christina A. Sanders

Executive marketing manager: Sankha Basu
Managing editor: Lori Koetters
Full service project manager: Sharon Monday, Aptara®, Inc.
Lead production supervisor: Carol A. Bielski
Lead designer: Matthew Baldwin
Senior photo research coordinator: Lori Kramer
Photo researcher: Sarah Evertson
Senior media project manager: Jennifer Lohn
Cover and interior design: Matthew Baldwin
Cover image: © Getty Images
Typeface: 10.5/12 Times Roman
Compositor: Aptara®, Inc.
Printer: R. R. Donnelley
Library of Congress Cataloging-in-Publication Data
Wild, John J.
Managerial accounting / John J. Wild, Ken W. Shaw.—2010 ed.
p. cm.
Includes index.
ISBN-13: 978-0-07-337958-6 (alk. paper)
ISBN-10: 0-07-337958-1 (alk. paper)
1. Managerial accounting. I. Shaw, Ken W. II. Title.
HF5657.4.W523 2010
658.15Ј11—dc22
2008047781
www.mhhe.com


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iii

Dear Colleagues/Friends,
As we roll out the new edition of Managerial Accounting, we thank each of you who provided suggestions to enrich this textbook. As teachers, we know how important it is to select
the right book for our course.This new edition reflects the advice and wisdom of many dedicated reviewers, focus group participants, students, and instructors. Our book consistently rates number one in customer loyalty because of you.Together, we have created the most
readable, concise, current, and accurate managerial accounting book available today.
We are thrilled to welcome Ken Shaw to the Managerial Accounting team with this edition.
Ken's teaching and work experience, along with his enthusiasm and dedication to students,
fit nicely with our continuing commitment to develop cutting–edge classroom materials for
instructors and students.
Throughout the writing process, we steered this book in the manner you directed.This path
of development enhanced this book's technology and content, and guided its clear and concise writing.
Reviewers, instructors, and students say this book's enhanced technology caters to different
learning styles and helps students better understand accounting. McGraw-Hill Connect
Accounting offers new features to improve student learning and to assist instructor grading.
Our iPod content lets students study on the go, while our Algorithmic Test Bank provides an
infinite variety of exam problems. You and your students will find all these tools easy to
apply.
We owe the success of this book to our colleagues who graciously took time to help us
focus on the changing needs of today's instructors and students.We feel fortunate to have
witnessed our profession's extraordinary devotion to teaching. Your feedback and suggestions are reflected in everything we write. Please accept our heartfelt thanks for your dedication in helping today's students understand and appreciate accounting.
With kindest regards,

John J. Wild

Ken W. Shaw


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iv

Driving Student and
Instructor Success
Managerial Accounting 2e
Help your students steer towards success by giving them the tools they
need to accelerate in today’s managerial accounting course.
This book helps drive student success by providing leading accounting content that engages students–with innovative technology.
One of the greatest challenges students confront in a managerial accounting
course is seeing the relevance of materials.This book tackles this issue head
on with engaging content and a motivating style. Students are motivated
with reading materials that are clear and relevant.This book leads the pack
in engaging students. Its chapter-opening vignettes showcase dynamic, successful, entrepreneurial individuals and companies guaranteed to interest and
excite readers.This edition’s featured companies (Best Buy, Circuit City,
RadioShack, and Apple) engage students with their operations which are great
vehicles for learning managerial accounting.
This book also delivers innovative technology to help drive student success.
McGraw-Hill Connect Accounting provides students with instant grading
feedback for assignments that are completed online. Connect Plus integrates
an online version of the textbook with our Connect homework management
system. An algorithmic test bank in Connect offers infinite variations of
numerical test bank questions.This book also offers accounting students
portable iPod-ready content.
We're confident you'll agree that Wild and Shaw’s Managerial Accounting
(MA) will put your students in the driver’s seat to success.



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v

John J. Wild is a distinguished professor of accounting at the University of Wisconsin at Madison. He previously held
appointments at Michigan State University and the University of Manchester in England. He received his BBA, MS, and
PhD from the University of Wisconsin.
Professor Wild teaches accounting courses at both the undergraduate and graduate levels. He has received numerous
teaching honors, including the Mabel W. Chipman Excellence-in-Teaching Award, the departmental Excellence-in-Teaching
Award, and the Teaching Excellence Award from the 2003 and 2005 business graduates at the University of Wisconsin. He
also received the Beta Alpha Psi and Roland F. Salmonson Excellence-in-Teaching Award from Michigan State University.
Professor Wild has received several research honors and is a past KPMG Peat Marwick National Fellow and is a recipient
of fellowships from the American Accounting Association and the Ernst and Young Foundation.
Professor Wild is an active member of the American Accounting Association and its sections. He has served on several
committees of these organizations, including the Outstanding Accounting Educator Award,Wildman Award, National
Program Advisory, Publications, and Research Committees. Professor Wild is author of Financial Accounting, Fundamental
Accounting Principles, Financial and Managerial Accounting, and College Accounting, each published by McGraw-Hill/Irwin. His
research articles on accounting and analysis appear in The Accounting Review, Journal of Accounting Research, Journal of
Accounting and Economics, Contemporary Accounting Research, Journal of Accounting, Auditing and Finance, Journal of
Accounting and Public Policy, and other journals. He is past associate editor of Contemporary Accounting Research and
has served on several editorial boards including The Accounting Review.
Professor Wild, his wife, and four children enjoy travel, music, sports, and community activities.

Ken W. Shaw is an associate professor of accounting and the CBIZ/MHM Scholar at the University of Missouri. He
previously was on the faculty at the University of Maryland at College Park. He received an accounting degree from
Bradley University and an MBA and PhD from the University of Wisconsin. He is a Certified Public Accountant with
work experience in public accounting.
Professor Shaw teaches financial accounting at the undergraduate and graduate levels. He received the Williams Keepers

LLC Teaching Excellence award in 2007, was voted the “Most Influential Professor” by the 2005 and 2006 School of
Accountancy graduating classes, and is a two-time recipient of the O'Brien Excellence in Teaching Award. He is the advisor to his School's chapter of Beta Alpha Psi, a national accounting fraternity.
Professor Shaw is an active member of the American Accounting Association and its sections. He has served on many
committees of these organizations and presented his research papers at national and regional meetings. Professor Shaw's
research appears in the Journal of Accounting Research; Contemporary Accounting Research; Journal of Financial and
Quantitative Analysis; Journal of the American Taxation Association; Journal of Accounting, Auditing, and Finance; Journal of
Financial Research; Research in Accounting Regulation; and other journals. He has served on the editorial boards of Issues
in Accounting Education and the Journal of Business Research, and is treasurer of the American Accounting Association’s
FARS. Professor Shaw is co-author of Fundamental Accounting Principles and College Accounting, both published by
McGraw-Hill.
In his leisure time, Professor Shaw enjoys tennis, cycling, music, and coaching his children's sports teams.


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vi

Engaging Content
Managerial Accounting content continues to set the standard.This book describes key managerial accounting concepts clearly and concisely. For example, Chapter 1 sets the stage for student success by explaining
cost classifications and the reporting of production activities. Also, take a look at Chapter 3, which presents a clear 4-step method for process costing involving analysis of (1) physical flow, (2) equivalent units,
(3) cost per equivalent unit, and (4) cost assignment and reconciliation. And finally, overhead variances are
shown in Chapter 8 with ample visual aids–see samples below. Managerial Accounting also motivates students with engaging chapter openers. Students identify with them and can even picture themselves as
future entrepreneurs.
Cost Item

By Behavior

By Traceability


By Function

Bicycle tires . . . . . . . . . . . . . . . . . . .

Variable

Direct

Product

Wages of assembly worker*
Advertising . . . . . . . . . . . .
Production manager’s salary
Office depreciation . . . . . .

Variable
Fixed
Fixed
Fixed

Direct
Indirect
Indirect
Indirect

Product
Period
Product
Period


.
..
..
..

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.


.
.
.
.

Step 1: Determine the Physical Flow of Units

A physical flow reconciliation is a report that reconciles (1) the physical units started in a period with (2) the physical units completed in that period. A physical flow reconciliation for
GenX is shown in Exhibit 3.12 for April.
Units to Account For

Units Accounted For

Beginning goods in
process inventory . . . . . . .
Units started this period . . . .
Total units to account for . . .

Units completed and
transferred out . . . . . . . . . . . . . . .
Ending goods in process inventory . . .
Total units accounted for . . . . . . . . . .

30,000 units
90,000 units
120,000 units

100,000 units
20,000 units

120,000 units

Variable Overhead Variance*
reconciled

Actual Overhead
AH ϫ AVR

Applied Overhead
SH ϫ SVR

AH ϫ SVR

Spending Variance
(AH ϫ AVR) Ϫ (AH ϫ SVR)

Efficiency Variance
(AH ϫ SVR) Ϫ (SH ϫ SVR)

Variable Overhead Variance
* AH actual direct labor hours; AVR
overhead rate.

State-of-the-Art Technology

actual variable overhead rate; SH

standard direct labor hours; SVR

standard variable


accounting

Managerial Accounting offers the most advanced and comprehensive technology on the market in a seamless, easy-to-use platform. As students learn in different ways, Managerial Accounting provides a technology
smorgasbord that helps students learn more effectively and efficiently. Connect Accounting, eBook
options, and iPod content are some of the options. Connect Plus Accounting takes learning to another
level by integrating an online version of the book with all the power of Connect Accounting.Technology
offerings follow:
•
•
•

Connect Accounting
Connect Plus Accounting
iPod content

•
•
•

Algorithmic Test Bank
Online Learning Center
ALEKS for the Accounting Cycle


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vii


accounting

accounting

What Can McGraw-Hill Technology Offer You?
Whether you are just getting started with technology in your course, or you are ready to embrace the latest
advances in electronic content delivery and course management, McGraw-Hill/Irwin has the technology you need,
and provides training and support that will help you every step of the way.
Our most popular technologies, Connect Accounting and Connect Plus Accounting, are optional online homework
management systems that allow you to assign problems and exercises from the text for your students to work out
in an online format. Student results are automatically graded, and the students receive instant feedback on their work.
Connect Plus adds an online version of the book.
Students can also use the Online Learning Center with this book to enhance their knowledge. Plus we offer iPod
content for students who want to study on the go.
For instructors, we provide all of the crucial instructor supplements on one easy to use Instructor CD-ROM; we can
help build a custom class Website for your course using PageOut; we can deliver an online course cartridge for you
to use in Blackboard,WebCT, or eCollege; and we have a technical support team that will provide training and support for our key technology products.

How Can Students Study on the Go Using Their iPod?
iPod Content
Harness the power of one of the most popular technology tools
students use today–the Apple iPod. Our innovative approach
allows students to download audio and video presentations right
into their iPod and take learning materials with them wherever
they go. Students just need to visit the Online Learning Center
at www.mhhe.com/wildMA2e to download our iPod content. For each chapter of the book they will be able to download
audio narrated lecture presentations and videos for use on various versions of iPods. iPod Touch users can even access selfquizzes.
It makes review and study time as easy as putting in headphones.



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viii

How does Technology drive

How Can My Students Use the Web to Complete Their Homework?

accounting

McGraw-Hill Connect Accounting is a web-based assignment and assessment platform that gives students
the means to better connect with their coursework, with their instructors, and with the important concepts that they will need to know for success now and in the future.
With Connect Accounting instructors can deliver
assignments, quizzes, and tests online. Nearly all
the questions from the book are presented in an
auto-gradable format and tied to the book's
learning objectives. Instructors can edit existing
questions and author entirely new problems.
Track individual student performance—by question, assignment, or in relation to the class overall—with detailed grade reports. Integrate grade
reports easily with Learning Management
Systems (LMS) such as WebCT and Blackboard.

By choosing Connect Accounting instructors are providing their students with a powerful tool for improving
academic performance and truly mastering course material. Connect Accounting allows students to practice
important skills at their own pace and on their own schedule. Importantly, students' assessment results and
instructors' feedback are all saved online—so students can continually review their progress and plot their
course to success.



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your students to succeed?

ix

accounting

Some instructors may also choose Connect Plus Accounting for their students. Like Connect Accounting,
Connect Plus Accounting provides students with online assignments and assessments, plus 24/7 online access
to an eBook—an online edition of the text—to aid them in successfully completing their work, wherever
and whenever they choose.
By simply clicking on the
eBook button while in
Connect, Connect Plus
users will be linked directly
to the relevant textbook
materials without additional
login requirements.This feature makes it quick and convenient to study and complete assignments online.


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x

Use EZ Test Online with Apple iPod® iQuiz to help students succeed.
Using our EZ Test Online you can make test and quiz content
available for a student's Apple iPod®.
Students must purchase the iQuiz game application from Apple
for 99¢ to use the iQuiz content. It works on the iPod fifth
generation iPods and better.
Instructors only need EZ Test Online to produce iQuiz-ready
content. Instructors take their existing tests and quizzes and
export them to a file that can then be made available to the
student to take as a self-quiz on their iPods. It's as simple as
that.

How Can Book-Related Web Resources Enhance My Course?
Online Learning Center (OLC)
We offer an Online Learning Center (OLC) that follows Managerial Accounting chapter by chapter.
It doesn’t require any building or maintenance on your part. It’s ready to go the moment you and your students
type in the URL: www.mhhe.com/wildMA2e.
As students study and learn from Managerial Accounting, they can visit the Student Edition of the OLC Website to
work with a multitude of helpful tools:
•
•
•
•

Chapter Learning Objectives
Interactive Chapter Quizzes
PowerPoint® Presentations
Narrated PowerPoint® Presentations

• Video Library

• Excel Template Assignments
• iPod Content

A secured Instructor Edition stores essential course materials to save you prep time before class. Everything you
need to run a lively classroom and an efficient course is included. All resources available to students, plus . . .
• Instructor’s Manual
• Solutions Manual

• Solutions to Excel Template Assignments
• Test Bank and Solutions

The OLC Website also serves as a doorway to other technology solutions, like course management systems.

Rick Barnhart, Grand Rapids Community College

“My overall impression (of the Website) is very favorable.... It is very user friendly
and easy to navigate. The addition of the iPod content is great, because so many
students have an MP3 player.”


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xi

Save money. Go green. McGraw-Hill eBooks.
Green…it's on everybody's mind these days. It's not only about saving trees, it's also about saving
money. At 55% of the bookstore price, McGraw-Hill eBooks are an eco-friendly and cost-saving
alternative to the traditional printed textbook. So, do some good for the environment…and do

some good for your wallet.

CourseSmart
CourseSmart is a new way to find and buy eTextbooks. CourseSmart has the
largest selection of eTextbooks available anywhere, offering thousands of the most
commonly adopted textbooks from a wide variety of higher education publishers.
CourseSmart eTextbooks are available in one standard online reader with full text search, notes, and
highlighting, and email tools for sharing between classmates.Visit www.CourseSmart.com for more
information on ordering.
McGraw-Hill Connect Plus
If you use Connect in your course, your
accounting
students can purchase McGraw-Hill
Connect Plus for MA 2e. Connect Plus Accounting gives students
direct access to an online edition of the book while working assignments within Connect Accounting. If you get stuck working a problem,
simply click the “Hint” link and jump directly to relevant content in the
online edition of the book.
Visit the Online Learning Center at www.mhhe.com/wildMA2e
to purchase McGraw-Hill’s Connect Plus.

McGraw-Hill CARES
At McGraw-Hill, we understand that getting the most from new technology can be challenging.That’s
why our services don’t stop after you purchase our book. You can e-mail our Product Specialists 24
hours a day, get product training online, or search our knowledge bank of Frequently Asked Questions
on our support Website.
McGraw-Hill Customer Care Contact Information
For all Customer Support call (800) 331-5094
Email
Or visit www.mhhe.com/support
One of our Technical Support Analysts will assist you in a timely fashion.



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xii

How can Technology give Instructors

How Can McGraw-Hill Help Me Teach My Course Online?

ALEKS® for the Accounting Cycle and ALEKS®
for Financial Accounting
Available from McGraw-Hill over the World Wide
Web, ALEKS (Assessment and LEarning in Knowledge Spaces) provides precise assessment and individualized instruction in the fundamental skills your
students need to succeed in accounting.
ALEKS motivates your students because ALEKS
can tell what a student knows, doesn’t know, and
is most ready to learn next. ALEKS does this using the ALEKS Assessment and Knowledge Space Theory
as an artificial intelligence engine to exactly identify a student’s knowledge of accounting. When students
focus on precisely what they are ready to learn, they build the confidence and learning momentum that
fuel success.
To learn more about adding ALEKS to your
principles course, visit www.business.aleks.com.

How Can I Make My Classroom
Discussions More Interactive?

Janice Stoudemire, Midlands Technical College


“The supplemental material that this accounting
text provides is impressive: Homework Manager,
the extensive online learning center, general ledger
application software, as well as ALEKS.”

CPS Classroom Performance System
This is a revolutionary system that brings ultimate interactivity to the classroom. CPS is a wireless response
system that gives you immediate feedback from every student in the class. CPS units include easy-to-use
software for creating and delivering questions and assessments to your class. With
CPS you can ask subjective and objective questions. Then every student simply
responds with their individual, wireless response pad, providing instant results. CPS is
the perfect tool for engaging students while gathering important assessment data.

Liz Ott, Casper College

“I originally adopted the book because of the tools that
accompanied it: Homework Manager, ALEKS, CPS.”


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the tools they need to succeed?

xiii

Online Course Management
No matter what online course management system you use (WebCT, BlackBoard, or eCollege), we have a

course content ePack available for Managerial Accounting 2e. Our new ePacks are specifically designed to
make it easy for students to navigate and access content online.They are easier than ever to install on the
latest version of the course management system.
Don’t forget that you can count on the highest level of service from McGraw-Hill. Our online course management specialists are ready to assist you with your online course needs. They provide training and will
answer any questions you have throughout the life of your adoption. So try our new ePack for Managerial
Accounting 2e and make online course content delivery easy and fun.

TM

PageOut: McGraw-Hill’s Course Management
System
PageOut is the easiest way to create a Website for your
course. There is no need for HTML coding, graphic
design, or a thick how-to book. Just fill in a series of
boxes with simple English and click on one of our professional designs. In no time, your course is online with
a Website that contains your syllabus!
Should you need assistance in preparing your Website,
we can help. Our team of product specialists is ready to
take your course materials and build a custom Website
to your specifications. You simply need to call a
McGraw-Hill PageOut specialist to start the process. To learn more, please visit www.pageout.net and see
“PageOut & Service” below.
Best of all, PageOut is free when you adopt Managerial Accounting!
PageOut Service
Our team of product specialists is happy to help you design your own course Website. Call 1-800-634-3963,
press 0, and ask to speak with a PageOut specialist.You will be asked to send in your course materials and
then participate in a brief telephone consultation. Once we have your information, we build your Website for
you.



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xiv

What tools drive student engagement

Decision Center
Whether we prepare, analyze, or apply accounting information, one skill remains essential: decision-making.
To help develop good decision-making habits and to illustrate the relevance of accounting, MA 2e uses a
unique pedagogical framework called the Decision Center. This framework is comprised of a variety of
approaches and subject areas, giving students insight into every aspect of managerial decision-making.
Answers to Decision Maker and Ethics boxes are at the end of each chapter.
Decision Insight
D

Decision Analysis

Eco-CVP Ford Escape,Toyota Prius, and Honda Insight are hybrids.
Many promise to save owners $1,000 or more a year in fuel costs
relative to comparables, and they generate fewer greenhouse gases. Are
these models economically feasible? Analysts estimate that Ford can
break even with its Escape when a $3,000 premium is paid over
comparable gas-based models.

A3

Analyze changes in
sales using the degree

of operating leverage.

CVP analysis is especially useful when management begins
outcomes of alternative strategies. These strategies can involv
able costs, sales volume, and product mix. Managers are in
some or all of these factors.
One goal of all managers is to get maximum benefits fro
use 100% of their output capacity so that fixed costs are sp

Decision Ethics

Decision Maker

Supervisor Your team is conducting a cost-volume-profit analysis for a new product. Different sales
projections have different incomes. One member suggests picking numbers yielding favorable income
because any estimate is “as good as any other.” Another member points to a scatter diagram of 20 months’
production on a comparable product and suggests dropping unfavorable data points for cost estimation.
What do you do? [Answer—p. 187]

Sales Manager You are evaluating orders from two customers but can accept only one of the orders
because of your company’s limited capacity.The first order is for 100 units of a product with a contribution
margin ratio of 60% and a selling price of $1,000.The second order is for 500 units of a product with a
contribution margin ratio of 20% and a selling price of $800.The incremental fixed costs are the same for
both orders.Which order do you accept? [Answer—p. 187]

“This text has the best introductions of any text that I have reviewed or used. Some texts simply
summarize the chapter, which is boring to students. Research indicates that material needs to be
written in an ‘engaging manner.’ That's what these vignettes do––they get the students interested.”
Clarice McCoy, Brookhaven College


CAP Model
The Conceptual/Analytical/Procedural
(CAP) Model allows courses to be
specially designed to meet your
teaching needs or those of a diverse
faculty. This model identifies learning
objectives, textual materials, assignments, and test items by C, A, or P,
allowing different instructors to
teach from the same materials,
yet easily customize their courses
toward a conceptual, analytical, or
procedural approach (or a combination thereof) based on personal
preferences.

Learning Objectives

CAP
Conceptual

Analytical

Procedural

different types of cost
C1 Describe
behavior in relation to production

the scatter diagram, highA1 Compare
low, and regression methods of


cost estimates using
P1 Determine
three different methods. (p. 171)
the break-even point for a
P2 Compute
single product company. (p. 175)
costs and sales for a single
P3 Graph
product company. (p. 176)
the break-even point for a
P4 Compute
multiproduct company. (p. 181)

and sales volume. (p. 168)
assumptions in cost-volumeC2 Identify
profit analysis and explain their
impact. (p. 177)

C3

Describe several applications of costvolume-profit analysis. (p. 179)

estimating costs. (p. 173)
the contribution margin and
A2 Compute
describe what it reveals about a
company’s cost structure. (p. 174)
changes in sales using the
A3 Analyze
degree of operating leverage. (p. 184)


LP5


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xv

and bring Accounting to life?
Chapter Preview
with Flow Chart
This feature provides a handy
textual/visual guide at the start of
every chapter. Students can now
begin their reading with a clear
understanding of what they will
learn and when, allowing them to
stay more focused and organized
along the way.

Quick Check
These short question/answer
features reinforce the material
immediately preceding them. They
allow the reader to pause and
reflect on the topics described, then
receive immediate feedback before
going on to new topics. Answers are

provided at the end of each chapter.

Marginal Student
Annotations
These annotations provide
students with additional hints, tips,
and examples to help them more
fully understand the concepts and
retain what they have learned. The
annotations also include notes on
global implications of accounting and
further examples.

This chapter describes different types of costs and shows how
changes in a company’s operating volume affect these costs.
The chapter also analyzes a company’s costs and sales to
explain how different operating strategies affect profit or loss.

Managers use this type of analysis to forecast what will happen
if changes are made to costs, sales volume, selling prices, or
product mix. They then use these forecasts to select the best
business strategy for the company.

Cost Behavior and Cost-Volume-Profit Analysis

Identifying Cost
Behavior

•
•

•
•
•

Fixed costs
Variable costs
Mixed costs
Step-wise costs
Curvilinear costs

Measuring Cost
Behavior

•
•
•
•

Scatter diagrams
High-low method
Least-squares regression
Comparison of cost
estimation methods

Using Break-Even
Analysis

• Computing contribution

Applying Cost-VolumeProfit Analysis


• Computing income from sales

margin

• Computing break-even
• Preparing a cost-volumeprofit chart

• Making assumptions in
cost-volume-profit
analysis

•
•
•
•

and costs
Computing sales for target income
Computing margin of safety
Using sensitivity analysis
Computing multiproduct
break-even

Quick Check

Answers—p. 188

4. Which of the following methods is likely to yield the most precise estimated line of cost
behavior? (a) High-low, (b) least-squares regression, or (c) scatter diagram.

5. What is the primary weakness of the high-low method?
6. Using conventional CVP analysis, a mixed cost should be (a) disregarded, (b) treated as a fixed
cost, or (c) separated into fixed and variable components.

, or $80,000 of monthly sales.
units), we prepare a simpli0 revenue from sales of 800

Point: Even if a company operates at
a level in excess of its break-even point,
management may decide to stop operating because it is not earning a reasonable return on investment.


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xvi

How are chapter concepts

Once a student has finished reading the chapter, how well he or she retains the material can depend greatly on the
questions, exercises, and problems that reinforce it.This book leads the way in comprehensive, accurate assignments.
to the beginning balances.

Demonstration Problems

Solution to Demonstration Problem

Demonstration Problem


present
both a problem and a complete solution, allowing students
to review the entire problem-solving process and achieve
success.

1. Sales budget

Wild Wood Company’s management asks you to prepare its master budget us
mation. The budget is to cover the months of April, May, and June of 2009.

Chapter Summaries provide students with a

Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 50,000

Liabilities and Equity
Accounts payable . . . . .

Accounts receivable . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . .

175,000
126,000

Short-term notes payable
Total current liabilities .

Total current assets . . . . . . . . . . . . . . . . . .

Equipment, gross . . . . . . . . . . . . . . . . . . . .

351,000
480,000

Long-term note payable
Total liabilities . . . . . . .

Accumulated depreciation . . . . . . . . . . . . . .
Equipment, net . . . . . . . . . . . . . . . . . . . . . .

(90,000)
390,000

Common stock . . . . . .
Retained earnings2.
. . .Purchases
..

Total assets . . . . . . . . . . . . . . . . . . . . . . . .

review organized by learning objectives. Chapter Summaries
are a component of the CAP model (see page xiv), which
recaps each conceptual, analytical, and procedural objective.

May

10,500
ϫ $25
$262,500


11,025
ϫ $25
$275,625

budget
April

unit sales. The March 31 inventory is 8,400 units, which complies with the poLess beginning inventory . . . . . . . . . . . . . . .
is $15 per unit.
Units to be purchased . . . . . . . . . . . . . . . .

Multiple Choice Questions

ϫ

11,025
80%
8,820

May
11,5
ϫ
9,2

10,500
19,320

11,0
20,2


8,400
10,920

8,8
11,4

Key Terms
Key Terms are available at the book’s Website for learning and testing in an onli
Cash budget (p. 248)
Continuous budgeting (p. 240)
General and administrative expense
budget (p. 246)
Manufacturing budget (p. 257)
Master budget (p. 242)

Activity-based budgeting (ABB) (p. 251)
Budget (p. 238)
Budgeted balance sheet (p. 250)
Budgeted income statement (p. 250)
Budgeting (p. 238)
Capital expenditures budget (p. 247)

Multiple Choice Quiz

Multiple
Choice Questions quickly test chapter knowledge before a
student moves on to complete Quick Studies, Exercises, and
Problems.


10,500
525
11,025

April

Next period’s unit sales (part 1) . . . . . . . . .
Ending inventory percent . . . . . . . . . . . . . .
a. Sales for March total 10,000 units. Each month’s sales are expected to exce Desired ending inventory . . . . . . . . . . . . . .
Current period’s unit sales (part 1) . . . . . . .
sults by 5%. The product’s selling price is $25 per unit.
b. Company policy calls for a given month’s ending inventory to equal 80% of th Units to be available . . . . . . . . . . . . . . . . . .

with page numbers indicating their location. The book also includes a complete
Glossary of Key Terms.

Answers on p. 275

Additional Quiz Questions are available at the book’s W
1. A plan that reports the units or costs of merchandise to be pur-

chased by a merchandising company during the budget period
is called a
a. Capital expenditures budget.
b. Cash budget.
c. Merchandise purchases budget.
d. Selling expenses budget.
e S l b d t

$240,000

$225,000
$ 60,000
$165,000
$220,000
4. A plan that shows
during the budget
a.
b.
c.
d.
e.

261

Chapter 7 Master Budgets and Performance Planning

exercises that often focus on one learning objective.
All are included in Connect. There are usually 8-10
Quick Study assignments per chapter.

Projected unit sales . . . . . . . . . .
Selling price per unit . . . . . . . . . .
Projected sales . . . . . . . . . . . . . .

Total stockholders’ equit
Total liabilities and equity

$741,000

May


10,000
500
10,500

Additional Information

Key Terms are bolded in the text and repeated at the end of the chapter

Quick Study assignments are short

April
Prior period’s unit sales . . . . . . .
Plus 5% growth . . . . . . . . . . . . .
Projected unit sales . . . . . . . . . .

WILD WOOD COMPANY
Balance Sheet
March 31, 2009

Available with McGraw-Hill Connect Accounting

Which one of the following sets of items are all necessary components of the master budget?
1. Prior sales reports, capital expenditures budget, and financial budgets.
2. Sales budget, operating budgets, and historical financial budgets.
3. Operating budgets, financial budgets, and capital expenditures budget.
4. Operating budgets, historical income statement, and budgeted balance sheet.

QUICK STUDY


The moti ation of emplo ees is one goal of b dgeting Identif three g idelines that organi ations sho ld

QS 7 2

QS 7-1
Components of a master budget

C3

Bank loan owed . . . . . . . . . . . . . . . .

Exercises

are one of this book’s many
strengths and a competitive advantage. There are
about 10-15 per chapter and all are included in
Connect.

________

Available with McGraw-Hill Connect Accounting

EXERCISES
Exercise 7-1
Preparation of merchandise
purchases budgets (for
three periods)

Troy Company prepares monthly budgets. The current budget plans for a September ending inventory
of 38,000 units. Company policy is to end each month with merchandise inventory equal to a specified

percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the
three most recent months follow. (1) Prepare the merchandise purchases budget for the months of July,
August, and September. (2) Compute the ratio of ending inventory to the next month’s sales for each
budget prepared in part 1. (3) How many units are budgeted for sale in October?

C3 P1

Check July budgeted ending
inventory, 64,000

Sales (Units)

Purchases (Units)

July . . . . . . . . . . . . .

170,000

200,000

August . . . . . . . . . .

320,000

312,000

September . . . . . . .

280,000


262,000

Available with McG

PROBLEM SET A

Problem Sets A & B

Problem 7-1A

are proven problems that can be assigned as homework. All problems are coded according to the CAP
model (see page xiv), and Set A is included in
Connect.

C3 P1

Preparation and analysis of
merchandise purchases budgets

Herron Supply is a merchandiser of three different products.
footwear, 18,500 units; sports equipment, 80,000 units; and a
that excessive inventories have accumulated for all three pro
ending inventory in any month should equal 29% of the ex
Expected sales in units for March, April, May, and June foll
Budge

x

March


e cel
mhhe.com/wildMA2e

A

Footwear . . . . . . . . . . . . .

15,000

26

Sports equipment . . . . . . .
Apparel . . . . . . . . . . . . . . .

70,500
40,000

89
38

PROBLEM SET B
Problem 7-1B
Preparation and analysis of
merchandise purchases budgets

Water Sports Corp. is a merchandiser of thr
are water skis, 60,000 units; tow ropes, 45,00
that excessive inventories have accumulated
ending inventory in any month should equa
Expected sales in units for April, May, June


C3 P1

Water skis . . . . . . . .
Tow ropes . . . . . . . .
Life jackets . . . . . . .

Required
Check (I) March budgeted
purchases Footwear, 4,185; Sports
equip., 16,310; Apparel, 1,020

1. Prepare a merchandise purchases budget (in units) for eac

April, and May.
Analysis Component
2. The purchases budgets in part 1 should reflect fewer pur

pared to those in April and May. What factor caused few
ness conditions that would cause this factor to both occu

Required
Check (1) April budgeted purchases:
Water skis, 58,500; Tow ropes, 9,500;
Life jackets, 14,500

1. Prepare a merchandise purchases budget

May, and June.
A


l

i C

t


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xvii

reinforced and mastered?
Beyond the Numbers exercises ask students
to use accounting figures and understand their meaning.
Students also learn how accounting applies to a variety of
business situations. These creative and fun exercises are all
new or updated, and are divided into sections:
• Reporting in Action
• Comparative Analysis
• Ethics Challenge
• Communicating in Practice
• Taking It To The Net

Beyond the Numbers (BTN) is a special problem section aimed to refine communication, conceptual,
analysis, and research skills. It includes many activities helpful in developing an active learning environment.

BEYOND THE NUMBERS

REPORTING IN
ACTION
C1 C2

BTN 1-1 Managerial accounting is more than recording, maintaining, and reporting financial results. Managerial accountants must provide managers with both financial and nonfinancial information
including estimates, projections, and forecasts. There are many accounting estimates that management
accountants must make, and Best Buy must notify shareholders of these estimates.
Required
1. Access and read Best Buy’s “Critical Accounting Estimates” section (six pages), which is part of its

Management’s Discussion and Analysis of Financial Condition and Results of Operations section, from
either its annual report or its 10 K for the year ended March 3 2007 [BestBuy com] What are some

• Teamwork in Action
• Hitting the Road
• Entrepreneurial Decision
• Global Decision

Serial Problem uses a continuous running
case study to illustrate chapter concepts in a familiar
context. The Serial Problem can be followed continuously
from the first chapter or picked up at any later point
in the book; enough information is provided to ensure
students can get right to work.

The serial problem starts in this chapter and continues throughout most chapters of the book.

SP 1 On October 1, 2009, Adriana Lopez launched a computer services and merchandising company,
Success Systems, that offers consulting services, system installation, and business software sales. In
late 2009, Adriana decides to diversify her business by also manufacturing computer workstation furniture.


SERIAL PROBLEM
Success Systems

Required
1. Classify the following manufacturing costs of Success Systems by behavior and traceability.

“The best feature of this book is the use of real (financial) information in the Beyond the Numbers section. This is something
that I do on my own, which can be very time consuming. I also like the Entrepreneurial questions, which are not even addressed
in most textbooks.”
Cindy Navaroli, Chaffey Community College

The End of the Chapter Is Only the Beginning
Our valuable and proven assignments aren’t just confined to the book. From problems that require technological solutions to
materials found exclusively online, this book’s end-of-chapter material is fully integrated with its technology package.

• Quick Studies, Exercises, and Problems available
on Connect Accounting (see page viii) are marked
accounting
with an icon.

• Online Learning Center (OLC) includes Interactive Quizzes,
Excel template assignments, and more.

x

e cel
mhhe.com/wildMA2e

• Problems supported with Microsoft Excel template

assignments are marked with an icon.

Put Away Your
Red Pen
We pride ourselves on the
accuracy of this book’s assignment materials. Independent research reports that
instructors and reviewers
point to the accuracy of
this book’s assignment
materials as one of its
key competitive advantages.

• Material that receives additional coverage (slide shows,
videos, audio, etc.) available in iPod ready format are
marked with an icon.
The authors extend a special thanks to accuracy checkers Helen Roybark, Radford University; Beth Woods, CPA, Accuracy Counts; David Krug, Johnson County
Community College; Yvonne Phang, Borough of Manhattan Community College; and Marilyn Sagrillo, University of Wisconsin - Green Bay. Also to Karen
Wisneiwski, County College of Morris for creation of the online quizzes.


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xviii

Enhancements for MA 2e

This edition's revisions are driven by feedback from instructors and students. Many of the revisions are summarized here. Feedback
suggests that this is the book instructors want to teach from and students want to learn from. General revisions include:

•
•
•
•
•

Revised and updated assignments throughout
Updated managerial analyses for each chapter
New and revised entrepreneurial elements
Revised serial problem through nearly all chapters
New art program, visual graphics, and text layout

Chapter 1

1
2
3
4
5

Kernel Season’s NEW opener with new
entrepreneurial assignment
New section on fraud and the role of ethics in
managerial accounting
Added discussion on Institute of Management
Accountants and its road-map for resolving ethical dilemmas
Updated real-world examples including that for
Apple
Added balance sheet to exhibits that show cost
flows across accounting reports

New discussion on role of nonfinancial information

Chapter 2

Sprinturf NEW opener with new entrepreneurial assignment
New info on custom design involving Nike
Enhanced exhibit on job order production
activities
Added discussion linking accurate overhead
application for jobs to both product pricing
and performance evaluation
Streamlined explanation of closing over- and
underapplied overhead
New discussion of employee payroll fraud
schemes

Chapter 3

Hood River Juice Company NEW opener
with new entrepreneurial assignment
New discussion on impact of automation for
quality control and overhead application
Added explanation for use of a process cost
summary in product pricing

Chapter 4

Oregon Ice Cream Company NEW opener
with new entrepreneurial assignment
Simplified the steps of activity-based costing

(ABC) allocations
New discussion on using ABC to allocate selling and administrative costs
Enhanced presentation of, and enhanced
graphics for,ABC procedures

Chapter 5

Moe’s Southwest Grill NEW opener with
new entrepreneurial assignment
New section on working with changes in estimates for CVP analysis
New graphics illustrating how changes in esti-

•
•
•

New Best Buy data with comparisons to Circuit City, RadioShack,
Apple, and DSG (UK) with new assignments
New graphics added to each chapter's analysis section
New iPod content integrated and referenced in book

mates impact break-even analysis
New discussion on weighted average contribution margin in multiple product CVP analysis
New Appendix 5A on using Excel to estimate
least squares regression
New assignments on break-even and changes
in estimates

including balanced scorecard
New Appendix 9A on transfer pricing

Decision Analysis: new explanation of investment center profit margin and investment
turnover with new assignments

10
6
11
7
8 12
9 13

Chapter 6

Bonobos NEW opener with new entrepreneurial assignment
Streamlined discussion of contribution margin
income statements
Improved graphics comparing income reporting under absorption versus variable costing
Enhanced explanation of controllable vs.
uncontrollable costs
Expanded the Demonstration Problem to be
more comprehensive

Chapter 7

Jibbitz NEW opener with new entrepreneurial assignment
Enhanced discussion of master budgets
New assignments on preparing budgets and
budgeted financial statement

Chapter 8


Martin Guitar NEW opener with new entrepreneurial assignment
Reorganized discussion of overhead variance
analysis
Revised graphics on framework for understanding overhead variances
New discussion of increased automation for
overhead application
Revised explanation of journal entries for standard costing
Simplified discussion of closing variance
accounts
New assignments on variance analysis
Added journal entries to chapter demonstration problem

Chapter 9

RockBottomGolf.com NEW opener with new
entrepreneurial assignment
Enhanced explanation of evaluating investment
center performance with financial measures
New discussion of residual income
Added explanation of economic value added
New section on evaluating investment center
performance with nonfinancial measures

Chapter 10

Prairie Sticks Bat Company NEW opener
with new entrepreneurial assignment
Enhanced explanation of ‘make or buy’ decision
New discussion for ‘segment elimination’ decision
Enhanced presentation for managerial decision

scenarios

Chapter 11

1-800-GOTJUNK NEW opener with new
entrepreneurial assignment
New info graphic on cost of capital estimates
across industries
Added discussion and example on use of profitability index to compare projects
New discussion on incorporating inflation in
net present value calculations
Added explanation on conflicts between meeting analysts' forecasts and choosing profitable
long-term projects
New Appendix 11A on using Excel to compute
net present value and internal rate of return
New assignments on profitability index

Chapter 12

Jungle Jim’s NEW opener with new entrepreneurial assignment
Updated graphics for operating, investing and
financing cash flows
Enhanced steps 1 through 5 for preparing the
statement of cash flows
Simplified summary Exhibit 12.12 for indirect
adjustments
Updated real world examples and graphics
including that for Harley, Starbucks, and Nike
New info on indirect vs direct method for U.S.
GAAP vis-à-vis IFRSs


Chapter 13

The Motley Fool UPDATED opener with
new entrepreneurial assignment
New Best Buy, Circuit City and RadioShack data
throughout chapter, exhibits, and illustrations
with comparative analysis
Enhanced presentation on comparative financial statements


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xix

Supplements
Assurance of Learning Ready
Assurance of learning is an important element of
many accreditation standards. Managerial
Accounting 2e is designed specifically to support
your assurance of learning initiatives.
Each chapter in the book begins with a list of
numbered learning objectives which appear
throughout the chapter, as well as in the end-ofchapter problems and exercises. Every test bank
question is also linked to one of these objectives,
in addition to level of difficulty, AICPA skill area,
and AACSB skill area. EZ Test, McGraw-Hill's
easy-to-use test bank software, can search the

test bank by these and other categories, providing
an engine for targeted assurance of learning analysis and assessment.

AACSB Statement
The McGraw-Hill Companies is a proud corporate member of AACSB International.
Understanding the importance and value of
AACSB accreditation, Managerial Accounting 2e has
sought to recognize the curricula guidelines
detailed in the AACSB standards for business
accreditation by connecting selected questions in
the test bank to the general knowledge and skill
guidelines found in the AACSB standards.
The statements contained in Managerial Accounting
2e are provided only as a guide for the users of
this text.The AACSB leaves content coverage and
assessment within the purview of individual
schools, the mission of the school, and the faculty.
While Managerial Accounting 2e and the teaching
package make no claim of any specific AACSB
qualification or evaluation, we have, within the
Managerial Accounting 2e test bank labeled questions according to the six general knowledge and
skills areas.

Instructor’s
Resource CD-ROM

Algorithmic Test
Bank

ISBN13: 9780073360478

ISBN10: 0073360473

ISBN13: 9780073360447
ISBN10: 0073360449

This is your all-in-one resource.
It allows you to create custom presentations from your own materials
or from the following book-specific
materials provided in the CD’s asset
library:
• Instructor’s Resource Manual
Written by Christine Schalow,
University of Wisconsin-Stevens
Point.
This manual contains (for each
chapter) a Lecture Outline, a chart
linking all assignment materials to
Learning Objectives, a list of relevant active learning activities, and
additional visuals with transparency
masters.
• Solutions Manual
Written by John J.Wild, Ken W.
Shaw, and Marilyn Sagrillo.
• Test Bank, Computerized Test Bank
Revised by Laurie Hays, Western
Michigan University.
• PowerPoint® Presentations
Prepared by Debra Schmidt,
Cerritos College.
Presentations allow for

revision of lecture slides, and
includes a viewer, allowing screens
to be shown with or without the
software.
• Link to PageOut

E x c e l Wo r k i n g P a p e r s
CD
ISBN13: 9780073360454
ISBN10: 0073360457
Written by John J.Wild.
Working Papers delivered in Excel
spreadsheets.These Excel Working
Papers are available on CD-ROM; see
your representative for information.

Study Guide
ISBN13: 9780073360538
ISBN10: 0073360538
Written by April Mohr, Jefferson
Community and Technical College,
SW.
Covers each chapter and appendix
with reviews of the learning objectives, outlines of the chapters, summaries of chapter materials, and additional problems with solutions.

Contributing Author
The authors and book team wish to thank
Marilyn Sagrillo for her excellent contributions.
Marilyn Sagrillo is an associate professor at the
University of Wisconsin at Green Bay. She received

her BA and MS from Northern Illinois University and
her PhD from the University of Wisconsin at
Madison. Her scholarly articles are published in
Accounting Enquiries, Journal of Accounting Case
Research, and the Missouri Society of CPAs Casebook.
She is a member of the American Accounting
Association and the Institute of Management
Accountants. She previously received the UWGB
Founder’s Association Faculty Award for Excellence in
Teaching. Professor Sagrillo is an active volunteer for
the Midwest Renewable Energy Association. She also
enjoys reading, traveling, and hiking.


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xx

Acknowledgments

John J.Wild, Ken W. Shaw, and McGraw-Hill would like to recognize the following instructors for their valuable feedback and involvement in the development of Managerial
Accounting 2e. We are thankful for their suggestions, counsel, and encouragement.

Audrey Agnello, Niagara County Community
College

Mike Deschamps, Mira Costa College


Sylvia Allen, Los Angeles Valley College

Laurie Hays,Western Michigan University

Donna Altepeter, University of North Dakota

Kathy Hill, Leeward Community College

Juanita Ardavany, Los Angeles Valley College

Margaret Houston,Wright State University

Richard Barnhart, Grand Rapids Community
College

Thomas Kam, Hawaii Pacific University

Beverly Beatty,Anne Arundel Community College
Terry W. Bechtel, Northwestern State University
of Louisiana

Saturnino Gonzalez, El Paso Community College

David Krug, Johnson County Community College
Tara Laken, Joliet Junior College
William Link, University of Missouri-St. Louis

Gerard L. Berardino, Community College of
Allegheny County-Boyce Campus


Cathy Lumbattis, Southern Illinois UniversityCarbondale

Patrick Borja, Citrus College

James P. Makofske, Fresno City College

Phil Brown, Harding University

Stacie Mayes, Rose State College

Chak-Tong Chau, University of Houston

April Mohr, Jefferson Community and Technical
College, SW

Siu Chung, Los Angeles Valley College
Darlene Coarts, University of Northern Iowa
Ken Couvillion, Delta College
Walter DeAguero, Saddleback College

Audrey S. Morrison, Pensacola Junior College
Susan Pallas, Southeast Community College
Ash Patel, Normandale Community College


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xxi


Gary Pieroni, Diablo Valley College
Yvonne Phang, Borough of Manhattan
Community College

Gracelyn V. Stuart-Tuggle, Palm Beach Community
College-South
Larry Swisher, Muskegon Community College

James E. Racic, Lakeland Community College

William Talbot, Montgomery College-Rockville

Jenny Resnick, Santa Monica College

Diane Tanner, University of North Florida

Helen Roybark, Radford University

Margaret Tanner, University of Arkansas

Marilyn Sagrillo, University of Wisconsin Green
Bay

Scott Williams, County College of Morris

Christine Schalow, University of Wisconsin
Stevens Point

Karen Wisniewski, County College of Morris


Debra Schmidt, Cerritos College

Gloria Worthy, Southwest Tennessee Community
College

Randall Serrett, University of Houston-Downtown

Judith Zander, Grossmont College

John Windler, University of Nebraska at Omaha

Brad Smith, Des Moines Area Community College
Nancy Snow, University of Toledo

In addition to the helpful and generous colleagues listed above, we thank the entire
McGraw-Hill Managerial Accounting 2e team, including Stewart Mattson,Tim Vertovec, Steve
Schuetz, Christina Sanders, Sharon Monday of Aptara, Lori Koetters, Matthew Baldwin, Carol
Bielski, and Jennifer Lohn.We also thank the great marketing and sales support staff, including Krista Bettino, Sankha Basu, and Randy Sealy. Many talented educators and professionals
worked hard to create the supplements for this book, and for their efforts we’re grateful.
Finally, many more people we either did not meet or whose efforts we did not personally
witness nevertheless helped to make this book everything that it is, and we thank them all.

John J. Wild

Ken W. Shaw


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Brief Contents
1

Managerial Accounting Concepts and Principles 2

2

Job Order Costing and Analysis 46

3

Process Costing and Analysis 86

4

Activity-Based Costing and Analysis 128

5

Cost Behavior and Cost-Volume-Profit Analysis 166

6


Variable Costing and Performance
Reporting 204

7

Master Budgets and Performance Planning 236

8

Flexible Budgets and Standard Costing 276

9

Decentralization and Performance
Evaluation 320

10

Relevant Costing for Managerial
Decisions 342

11

Capital Budgeting and Investment
Analysis 370

12

Reporting and Analyzing Cash Flows 398


13

Analyzing and Interpreting Financial Statements 448

Appendix A

Financial Statement Information A-1

Appendix B

Time Value of Money B-1

Appendix C* Basic Accounting for Transactions
Appendix D* Accounting for Partnerships

* Appendixes C and D are available on the book’s Website, mhhe.com/wildMA2e, and as print copy from a
McGraw-Hill representative.

xxiii


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