Managerial Accounting 14E- Garrison, Noreen, Brewer PDF

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Less managing. More teaching. Greater learning. STUDENTS... INSTRUCTORS... Want to get better grades? (Who doesn’t?) Would you like your students to show up for class more prepared? (Let’s face it, class is much more fun if everyone is engaged and prepared…) Prefer to do your homework online? (Afte...

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Less managing. More teaching. Greater learning.

STUDENTS... Want to get better grades?

INSTRUCTORS... Would you like your students to show up for class more prepared?

(Who doesn’t?)

Prefer to do your homework online? (After all, you are online anyway.) Need a better way to study before the big test?

(A little peace of mind is a good thing…)

(Let’s face it,

class is much more fun if everyone is engaged and prepared…)

Want an easy way to assign homework online and track student progress? (Less time grading means more time teaching…)

Want an instant view of student or class performance relative to learning objectives? (No more wondering if students understand…)

With McGraw-Hill's Connect Plus Accounting, ™

STUDENTS GET: • Easy online access to homework, tests, and quizzes assigned by your instructor.

Need to collect data and generate reports required for administration or accreditation? (Say goodbye to manually tracking student learning outcomes…) Want to record and post your lectures for students to view online?

• Immediate feedback on how you’re doing. (No more wishing you could call your instructor at 1 a.m.)

With McGraw-Hill's Connect Plus Accounting, ™

• Quick access to lectures, practice materials, eBook, and more. (All the material you need to be successful is right at your fingertips.)

INSTRUCTORS GET:

• A Self-Quiz and Study tool that assesses your knowledge and recommends specific readings, supplemental study materials, and additional practice work.*

• Simple assignment management, allowing you to spend more time teaching. • Auto-graded assignments, quizzes, and tests.

• LearnSmart – intelligent flash cards that adapt to your specific needs and provide you with 24 x 7 personalized study.*

• Detailed Visual Reporting where student and section results can be viewed and analyzed. • Sophisticated online testing capability. • A filtering and reporting function that allows you to easily assign and report on materials that are correlated to accreditation standards, learning outcomes, and Bloom’s taxonomy.

*Available with select McGraw-Hill titles.

• An easy-to-use lecture capture tool. • The option to upload course documents for student access.

ISBN: 0078111005 Author: Garrison Title: Managerial Accounting 14e

Front endsheets Color: 4c Pages: 2,3

Want an online, searchable version of your textbook? Wish your textbook could be available online while you’re doing your assignments? Connect™ Plus Accounting eBook If you choose to use Connect™ Plus Accounting, you have an affordable and searchable online version of your book integrated with your other online tools.

Connect™ Plus Accounting eBook offers features like: • Topic search • Direct links from assignments • Adjustable text size • Jump to page number • Print by section

Want to get more value from your textbook purchase? Think learning accounting should be a bit more interesting? Check out the STUDENT RESOURCES section under the Connect™ Library tab. Here you’ll find a wealth of resources designed to help you achieve your goals in the course. You’ll find things like quizzes, PowerPoints, and Internet activities to help you study. Every student has different needs, so explore the STUDENT RESOURCES to find the materials best suited to you.

ISBN: 0078111005 Author: Garrison Title: Managerial Accounting

Front endsheets Color: 4c Pages: 4, Insert

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Managerial Accounting Fourteenth Edition

Ray H. Garrison, D.B.A., CPA Professor Emeritus Brigham Young University

Eric W. Noreen, Ph.D., CMA Professor Emeritus University of Washington

Peter C. Brewer, Ph.D., CPA Miami University—Oxford, Ohio

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MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2012, 2010, 2008, 2006, 2003, 2000, 1997, 1994, 1991, 1988, 1985, 1982, 1979, 1976 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 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811100-6 MHID 0-07-811100-5 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Sponsoring editor: Donna Dillon Executive director of development: Ann Torbert Development editor: Katie Jones Vice president and director of marketing: Robin J. Zwettler Marketing director: Brad Parkins Senior marketing manager: Kathleen Klehr Vice president of editing, design, and production: Sesha Bolisetty Lead project manager: Pat Frederickson Senior buyer: Carol A. Bielski Lead designer: Matthew Baldwin Senior photo research coordinator: Keri Johnson Senior media project manager: Allison Souter Media project manager: Cathy L. Tepper Cover image: © Getty Images Typeface: 10.5/12 Times Roman Compositor: Laserwords Private Limited Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Garrison, Ray H. Managerial accounting / Ray H. Garrison, Eric W. Noreen, Peter C. Brewer. — 14th ed. p. cm. Includes index. ISBN-13: 978-0-07-811100-6 (alk. paper) ISBN-10: 0-07-811100-5 (alk. paper) 1. Managerial accounting. I. Noreen, Eric W. II. Brewer, Peter C. III. Title. HF5657.4.G37 2012 658.15’11—dc22 2010045770

www.mhhe.com

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Dedication To our families and to our many colleagues who use this book.

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About the Authors Ray H. Garrison is emeritus professor of accounting at Brigham Young University, Provo, Utah. He received his BS and MS degrees from Brigham Young University and his DBA degree from Indiana University. As a certified public accountant, Professor Garrison has been involved in management consulting work with both national and regional accounting firms. He has published articles in The Accounting Review, Management Accounting, and other professional journals. Innovation in the classroom has earned Professor Garrison the Karl G. Maeser Distinguished Teaching Award from Brigham Young University.

Eric W. Noreen has held appointments at institutions in the United States, Europe, and Asia. He is emeritus professor of accounting at the University of Washington. He received his BA degree from the University of Washington and MBA and PhD degrees from Stanford University. A Certified Management Accountant, he was awarded a Certificate of Distinguished Performance by the Institute of Certified Management Accountants. Professor Noreen has served as associate editor of The Accounting Review and the Journal of Accounting and Economics. He has numerous articles in academic journals including: the Journal of Accounting Research; The Accounting Review ; the Journal of Accounting and Economics; Accounting Horizons; Accounting, Organizations and Society; Contemporary Accounting Research; the Journal of Management Accounting Research; and the Review of Accounting Studies. Professor Noreen has won a number of awards from students for his teaching.

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Peter C. Brewer is a professor in the Department of Accountancy at Miami University, Oxford, Ohio. He holds a BS degree in accounting from Penn State University, an MS degree in accounting from the University of Virginia, and a PhD from the University of Tennessee. He has published more than 30 articles in a variety of journals including: Management Accounting Research, the Journal of Information Systems, Cost Management, Strategic Finance, the Journal of Accountancy, Issues in Accounting Education, and the Journal of Business Logistics. Professor Brewer is a member of the editorial board of the Journal of Accounting Education and has served on the editorial board of Issues in Accounting Education. His article “Putting Strategy into the Balanced Scorecard” won the 2003 International Federation of Accountants’ Articles of Merit competition, and his articles “Using Six Sigma to Improve the Finance Function” and “Lean Accounting: What’s It All About?” were awarded the Institute of Management Accountants’ Lybrand Gold and Silver Medals in 2005 and 2006. He has received Miami University’s Richard T. Farmer School of Business Teaching Excellence Award and has been recognized on two occasions by the Miami University Associated Student Government for “making a remarkable commitment to students and their educational development.” He is a leading thinker in undergraduate management accounting curriculum innovation and is a frequent presenter at various professional and academic conferences. Prior to joining the faculty at Miami University, Professor Brewer was employed as an auditor for Touche Ross in the firm’s Philadelphia office. He also worked as an internal audit manager for the Board of Pensions of the Presbyterian Church (U.S.A.). He frequently collaborates with companies such as Harris Corporation, Ghent Manufacturing, Cintas, Ethicon Endo-Surgery, Schneider Electric, Lenscrafters, and Fidelity Investments in a consulting or case writing capacity.

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Let

Garrison be Your Guide

It is the ‘Bible’ of Managerial Accounting. Mark Motluck, Anderson University

An excellent choice for a first course in managerial accounting. Steven Huddart, Penn State

Garrison is the gold standard of all accounting texts. Gene Johnson, Clark College

For centuries, the lighthouse has provided guidance and safe passage for sailors. Similarly, Garrison/Noreen/Brewer has successfully guided millions of students through managerial accounting, helping them sail smoothly through the course. Decades ago, lighthouses were still being operated manually. In these days of digital transformation, lighthouses are run using automatic lamp changers and other modern devices. In much the same way, Garrison/ Noreen/Brewer has evolved over the years. Today, the Garrison book not only guides students—accounting majors and other business majors alike—safely through the course but is enhanced by a number of powerful new tools to augment student learning and increase student motivation. McGraw-Hill’s Connect™ Accounting offers a number of features to facilitate student learning. Embedded within Connect Accounting, our NEW intelligent technology, LearnSmart, offers flashcards that personalize the study experience by constantly adapting, emphasizing the concepts a student still needs to master. NEW animated, narrated Guided Examples connected to practice exercises within Connect Accounting provide a step-by-step walkthrough of a similar exercise, assisting students when they need it most. Connect Accounting’s NEW Self-Quiz and Study provides a study plan that recommends specific readings from the text, supplemental narrated PowerPoints, and practice exercises that will improve students’ understanding of each learning objective. Finally, the student library within Connect gives students access to additional resources, such as forms for the NEW Applying Excel feature, Interactive Presentations for each learning objective, an electronic version of the textbook, and more. Just as the lighthouse continues to provide reliable guidance to seafarers, the Garrison/Noreen/Brewer book continues its tradition of helping students sail successfully through managerial accounting by always focusing on three important qualities: relevance, accuracy, and clarity.

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RELEVANCE. Every effort is made to help students relate the concepts in this book to the decisions made by working managers. In the fourteenth edition, the authors have written a new Chapter 1 with the goal of helping all business students better understand why managerial accounting is relevant to their future careers. New and revised In Business boxes throughout the book link chapter concepts to pertinent real-world examples. Service industry references appear throughout the chapter narrative and end-of-chapter material to provide students with relevant context for the material they are learning. The robust Connect Accounting technology package is populated with new and exciting tools to help keep students engaged in the learning process. For these reasons and many more, a student reading Garrison should never have to ask “Why am I learning this?”

ACCURACY. The Garrison book continues to set the standard for accurate and reliable material in its fourteenth edition. With each revision, the authors evaluate the book and its supplements in their entirety, working diligently to ensure that the end-of-chapter material, solutions manual, and test bank are consistent, current, and accurate.

Garrison’s Managerial Accounting text is one of the best introductory texts available today. It provides students with the tools and information needed to help them successfully learn this material in an interesting and engaging manner. The Garrison text is the only option. Tracy Campbell Tuttle, San Diego Mesa Community College

Good service industry materials. The more I read the book, the more I appreciated this information. The homework . . . directed toward service business expands the relevance of the material to the student. Don Lucy, Indian River State College

CLARITY.

Generations of students have praised Garrison for the friendliness and readability of its writing, but that’s just the beginning. In the fourteenth edition, the authors have rewritten various chapters with input and guidance from instructors around the country to ensure that teaching and learning from Garrison remains as easy as it can be. In addition, the authors have taken an active role in building out Connect Accounting, carefully reviewing its various components to ensure clarity and consistency with the textbook. The authors’ steady focus on these three core elements has led to tremendous results. Managerial Accounting has consistently led the market, being used by over two million students and earning a reputation for reliability that other texts aspire to match.

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A well-done text that is a pleasure to teach from. Joseph Gerard, University of Wisconsin—Whitewater

It’s still the best book on the market, and my students continually tell me what a great book it is. Charles Caliendo, University of Minnesota

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Garrison’s Managerial Accounting

includes pedagogical elements that engage and instruct students without cluttering the pages or interrupting student learning. Garrison’s key pedagogical tools enhance and support students’ understanding of the concepts rather than compete with the narrative for their attention. Job-Order Costing

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Applying Excel Available with McGraw-Hill’s Connect™ Accounting.

LEARNING OBJECTIVES 1, 4, 7

the  power of Excel with managerial accounting concepts by illustrating how Excel functionality can

be used to better understand accounting data. Applying Excel goes beyond plugging numbers into a template by providing students with an opportunity to build their own Excel worksheets and formulas. Students are then asked “what if” questions in which they analyze not only how related pieces of accounting data affect each other but why they do. Applying Excel immediately precedes the Exercises in twelve of the fifteen chapters in the book and is also integrated with McGrawHill’s Connect™ Accounting, allowing students to practice their skills online with algorithmically generated datasets.

You should proceed to the requirements below only after completing your worksheet. Required:

2.

Check your worksheet by changing the estimated total amount of the allocation base in the Data area to 60,000 machine-hours, keeping all of the other data the same as in the original example. If your worksheet is operating properly, the predetermined overhead rate should now be $5.00 per machine-hour. If you do not get this answer, find the errors in your worksheet and correct them. How much is the underapplied (overapplied) manufacturing overhead? Did it change? Why or why not? Determine the underapplied (overapplied) manufacturing overhead for a different company with the following data: Allocation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Estimated manufacturing overhead cost . . . . . . . . . . . . . . . . Estimated total amount of the allocation base . . . . . . . . . . . Actual manufacturing overhead cost . . . . . . . . . . . . . . . . . . Actual total amount of the allocation base . . . . . . . . . . . . . .

Applying Excel This NEW and exciting end-of-chapter feature links

The Excel worksheet form that appears below is to be used to recreate part of the example on page 104. Download the workbook containing this form from the Online Learning Center at www. mhhe.com/garrison14e. On the website you will also receive instructions about how to use this worksheet form.

1.

NEW to the fourteenth edition of Garrison!

Machine-hours $100,000 50,000 machine-hours $90,000 40,000 machine-hours

An excellent pedagogical feature that helps further reinforce students’ knowledge of key concepts in the text book, while strengthening students’ Excel skills that are so important in the work place. This will further enhance an already excellent text.

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Marianne L. James, California State University, Los Angeles

[Applying Excel is] an excellent way for students to programmatically develop spreadsheet skills without having to be taught spreadsheet techniques by the instructor. A significant associated benefit is that students gain more exposure to the dynamics of accounting information by working with what-if scenarios. Earl Godfrey, Gardner–Webb University

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Powerful Pedagogy Opening Vignette

Profit Planning Planning for a Crisis—Civil War Preservation Trust

This textbook speaks to today’s student with Excel-based visuals, discussions on hot ...