The Manager and Management Total Costs and Unit Costs 57 Accounting 24 Unit Costs 57 Use Unit Costs Cautiously 57. Are Up Costs and Period Costs 58

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1 The Manager and Management Total Costs and Unit Costs 57 Accounting 24 Unit Costs 57 Use Unit Costs Cautiously 57 Pnc.ng: Downloads Are Down, but Profits Sectors, Types of Inventory, Inventoriable Are Up Costs and Period Costs 58 Financial Accounting, Management Accounting, and Manufacturing-, Merchandising-, and Service-Sector Cost Accounting 25 Companies 58 Strategic Decisions and the Management Accountant 27 TvDes of 59 Value Chain and Supply Chain Analysis and Key Commonly Used Classifications of Manufacturing Success Factors 27 Costs 59 Value-Chain Analysis 28 Inventoriable Costs 59 Supply-Chain Analysis 29 Period Costs 60 Key 29 Illustrating the Flow of Inventoriable Costs and Period Decision Making, Planning, and Control: The Five-Step Costs 61 Process 31 Manufacturing-Sector Example 61 Key Accounting Guidelines 33 Recap of Inventoriable Costs and Period Costs 64 Cost-Benefit Approach 34 Prime Costs and Conversion Costs 65 Considerations 34 Measuring Costs Requires Judgment 66 Different Costs for Purposes 34 Measuring Labor Costs 66 Overtime Premium and Idle Time 66 The Chief Financial Officer and the Controller 35 A Framework for Cost Accounting and Cost Professional Ethics 36.. Management 69,, Staff Relationships... Benefits of Defining Accounting Terms 67 Different Meanings of Product Costs 67 Institutional Support 36 Calculating the Cost of Products, Services, and Other Concepts in Action: Management Accounting Beyond Objects 69 the Numbers Obtaining Information for Planning and Control and Typical Ethical Challenges 39 Performance Evaluation 69 Problem for Self-Study 40 Decision Points 40 Terms to Analyzing the Relevant Information for Making Learn 41 Assignment Material 41 Questions 41 Decisions 69 Exercises 42 Problems 44 Collaborative Learning Problem for Self-Study 70 Decision Points 72 Terms to Problem 47 / Assignment 73 Questions 73 Exercises 74 Problems 78 Collaborative Learning An Introduction to Cost Terms and Problem 83 Purposes 48 Collapses Under the Weight its Fixed Costs Analysis 84 Costs and Cost Terminology 49 How the "The Biggest Rock Show Ever" Turned a Big Profit Direct Costs and Indirect Costs 50 Essentials of CVP Analysis 85 Challenges Cost Allocation 51 Contribution Margins 86 Factors Affecting Cost Expressing CVP Relationships 88 Classifications 51 Cost-Volume-Profit Assumptions 90 Cost-Behavior Patterns: Variable Costs and Fixed Breakeven Point and Target Operating Income 90 Breakeven Point 90 Cost Drivers 54 Target Operating Income 91 Concepts in Action: How Zipcar Helps Reduce Target Net Income and Income Taxes 92 Twitter's Transportation Costs Using CVP Analysis for Decision Making 94 Relevant Range 55 Decision to Advertise 94 Relationships of Types of Costs 56 Decision to Reduce Selling Price 95

2 Sensitivity Analysis and Margin of Safety 95 Simple Costing System at Plastim Corporation 163 Cost Planning and CVP 97 Design, Manufacturing, and Distribution Alternative Fixed-Cost/Variable-Cost Structures 97 Processes 163 Operating Leverage 98 Simple Costing System Using a Single Indirect-Cost Effects of Sales Mix on Income 99 Pool 164 Concepts in Action: Choosing Plant Location Applying the Five-Step Decision-Making Process at CVP Analysis in Service and Nonprofit Plastim Organizations 102 Refining a Costing System 167 Contribution Margin Versus Gross Margin 103 Reasons for Refining a Costing System 167 Guidelines for Refining a Costing System 168 Problem for Self-Study 104 Decision Points 105 Activity-Based Costing Systems 168 APPENDIX: Decision Models and Uncertainty 106 ABC System 168 Cost Hierarchies 171 Terms to Learn 108 Assignment Material 109 Implementing Activity-Based Costing 172 Questions Exercises Problems Implementing ABC at Plastim 172 Collaborative Learning Problem Comparing Alternative Costing Systems 175 Considerations in Implementing Activity-Based- Job Costing 120 Costing Systems 176 Job Costing and Next Generation Energy and Concepts in Action: Successfully Championing ABC Carbon Solutions Using ABC Systems for Improving Cost Management Building-Block Concepts of Costing Systems 121 and Profitability 178 Job-Costing and Process-Costing Systems 122 Pricing and Product-Mix Decisions 178 Job Costing: Evaluation and Implementation 124 Reduction and Process Improvement Time Period Used to Compute Indirect-Cost Decisions 178 Rates 125 Design Decisions 179 Normal Costing 126 Planning and Managing Activities 180 General Approach to Job Costing 126 Activity-Based Costing and Department Costing Concepts in Action: Job Costing on Cowboys Stadium..., ABC Service and Merchandising Companies 181 Actual Costing 132 Concepts in Action: Pincky: Capacity Costs and Time A Normal Job-Costing System in Manufacturing 133 Activity-Based Costing General Ledger 134 Problem for Self-Study 182 Decision Points 185 Terms to Explanations of Transactions 135 Assignment Material 186 Questions 186 Ledgers Exercises 187 Problems 194 Collaborative Learning Budgeted Indirect Costs and Adjustments 139 Underallocated and Overallocated Direct Costs 140 Master Budget and Responsibility Adjusted Allocation-Rate Approach 140 Proration Approach Accounting 204 Write-Off to Cost of Goods Sold Approach 143 "Scrimping" at the Master Budgets Choice Among Approaches 143 Budgets and the Budgeting Cycle 206 Variations from Normal Costing: A Service-Sector Strategic Plans and Operating Plans 206 Example 144 Budgeting Cycle and Master Budget 207 Advantages of Budgets 207 Problem for Self-Study 145 Decision Points 147 Terms to Coordination and Communication 207 Learn 148 Assignment Material 148 Questions 148 Framework for Judging Performance and Facilitating Exercises 149 Problems 154 Collaborative Learning Learning 208 Problem 159 Motivating Managers and Other Employees 208 Challenges in Administering Budgets 209 Activity-Based Costing and Activity- Developing an Operating Budget 209 Based Management 160 Time Coverage of Budgets 209 LG Electronics Reduces Costs and Inefficiencies Through Preparing an Operating Budget 210 Activity-Based Costing Financial Planning Models and Sensitivity Analysis Broad Averaging and Its Consequences Concepts in Action: Budgeting and and Overcosting 162 Product-Cost Cross-Subsidization 162 Budgeting and Responsibility Accounting 221

3 Organization Structure and Responsibility 221 Flexible Budgets, Overhead Cost Feedback 222 Variances, and Management Control 284 and Controllability 222 to Changes in Strategy Planning of Variable and Fixed Overhead Costs 285. Planning Variable Overhead Costs 286 Budgeting Multinational Companies Planning Fixed Overhead Costs 286 firowe/n for Self-Study 226 Decision Points 227 Standard Costing at Webb Company 286 Developing Budgeted Variable Overhead Rates 287 APPENDIX: Cash Budget 228 Developing Budgeted Fixed Overhead Rates 288 Terms to Learn 233 Assignment Material 233 Variable Overhead Cost Variances 289 Questions 233 Exercises 233 Problems 237 Flexible-Budget Analysis 289 Variable Overhead Efficiency Variance 289 Collaborative Learning Problem 246,,...,.. Flexible Budgets, Direct-Cost Variances, Variable Overhead Spending Variance 291 and Management Control 248 Variances 293 SingaDeli Bakery Production-Volume Variance 294 Static Budgets and Variances 249 Interpreting the Production-Volume Variance 295 The Use of Variances 249 Journal Entries for Fixed Overhead Costs and Static Budgets and Static-Budget Variances 250 Variances 296 Flexible Budgets 252 Integrated Analysis of Overhead Cost Variances 298 Flexible-Budget Variances and Sales-Volume 4-Variance Analysis 299 Variances 253 Combined Variance Analysis 300 Price Variances and Variances Efficiency 254 Variances for Direct-Cost Production-Volume Variance and Sales-Volume Concepts in Action: Variance Analysis and Flexible-Budget Inputs 256 Variances 255 Variance 300 Its Obtaining Budgeted Input Prices and Budgeted Input Overhead Costs,,.. Variance Analysis and Activity-Based Costing 303 Data for Calculating Webb s Price Variances and for Efficiency Variances 257. Labor Costs Flexible Budget and Variance Analysis for Fixed Efficiency Variance 258 Setup Overhead Costs 306 Concepts in Action: Starbucks Reduces Direct-Cost Overhead Variances in Settings 307 Variances to Brew a Turnaround Financial and Nonfinancial Performance Summary of Variances 261 Measures 308 Journal Entries Using Standard Costs 262 Implementing Standard Costing 263 Problem for Self-Study 309 Decision Points 311 Terms to Standard Costing and Information Technology 263 Learn 312 Assignment Material 312 Questions 312 Wide Applicability of Standard Costing 264 Exercises 312 Problems 316 Collaborative Learning Management Uses of Variances 264 Problem 321 Multiple Causes of Variances 264 When to Investigate Variances Inventory Costing and Capacity Performance Measurement Using Variances 265 Analysis 322 Organization Learning 265 Continuous Improvement 266 Helps Companies Reduce Inventory Financial and Nonfinancial Performance and Survive the Recession Measures 266 Variable and Absorption Costing 323 Benchmarking and Variance Analysis 266 Variable Costing 323 Absorption Costing 324 Problem for Self-Study 268 Decision Points 269 Comparing Variable and Absoption Costing 324 APPENDIX: Market-Share and Market-Size Variances 270 Income Statements 325 Terms to Learn 271 Assignment Material 272 Comparing Income Statements for One Year 325 Questions 272 Exercises 272 Problems 276 Comparing Income Statements for Three Years 327 Collaborative Learning Problem 282

4 Variable Costing and the Effect of Sales and Steps in Estimating a Cost Function Using Quantitative Production on Operating Income 330 Analysis 370 Absorption Costing and Performance Measurement 331 High-Low Method 372 Undesirable Buildup of Inventories 332 Regression Analysis Method 374 Proposals for Revising Performance Evaluation 333 Evaluating Cost Drivers of the Estimated Cost Comparing Inventory Costing Methods 334 Function 375 Throughput Costing 334 Choosing Among Cost Drivers 376 A Comparison of Alternative Inventory-Costing Concepts in Action: Activity-Based Costing: Methods 335 Identifying Cost and Revenue Drivers Denominator-Level Capacity Concepts and Fixed-Cost Cost Drivers and Activity-Based Costing 378 Capacity Analysis 336 Nonlinear Cost Functions 379 Absorption Costing and Alternative Denominator- Learning Curves 380 Level Capacity Concepts 336 Cumulative Average-Time Learning Model 381 Effect on Budgeted Fixed Manufacturing Cost Incremental Unit-Time Learning Model 382 Rate 337 Incorporating Learning-Curve Effects into Prices and Choosing a Capacity Level 338 Standards 383 Product Costing and Capacity Management 338 Data Collection and Adjustment Issues 384 Pricing Decisions and the Downward Demand Spiral 339 Problem for Self-Study 386 Decision Points 388 Performance Evaluation 340 Concepts in Action: The "Death Spiral" and the End of APPENDIX: Regression Analysis 389 Landline Telephone Service Terms to Learn 397 Assignment Material 397 External Reporting 342 Questions 397 Exercises 397 Problems Tax Requirements 344 Collaborative Learning Problem 410 Planning and Control of Capacity Costs 345 Difficulties in Forecasting Chosen Denominator-Level 11 Decision Making and Relevant Concept 345 Information 412 Relevant Costs, JetBlue, and Twitter, Information and the Decision Process 413 Costs 346 c A... Concept of Relevance 414 Relevant Costs and Relevant Revenues 415 Problem for Self-Study 346 Decision Points 348 Qualitative and Quantitative Relevant Information 416 APPENDIX: Breakeven Points in Variable Costing and An Illustration of Relevance: Choosing Output Absorption Costing 349 Levels 416,..., One-Time-Only Special Orders 416 Terms to Learn 350 Assignment Material 350,,. Potential Problems Relevant-Cost Analysis 419 Questions 350 Exercises 351 Problems 356 Insourcing-versus-Outsourcing and Make-versus-Buy Collaborative Learning Problem 361 Decisions Outsourcing and Idle Facilities Determining How Costs Behave 362 Management Accountants at Cisco Embrace Concepts in Action: Pringles Prints and the Offshoring Opportunities, Enhance Sustainability of Basic Assumptions and Examples of Cost Functions 363 International Outsourcing 422 Basic Assumptions 364 Opportunity Costs and Outsourcing 423 Linear Cost Functions 364 The Opportunity-Cost Approach 424 Review of Cost Classification 365 Carrying Costs of Inventory 425 Identifying Cost Drivers 366 Product-Mix Decisions with Capacity Constraints 427 The Cause-and-Effect Criterion 367 Customer Profitability, Activity-Based Costing, and Cost Drivers and the Decision-Making Process 367 Relevant Costs 428 Cost Estimation Methods 368 Relevant-Revenue and Relevant-Cost Analysis of Industrial Engineering Method 368 Dropping a Customer 430 Conference Method 368 Relevant-Revenue and Relevant-Cost Analysis of Account Analysis Method 369 Adding a Customer 431 Quantitative Analysis Method 369 Relevant-Revenue and Relevant-Cost Analysis of Closing or Adding Branch Offices or Segments

5 Irrelevance of Past Costs and Equipment-Replacement 13 Strategy, Balanced Scorecard, and Decisions 432 Strategic Profitability Analysis 488 Decisions and Performance Evaluation 434 Problem for Self-Study 435 Decision Points 437 Leading Consultancy What Is Strategy? 489 APPENDIX: Linear Programming 438 Capabilities: Quality Improvement Terms to Learn 440 Assignment Material 441 at Chipset 491 Questions 441 Exercises 441 Problems 446 Collaborative Learning Problem 453 Scorecard 492 The Balanced Scorecard 492 and the Balanced 12 Pricing Decisions and Cost Implementing a Balanced Scorecard 496 Management Aligning the Balanced Scorecard to Strategy 497 Target Pricing and Tata $2,500 Car Features of a Good Balanced Scorecard 497 Major Influences on Pricing Decisions 455 Pitfalls in Implementing a Balanced Scorecard 498 Customers, Competitors, and Costs 456 Evaluating the Success of Strategy and Costing and Pricing for the Short Run 456 Implementation 499 Relevant Costs for Short-Run Pricing Decisions 457 Strategic Analysis of Operating Income 500 Strategic and Other Factors in Short-Run Pricing 457 Growth Component of Change in Operating Effect of Time Horizon on Short-Run Pricing Income Decisions 457 Price-Recovery Component of Change in Operating Costing and Pricing for the Long Run 458 Income 503 Calculating Product Costs for Long-Run Pricing Productivity Component of Change in Operating Decisions 458 Income 504 Alternative Long-Run Pricing Approaches 459 Further Analysis of Growth, Price-Recovery, and Target Costing for Target Pricing 461 Productivity Components 505 Understanding Perceived Value 461 Concepts in Action: The Growth Versus Profitability Competitor Analysis Choice at Facebook Implementing Target Pricing and Target Costing 462 to Concepts in Action: Extreme Target Pricing and Cost Strategy 507 Management at IKEA Downsizing and the Management of Processing Value Engineering, Cost Incurrence, and Capacity Engineered and Discretionary Costs 508 Value-Chain Analysis and Cross-Functional Identifying Unused Capacity for Engineered and Teams 464 Discretionary Overhead Costs 509 Achieving the Target Provalue 465 Managing Unused Capacity 509 Cost-Pius Pricing 467 Cost-Pius Target Rate of Return on Investment 467 Problem for Self-Study 510 Decision Points 514 Alternative Cost-Pius Methods Cost-Pius Pricing and Target Pricing 469 APPENDIX: Measurement 514 Life-Cycle Product Budgeting and Costing 469 Terms to Learn 517 Assignment Material 517 Life-Cycle Budgeting and Pricing Decisions 470 Questions 517 Exercises 517 Problems 520 Customer Costing 471 Collaborative Learning Problem 523 Additional Considerations for Pricing Decisions 472 Cost Allocation, 473 Sales-Variance Analysis 524 Antitrust Laws 473 Express Services (Overseas Group): Analyzing Customers at the United Arab Emirates 1 Branch Problem for Self-Study 474 Decision Points 476 Terms Allocation 525 to Learn 477 Assignment Material 477 Questions 477 Criteria to Guide Cost-Allocation Decisions 526 / Exercises 478 Problems 482 Collaborative Learning Cost Allocation Decisions 528 Problem 487 Allocating Corporate Costs to Divisions and Products 530

6 Implementing Corporate Cost Allocations Bundled Products and Revenue Allocation Methods 582 Customer-Profitability Analysis 532 Bundling and Revenue Allocation 582 Customer-Revenue Analysis 533 Revenue-Allocation Method 583 Customer-Cost Analysis 533 Incremental Revenue-Allocation Method 584 Customer-Level Costs 534 Customer-Profitability Profiles 536 Problem for Self-Study 586 Decision Points 588 Presenting Profitability Analysis 537 Material 589 Questions 589 Using the Five-Step Decision-Making Process to Exercises 589 Problems 593 Collaborative Learning Manage Customer Profitability 539 Problem 597 Concepts in Action: Measuring Customer Profitability of Subscription-Based Services.,, Allocation: Joint Products and Sales Variances 540 Byproducts 598 Static-Budget Variance 542 Joint Cost Allocation and the Production of Ethanol Fuel Flexible-Budget Variance and Joint-Cost Basics 599 Variance 542 Allocating Joint Costs 601 Sales-Mix Variance 543 Approaches to Allocating Joint Costs 601 Sales-Quantity Variance 543 Sales Value at Splitoff Method 602 Physical-Measure Method 604 Problem for Self-Study 545 Decision Points 547.., Net Realizable Value Method 605 APPENDIX: Mix and Yield Variances for Substitutable Constant Gross-Margin Percentage NRV Method 606 Inputs 547 Choosing an Allocation Method 608 Not Allocating Joint Costs 609 Terms to Learn 550 Assignment Material 551 Irrelevance of Joint Costs for Decision Making 609 Questions 551 Exercises 551 Problems 556 Decisions 609 Collaborative Learning Problem 563 Joint-Cost Allocation and Performance Evaluation Allocation of Support-Department Costs, Pricing Decisions 611 Common Costs, and Revenues 564 Accounting for Byproducts 611 Cost Allocation and the Future of "Smart Grid" Energy Concepts in Action: Byproduct Costing Keeps Wendy's Infrastructure Allocating Support Department Costs Using the Single- Production Method: at Time and Dual-Rate Methods 565 Production Completed Single-Rate and Dual-Rate Methods 566 Allocation Based on the Demand for (or Usage of) Sale 614 Recognized at of Computer Services 566 Problem for Self-Study 614 Decision Points 617 Termsto Allocation Based on the Supply of Capacity 567 Assignment Material 618 Questions 618 Single-Rate Versus Dual-Rate 568 Learning Budgeted Versus Actual Costs, and the Choice of Problem 627 Allocaton Base 569 Budgeted Versus Rates 17 Process Costing 628 Budgeted Versus Actual Usage 570 Allocating Costs of Multiple Support Departments 572 ExxonMobil and Accounting Differences in the Oil Patch Direct Method 572 Illustrating Process Costing 629 Step-Down Method 573 Costing with No Beginning or Ending Reciprocal Method 575 Work-in-Process Inventory 630 Overview of Methods 578 Costing Zero Beginning and Some Allocating Common Costs 579 Ending Work-in-Process Inventory 631 Stand-Alone Cost-Allocation Method 579 Equivalent Units (Steps 1 Incremental Method 579 and 2) 632 Cost Allocations and Contract Disputes 580 Calculation of Product Costs (Steps and 5) 633 Contracting U.S. Government 581 Journal Entries 634 Fairness of Pricing 581 Costing with Some Beginning and Some Concepts in Action: Contract Disputes over Reimbursable Costs for the U.S. Department 636 Of Defense First-Out Method 639

7 Comparison of Weighted-Average and FIFO 19 Balanced Scorecard: Quality, Time, and Methods 642 the Theory of Constraints 692, Costs in Process Costing 643.,,, «Toyota Plans Changes After Millions of Defective Cars Costs and the Weighted-Average Method 644 Are Recalled Transferred-In Costs and the FIFO Method 646 Quality as a Competitive Tool The Financial Perspective: Costs of Quality 694 Points to Remember About Costs 64/. Overview of Operation-Costing c Systems 648 The Customer Perspective: Nonfinancial Measures or Hybrid Costing Systems 648 The Internal-Business-Process Concepts Action: Hybrid Costing for Customized.,. Perspective: Analyzing Shoes at Adidas Customer Quality Problems Satisfaction and Improving Quality 697., Nonfinancial Measures of Internal-Business-Process Illustration of an Operation-Costing System 649 The Learning-and-Growth Perspective: Quality Problem for Self-Study 652 Decision Points 653 Improvements 700 Making Decisions and Evaluating Quality APPENDIX: Standard-Costing Method of Process Performance 700 Costing 654 Time as a Competitive Tool 702,,. Customer-Response Time and On-Time Terms to Learn 658 Assignment Material 658 p f 703 Questions 658 Exercises 658 Problems 662 Time Drivers 704 Collaborative Learning Problem 665 c ' ' Relevant Revenues and Relevant Costs of Time 706 Rework Delays Boeing by Three Years of Constraints and Throughput-Margin Defining Spoilage, Rework and Scrap 667 Analysis 708 Two Types of Spoilage 668 Managing Bottlenecks 708 Normal Spoilage 668 Balanced Scorecard and Time-Related Measures 710 Abnormal Spoilage 668 Spoilage in Process Costing Using Weighted-Average Problem Self-Study 711 Decision Points 712 Terms to FIFO 669 Learn 713 Assignment Material 713 Questions 713 Count All Spoilage 669 Exercises 713 Problems 718 Collaborative Learning Five-Step Procedure for Process Costing with Problem 723 Spoilage 670 Weighted-Average Method and Spoilage Inventory Management, Just-in-Time, FIFO Method and Spoilage 671 and Simplified Costing Methods 724 Journal Entries 674 «.... Inspection Points and Allocating Costs of Normal to Spoilage 674 Tough Times Job 677 Costing and Spoilage Inventory Management Retail Organizations 725 Job Costing and Rework 678 Costs Associated with Goods for Sale 725 Accounting for Scrap 679 Economic-Order-Quantity Decision Model 726 Recognizing Scrap Sale 679 When to Order, Assuming Certainty 729 Recognizing Scrap Its Production 680 Safety Stock Concepts in Action: Managing Waste and Effects 731 Environmental Costs at KB Home Considerations in Obtaining Estimates of Relevant Problem for Self-Study 682 Decision Points 682 Costs 731 Cost of a Prediction Error 731 APPENDIX: Standard-Costing Method and Spoilage 683 Conflict Between the EOQ Decision Model and Terms to Learn 685 Assignment Material 685 Managers' Performance Evaluation 732 Questions 685 Exercises 685 Problems 688 Just-in-Time Purchasing 733 Collaborative Learning Problem 691 Parameters 733 Relevant Costs of JIT Purchasing 733 Supplier Evaluation and Relevant Costs of Quality and Timely Deliveries 734

8 JIT Purchasing, Planning and Control, and Supply- Collaborative Learning Problem 794 Answers to Exercise Chain Analysis 735 in Compound Interest (Exercise 794 Inventory Management, MRP and JIT Production 736 Materials Requirements Planning Management Control Systems, Transfer JIT Production 737 Pricing, and Multinational Features of JIT Production Systems 737 Considerations 796 Financial Benefits of JIT and Relevant Costs 737 Transfer Pricing Disputes and Tax Issues Stop JIT in Service Industries 738 Enterprise Resource Planning (ERP) Systems 738 Collaborations Between Subunits of Mehr Co. Concepts in Action: After the Encore: Just-in-Time Management Systems Live Concert Recordings Effective Management Control Performance Measures and Control JIT Decentralization Production Benefits of Decentralization 799 Ettect of Systems on Product Costing Costs of Decentralization 800 Costing 740. Comparison of Benefits and Costs 801 Simplified Normal or Standard Costing Systems , Decentralization Multinational Companies 801 Accounting for Variances o Choices About Responsibility Centers 801 Special Considerations Costing 74s,.. Transfer Pricing 802 Criteria for Evaluating Transfer Prices 802 Problem for Self-Study 750 Decision Points 751 Calculating Transfer Prices 803 Learn 752 Assignment Material 753 Questions 753 An Illustration of Transfer Pricing 803 Exercises 753 Problems 756 Collaborative Learning Market-Based Transfer Prices 806 Problem 759 Perfectly-Competitive-Market Case 806 Distress Prices Capital Budgeting and Cost Analysis 760 Imperfect Competition Hybrid Cost-Based Transfer Transfer Prices Prices Target's Capital Budgeting Prorating the Difference Between Maximum and Stages of Capital 761 Variable-Cost Minimum Transfer Bases 809 Prices 810 Discounted Comparison Cash of Flow Net Present 763 and Internal Rate-. Net of-return Present Value Methods Method , Internal..... Method 765 Dual Pricing 811 A General Guideline for Transfer-Pricing Situations 812.,. Multinational Transfer Pricing and Tax Uniform Cash Flows Considerations 813 Nonuniform Cash Flows 769 Transfer Pricing for Tax Minimization Accrual Accounting Rate-of-Return Method 771,... Relevant Cash Flows in Discounted Cash Flow " Transfer Anal sis 772 Temporarily Stops me Flow of FIJI Water Relevant After-Tax Flows Categories Cash Flows 774 Additional Issues Transfer Pricing 816 Project Management and Performance Evaluation 777 Problem for Self-Study 816 Decision Points 818 Terms Post-Investment Audits 778 Assignment Material 819 Questions 819 Performance Evaluation Exercises 820 Problems 823 Collaborative Learning Strategic Considerations in Capital Budgeting Investment in Research and Development 779 Customer Value and Capital Budgeting 779 Performance Measurement, Problem for Self-Study 781 Decision Points 783 Compensation, and Multinational Considerations 828 Misalignment Between CEO Compensation and APPENDIX: Capital Budgeting and Inflation 784 Performance at Financial and Nonfinancial Performance Measures 829 Terms Leam 786 Assignment Material 786 Accounting-Based Measures for Business Units 830 Questions 786 Exercises 786 Problems 790 Return on Investment 831

9 Residual Income 832 Economic Value Added 834 Return on Sales 835 Comparing Performance Measures 835 Strategy and Levers of Control 848 Choosing the Details of the Performance Measures 836 Boundary Systems 848 Alternative Time Horizons 836 Belief Systems 849 Alternative Definitions of Investment 837 Interactive Control Systems 849 Concepts in Action: Government Bailouts, Record Profits, and the 2009 Wall Street Compensation Dilemma Alternative Asset Measurements 837,.,.,...., Problem for Self-Study 849 Decision Points 851 Term Target Levels of Performance and Feedback 840 Choosing Target Levels of Performance 840 ' Assignment Material 852 Questions 852 Choosing the Timing of Feedback 840 Collaborative Learning Performance Measurement in Multinational Problem 860 Companies 841 Appendix A 861 Calculating the Foreign Division's in the Foreign Currency 841 Appendix B: Recommended online Calculating the Foreign Division's ROI in U.S. Dollars 842 Appendix C: Cost Accounting in Professional Distinction Between Managers and Organization online Units The Basic Trade-Off: Creating Incentives Versus Imposing Risk 843 Glossary 868 Intensity of Incentives and Financial and Author Index 879 Nonfinancial Measurements 844 Benchmarks and Relative Performance Evaluation 845 Company Index 880 Performance Measures at the Individual Activity Subject Index 882 Level 845 Executive Performance Measures and Compensation 846