LANGFIELD-SMITH THORNE SMITH HILTONMANAGEMENT f 13 Information for Creating and Managing Value @ KIM LANGFIELD-SMITH 1 HELEN THORNE @ DAVID SMITH @ RONALD HILTONws (eng ca (Copyright © 2015 McGraw-Hill Education Australia) Pty Ltd ‘Additional owners of copyright are acknowledged in on-page credits, ‘very effort has been made to trace and acknowledge copyrighted material. The authors and publishers tender their apologies should any infringement have occurred. 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Title: Management accounting: information for creating and managing value/Kim Langfield-Smith, Helen Thorne, ‘David Smith, Ronald Hilton,Chapter Chapter 2 % Chapter 3 SO Chapter 4 \p Chapters Chapter 6 Chapter 7 ¥ Chapter 8 chapter 9 Chapter 10 x Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 "Chapter: 19 Chapter 20 Chapter 21 INTRODUCTION TO MANAGEMENT ACCOUNTING Management accounting: information for creating value and managing resources Management accounting: cost terms and concepts COSTS AND COSTING SYSTEMS Cost behaviour, cost drivers and cost estimation Product costing systems Process costing and operation costing Service costing A closer look at overhead costs Activity-based costing INFORMATION FOR MANAGING RESOURCES Budgeting systems Standard costs for control: direct material and direct labour Standard costs for control: flexible budgets and manufacturing overhead Managing and reporting performance Financial performance measures and incentive schemes Strategic performance measurement systems Managing suppliers and customers Managing costs and quality, INFORMATION FOR CREATING VALUE — Sustainability and management accounting Cost volume profit analysis Information for decisions: relevant c Pricing and product mix decisionsContents in full Preface xv Text ata glance wai ‘About the authors xvi Acknowledgments xiv ‘About this edition xvii Connect digital resources wavi ‘About the digital resources wi fee Introduction to management accounting | Chapter 1 | Management accounting: information for creating value and managing resources 4 lian organisations in the twenty-first century 5 Some important considerations in the design of ee management accounting systems 9 industry 6 Management accou ing responses to the changing business environment a Learning objectives A 9 Summary 2 ea al era, 3 anagement accountants within organisations 10 References 23 i Appendic 24 Key terms (appendix) 7 Review questions 2, B Exercises 28 Problems 3 Cases 3 W ” e & 37 _REALLIFE Theres plenty of gold, but at what cost? "Cost flows ina manufacturing businessChapter 3 Cost behaviour, cost drivers and cost estimation What are cost behaviour, cost estimation and cost prediction? Cost drivers REAL LIFE Cost drivers at Holden Engine Company REAL LIFE Managing costs in challenging times REAL LIFE Cost behaviour and cost management at Qantas Cost behaviour patterns REAL LIFE Cost behaviour in Australian companies REAL LIFE The behaviour of labour costs in the ‘current business environment Using cost behaviour patterns to predict costs Chapter 4 Product costing systems Product costing REAL LIFE The cost of Australian wine REAL LIFE Costing defence contracts REAL LIFE Product costing in small business Flow of costs in manufacturing businesses Allocating overhead costs to products REAL LIFE Product costs at Coopers Brewery 13 a n a n 7” 7 87 124 125 126 128 128 Cost estimation Practical issues in cost estimation Effect of learning on cost behaviour Learning objectives Summary Key terms References Self-study Appendix Key terms (appendix) Review questions Exercises Problems Cases Leaning objectives Summary Key terms References Selfstudy Appendix Key term (appendix) Review questions Exercises Cases sessyuaz2e2 on Ras 122 ww 151 151REAL LIFE Which costing system for Australian wine? Other issues in process costing Learning objectives Summary Key terms References Chapter 6 Service costing What are service organisations? Cost classifications in service organisations REALLLIFE The costs of services provided by Australis’ hospitals Estimating service costs REAL LIFE Service costing in the NSW public sector jank. Costing services at Adela REALLIFE The bilng system at SimsPartners REAL LIFE The downside of using billable hours to charge for legal services = _ When should firms estimate their service costs? m 194 7 195 196 196 221 223, 206 27 232 236 240 243 Self study Appendix Key term (appendix) Review questions Exercises Problems Cases REAL LIFE The costs and benefits of service costs at Hyde and Partners Flow of costs in service firms Costing in retail and wholesale businesses Learning objectives Summary Key terms References Self study Review questions Exercises Problems Cases Allocating support department costs Learning objectives Summary Key terms References Selfstudy Appendix Key terms (appendix) Review questions Exercises Problems Cases 200 204 204 205 210 a7 220 245, 246 247 220 249 251 251 251 254 255 259 267 272 290 272 298 299 300 308 308 a3 320Chapter 8 Activity-based costing 324 Problems with conventional product costing REAL LIFE ABCin the New Zealand Blood Service 341 ves 328 REAL LIFE The adoption of ABC in Australia Product costing at Mason & Cox 328 and New Zealand 3al ‘Activity-based costing at Mason & Cox 330 Other activity-based costing issues 342 Initial decisions about ABC at Mason & Cox 331 Activity-based costing in service organisations 344 Stenrenet rentinie tee encts of te REAL LIFE Counting the cost of childhood ‘manufacturing overhead activities 332, Immunisation 345 Step two: assigning the costs of manufacturing Learning objectives 324 overhead activities to products 334) Simard) 345 Key terms 346 REAL LIFE Activity-based costing in the NSW. References 36 public sector 357 Selfstudy 3a7 ‘Activity-based versus traditional product costs Appendix 350 at Mason & Cox 358) pol Meu ferns (onrencay) as Review questions 359 REAL LIFE Costing hospital care 389 Exercises 360 Coats versus benefits of ABC at Mason & Cox 340 Problems = When should ABC be used? 340) Part 3 Information | Chapter 9 Budgeting systems 386 Strategic planning and budgeting systems 387 Behavioural consequences of budgeting 405 Purposes of budgeting REAL LIFE Budgeting practices in Austral 406 Responsibility accounting Zero-base budgeting ‘408 REAL LIFE ‘Beyond budgeting’ and other Program budgeting 409 budget adaptations Esai obiectites , The annual budget: a planning too! REAL LIFE Budgeting at the Australian Ballet School Budgeting at AVJennings Lid REAL LIFE Budgeting for major events: the Olympic Games Budgetadminstation a 8 3pter 10 dard costs for control: direct material and direct labour rolling costs 443. Standard costs for product costing ng standards 444 Learning objectives loping standards at .M. Williams aap, slating standard cost variances 449 ‘References “LIFE Cost pressures and variance analysis, el seedy a asa Appencln PI Key terms (appendix) tigating significant variances and taking Review questions sctive actions 454 Exercises control through assigning responsibility 459 a dard costing and behaviour 461 apter 11 dard costs for control: flexible budgets and manufacturing overhead ible budgets 487 _ Activity-based budgeting ible overhead budget: RM. Williams 490 Learning objectives head application in a standard costing aed em 492 ese References lating overhead cost variances 492 Self-study Appendix thead rma gene jead cost performance report oem rhe te Oharcis dard costs for product costing 499 Review questions ible budgets in service organisations so Exercises = Problems ppraisal of standard costing systems Sol) Cases 504 531 Responsibility centres More complex structures REAL LIFE Shared services to enhance customer value and manage costs Financial performance reporting Transfer pricing 442 461 442 464 464 465, 465 468 469 470 an 474 482 486 505 486 508 509 509 509 512 513 515 514 518, 526 530 534 536Chapter 13 Financial performance measures and incentive schemes Financial measures in investment centres Return on investment Residual income Measuring profit and invested capital Measures of shareholder value Incentive schemes REAL LIFE Senior executive pay in Australia REAL LIFE Employee share ownership is more than an incentive compensation scheme Chapter 14 Learning objectives Key terms References Self'study Review questions Problems Cases Strategic performance measurement systems The problems with using traditional financial performance measures in isolation The advantages of non-financial measures Selecting operational measures The limitations of non-financial performance measures The balanced scorecard REAL LIFE Managing performance at JAG REAL LIFE Messuring impact in charitable organisations Strategy maps REAL LIFE Customising the balanced scorecard Developing a balanced scorecard for the Cooktown Bus Company 5 oy or 620 621 623, 624 624 626 627 How successful are balanced scorecards? Does non-financial performance lead to. financial performance? Benchmarking Learning objectives Summary Key terms References Self-study Review questions Exercises Problems Cases 558 589, 562 7 578 578 597, 598 598 598. 601 602 604 610 614 629 630 32 64 635, 636 636 or 639 640 642 648chapters | Managing suppliers and customers Supply chain management REAL LIFE A product not a commodity ‘anew supply chain for Tesmarian wool REAL LIFE Driving supply chain improvements at Coles | Managing sup Managing inventory ‘Managing customers REAL LIFE Is JIT too risky? REAL LIFE Managing customers with social media Chapter 16 Managing costs and quality ‘Cost management Activity-based management REAL LIFE Lean thinking atthe city of 655 655 656 656 661 668 669) n 705 706 no 73 74 75 7 Managing time Learning objectives Summary Key terms References Selfstudy Appendix Key terms (appendix) Review questions Exercises Problems Cases Managing quality REAL LIFE Managing costs, throughput and quality for customer value: Flinders Medical Centre Learning objectives Summary Key terms References Self-study Review questions Exercises Problems Cases Sustainability and management counting Recognising and measuring economic, ‘environmental and socal impacts REAL LIFE The valuation of environmental limpect PUMA and beyond Environmental management accounting 652 os 652 680 680 682 685, 687 688 689 692 704 m mm 704 78 m8 n9 730 73) 732 736.Environmental costs Sustainability and supply chain management REAL LIFE Alife cycle analysis of carbon, REAL LIFE Environmental costing at GH Michell & Sons REAL LIFE A sustainability scorecard at Westpac Strategic performance measurement systems and sustainability Chapter 18 Cost volume profit analysis 74, 768 768 ™m ™ 75 CYP analysis at the Melbourne Theatre Company 797 The break-even point The break-even formula REAL LIFE The importance of the break-even point at Linneys REAL LIFE A sundae too far away Graphing cost volume profit relationships Target net profit Using CVP analysis for management decision making CYP analysis with multiple products REAL LIFE Salmon-a fishy success story Including income taxes in CVP analysis Chapter 19 Information for decision: The management accountant's role in decision making REAL LIFE What role do accountants play in decision making? Relevant information Identifying relevant costs and benefits Relevant information for some common 799, 799. 800 802 802 804 806 B10 an an 845 847 B49 850 854 Sustainability and capital expenditure analysis Learning objectives Summary Key terms References Self-study Review questions Exercises Problems Cases Practical issues in CVP analysis REAL LIFE Making the most of our coffee culture ‘An activity-based approach to CVP analysis Financial planning models Learning objectives Summary Key terms References Self-study Appendix Key terms (appendix) Review questions Exercises Problems Cases elevant costs and benefits REAL LIFE Outsourcing, you cen bank on it REAL LIFE Sustainable solutions for by-products Implications of activity-based cost analysis for decisions Incentives for decision makers Pitfalls to avoid when using accounting data_ for decisions 752 780 781 781 782 785 786 789 792 796 a3 as aS 8 796 Bat 822 822 822 825, 828 828 829 852 838 86) 867 §&Leaning objectives Summary Key terms References Selfstudy Appendix Chapter 20 Pricing and product mix decisions Major influences on pricing decisions REAL LIFE Battling for Australias skies Key terms (oppendix) 871 Review questions 9 872 Exercises 8 872 Problems 873 Cases m1 875 897 Product mix decisions 900 Leaning objectives Economie profit- maximising models go funny Pricing strategies 903 References Se err oducts, Self-study Strategic pricing of new product Gey ees Competitive bidding 9 Key terms (appendix) Legal restrictions on setting prices 2 we ee) REAL LIFE Proving predatory pricing: Problems 2 challenge for the ACCC 93 Cases REALLIFE The penalties of price fixing m4 Chapter 21 Information for capital expenditure decisions 942 Capital expenditure decisions 943 Post-completion audits of capital expenditure decisions Cash flows vas 1PM eo Justification of investments in advanced The capital expenditure approval process 944 technologies es ae peessiestthe REAL LIFE What drives investments in technology? 972 pecan vencalcentre Beier lirniations of tacitonel capital Discounted cash low analysis 947 expenditure analysis 9 ‘Comparing two alternative investment projects 952 Learning objectives 942 Summar. 975 REAL LIFE Fleet renews decisions at Qantas: aie ae the A380 and B787 985 References 77 Selfstudy m7 956 Appendix 980 Review questions 984 Exercises 985. 957 Problems 988 go Cases 995 962 996 Index 10HPreface One of the challenges we always face in writing new editions of this book is to capture current thinking and practicein management accounting, whichare ina continual state of change. Unlike the financial accountingarea, there are no accounting standards or legally enforceable practices in management accounting. Management accounting takes place within organisations and can be quite specific to each business, Also, to understand the nature of management accounting practice we need to understand the broader aspects of business practice across a range of areas including strategy, marketing, human resource management, operations management and organisational behaviour. Management accounting both draws on and contributes to these areas, ‘Our approach in presenting this subject to students and managersis to focus on cutting-edge management accounting as practised by leading organisations in Australia and overseas, while at the same time acknowledging that some firms are satisfied with more traditional approaches. Since the first edition of this book appeared in the early 1990s, there have been dramatic changes in thinking about the role of management accounting in organisations. Once it was sufficient to describe management accounting as being concerned with providing information for planning and control, and for decision making, However, the role of management accounting is now more complex. It is now concerned with the processes and technologies that enable the effective use of organisational resources to support managers in enhancing customer and shareholder value. Supply chain management approaches provide a framework for integrating contemporary cost management and performance measurement. The issue of sustainability is now increasingly important as businesses seek to understand and menage any adverse impact they have on the environment and society. The processes and technologies of management accounting that enhance shareholder and customer value are evolving over time and require an intimate knowledge of the nature of the business, its markets, its strategy and its people. Over the decades the practice of management accounting has developed to become more integrated with the process of management, and less a part of the practice of accounting, with management accountants playing a significant role as part of the management team. The book has been written primarily as a text for one- or two-semester undergraduate management accounting courses, The references at the end of each chapter provide guidance on additional readings. With its description of current practice and strong emphasis on the new developments in management and management accounting, this book also provides a sound foundation for a management accounting unit within an MBA course. While the origins of the text can be traced to the US text, Managerial Accounting, by Ronald Hilton, it hes always differed from its US counterpart. It has been developed using major cases based on real Australian businesses, and it includes numerous illustrations~‘Real lfes-of current management accounting practices cof organisations in Australia, New Zealand and the wider Asia-Pacific region. The Australian book takes a broad perspective in viewing management accounting as the efficient and effective use of resources, supporting managers in the improvement of customer and shareholder value. The rapidly changing business environment is seen as having implications for the development of new approaches to management accounting. We sincerely welcome any comments or suggestions from the lecturers and students who use this text. Kim Langfield-Smith Helen Thorne David SmithAbout the authors Kim Langfield-Smith Kim has a BEc from the University of Sydney, a MEc from Macquarie University and a PhD. from Monash University. She isa fellow of CPA Australia and the Institute of Chartered Accountants in Australia (ICAA), and a graduate of the Australian Institute of Company Directors. She is a Vice-provost at Monash University as well as Professor of Management ‘Accounting, Her prior appointments were at La Trobe University, the Universities of Melbourne and Tasmania, and the University of Technology, Sydney. Before entering academic life Kim worked as an accountant in several commercial organisations. Her research interests are in the area of management control systems, and her research has been published in many journals, including Accounting, Organizations and Society; Journal of Management Accounting Research; Management Accounting Research; Behavioral Research in Accounting; Journal of Accounting Literature; and Journal of Management Studies. Kim continues to play an active role in the accounting profession. She is chair of the Professional ‘Qualifications Advisory Committee of CPA Australia, and a former member of the International Accounting Education Standards Board (IAESB), representing the CAA and CPA Australia Helen Thorne Helen has a BEc and DipAcc from Flinders University, and @ PAD from the University of ‘Adelaide. She is an adjunct professor in the International Graduate School of Business at the University of South Australia, Helen has also held appointments in the Graduate School of Management and the Commerce Department at the University of Adelaide. Her research focuses on contemporary approaches to management accounting, including activty-based costing and strategic performance measurement systems, and she has published in journals, including Journal of Accounting Literature; Journal of Cost ‘Management; Advances in Management Accounting: and Australian Accounting Review. Before commencing her academic career, Helen worked as a management accountant jor international company. Since then she has maintained her interest in the ‘teal world’, She is 2 the Department of Accounting at Monash sity and has previously held appointments at the University of Melbourne and La s research is in the area of management control systems, with a particular focus 2 measurement, and his research has been published in journals including tions and Society; Management Accounting Research; Behavioral g; Journal of Accounting Literature; and Accounting, Auditing and David is also a member of the Chartered Australasia Research Panel.About this edition ze In response to requests from adopters, each chapter contains a number of changes. On average, more then 40 per cent of the end-of-chapter learning activities (review questions, exercises, problems and cases) are either completely new or include new data. Major changes to each chapter, including changes to the end-of- chapter mate are described in the table below. New to this edition Chapter?) Management accounting: information for creating value and managing resources + Extensive revisions simplify and modernise the material. + The Wendy's case that was the chapter focus in prior editions has been replaced with a range of more recent case examples The ‘Strategy and the management accountant’ material has been updated. New ‘Real lifes’ covering big data and the management accountant, and the accountant in the modern ‘environment have been added. Other ‘Real ifes have been updated. Seventeen of the 42 end-of-chapter questions are new or include new data. Management accounting is presented as supporting managers in their rle of enhancing customer and shareholder value through the efficient and effective use of organisational resources. The link between strategy and management accounting lays a foundation for the strategic focus that permeates this book, + This classic chapter, which lays the foundation by CMe nee eee ee ee introducing students to a range of commonly used cost concepts, has not required any significant updates, although 19 ofthe 42 end-of-chapter questions are new or include new data, updated, and linked to end-of-chapter questions. + Fifteen of the 43 end-of-chapter questions are new or include new data. Several questions allow students to respond by constructing an Excel® spreadsheet. This chapter introduces students to the terminology of management accounting before covering concepts in more detail later inthe book. Chapter 3 Cost behaviour, cost drivers and cost estim: + One new ‘Real life! has been added and another has been’ This chapter maintains the current approach to explaining cost behaviour, cost drivers and cost estimation. Cia nae een eeu + Seventeen of the 43 end-of-chapter questions are new or ‘One ‘Real life’ example has been updated. include new data. Twenty of the 45 end-of-chapter questions are new or include new data. Nineteen of the 48 include new date, Chapters 4 and 5 focus on traditional ‘approaches to product costing, focusing primarily on job costing systems. ‘Chapters 4 and 5 focus on treditional p ‘costing approaches of process cosStn nn + Twenty-two of the 45 end-of-chapter questions are new or include new data Cree + Three new Real if’ examples have been provided—one looking at costingin the UK's National Health Service, one ‘on the use of actvity-based costingin the New Zealand Blood Service, and one focusing on calculating the cost of childhood immunisations. + Eighteen ofthe 49 end-of chapter questions are new or inelude new data. et ee + Anew ‘Real lif on budgeting for major events has been added and the ‘Real lf’ on budgeting practices in ‘Australia has been updated. + Twenty-two ofthe 42 end-of chapter questions are new or include new data. CMa + The Real life on cost pressures and variance analysis in hospitals has been updated. + Material on standards and behaviour has been brought together in a single section. Twenty ofthe 46 end-of-chapter questions are new or lude new data, "Anew ‘Real life on adapting standard costs for modern - timesis included. seen ofthe 45 end-cfchapter questions are new or has been restructured; the sections the characteristics of performance ave moved here from Chapter 4. Chapter 7 helps students develop a de understanding of the processes for alloca overhead costs to products. It includes an 8 introduction to activity-based approaches to estimating overhead costs This chapter describes common problems with traditional product costing systems and outlines the steps used in ativity-based costing This chapter presents a step-by-step guide to the budgeting process and describes some of the behavioural issues associated with budgeting. Chapter 10 focuses on traditional approaches to-estimating and controling product costs through standard costing focusing on the material and labour components. This chapter explains flexible budgets and standard costing for overhead. It also outlines the criticisms and advantages of standard ‘Modern and traditional approaches to ‘measuring financial performance are integrated with responsibilty accounting performance reports. Includes real-time reporting, the impact of shared services and team-based structures. Transfer pricing scenarios clearly ilustrate issues of goal congruence and incentives.Cee ee + The chapter has a new title, to reflect the change in focus from ‘reward systems’ to the more modern term ‘incentive systems. + The Real life! examples have been updated and linked to end-of-chapter questions. + Sixteen of the 42 end-of-chapter questions are new or include new data. This chapter presents internal financial reports and traditional financial measures, and an expanded section on value-based management. Up-to-date material on incentive systems is also included. The chapter title and the learning objectives have been vised to reflect changes in coverage of some material in iee The section on strategic performance measurement ystems, including balanced scorecards and strategy maps, has been reorgenised. ~ A new Real life’ on measuring performance in charitable organisations has been added. renty-one of the 44 end-of-chapter questions are new or include new data, This chapter focuses on the design of strategic performance measurement systems—financial and non-financial performance measures, the design of strategic performance measurement systems, and benchmarking. es + The material has been updated throughout the chapter. + Two new ‘Real life’ examples have been added on supply chain management at Coles, and using social media to manage customers. Other ‘Real lifes’ have been updated + Twenty-one of the 46 end-of-chapter questions are new or include new data Supply chain managements covered, with «a focus on managing suppliers, inventory, customers and time. Actvity-based approaches to the analysis of supplier and customer costs and performance indicators are outlined. Eee ee + The materia has been revised throughout the chapter + The section on throughput accounting has been simplified. + Anew ‘Real life’ example on lean thinking has been added. Other ‘Real lifes have been updated. + Eighteen of the 50 end-of-chapter questions are new or include new data. i + Major revision and modernisation of the material throughout the chapter. + Modern sustainability frameworks of the GRI and integrated reporting are now included. + Anumber of new exhit have been added on corporate responsibilty around the globe, sustainability reporting, sustainability scorecards, ‘and the valuation of environmental impact, ifteen of the 41 end-of-chapter questions are new or include new data. eee cneneeeen a Cost management techniques include activty-based management, business process reengineering, life cycle costing, target costing ‘and managing throughput. Quality concepts and cost of quality reporting are explained, the implications for management accounting systems and techniques, including cost analysis and management, performance measurement , 's and four new ‘Real ife' examples systems, and capital expenditure analysis. .+ Two new Reallifes'on the use of CVP analysis the Tasmanian salmon farming industry end in the management of coffee shops. + Twenty-seven of the 46 end-ofchapter questions are new or include new date. Grea none ee eee * The section on costing by-products has been moved from the Appendix to the main chapter. + New ‘Real life’ examples on the role of accountants in management decision making and sustainable solutions for by-products have been added. + Nineteen of the 46 end-ofchapter questions are new or include new d Greece enn “+ Material on the legal constraints on pricing has been updated. + Twonnew ‘Real life’ examples on the airline industry and price fixing have been included. + Fourteen of the 44 end-of chapter questions are new or include new data. Creo oe en + Includes a new section on real-options pricing analysis. + The Real ifes have been updated teen ofthe 47 end-of-chapter questions are new or | reeoreen Cees cS Cost volume profit analysis is presented as 2 tool to model the profit impact of changes in selling prices, costs and product mix, and formula-besed and graphical approaches. Methods for incorporating activty-based concepts are also included. This chapter demonstrates how management ‘accounting information can be used for @ variety of tactical decisions: accept or reject @ special order; add or delete a product, service cr department; and sel a joint product process it further This chapter includes factors that influence pricing strategies, models of cost-based pricing, and the legal restrictions of pricing behaviours. Techniques for considering pproduet mix decisions are also covered. This chapter presents techniques for analysing data for long-term investment decisions. The limitations of using traditional techniques to justify investments in advanced technologies are covered.About the digital resources ‘Management Accounting 7e comes with McGraw-Hill Connect~a digital teaching and learning environment that responds to contemporary students’ needs. Connect brings every learning resource that accompanies. this text together in one place, and can also integrate and interact with your LMS. Connect provides access to interactive versions of selected end-of-chapter exercises and problems with E worksheet and graphing functionality to allow students to practise what they are learning. Quizzes have been prepared for each chapter to provide the opportunity to check knowledge and understanding of chapter concepts, Instructors also have access to an Instructor Manual including solutions to end-of-chapter activities, PowerPoint® presentations and the testbank. Gweneth Norris BCom, MCom, PhD, FCPA, CMA Gweneth prepared the Instructor Manual, Gweneth retired from Charles Darwin University as Professor of Management (Accounting), where she was responsible for the accounting program and accounting research, She also spent many years atthe University of South Australia and at Deakin University in Geelong, Victoria. She is a past vice-president of the Institute of Certified Management Accountants (ICMA), and worked on the Geelong Branch Council of CPA Australia for ‘years, serving terms as chair and deputy chair. Gweneth was also a presenter of the ICMA graduate course ‘Advanced Management Accounting’ in Asia, teaching in both Singapore and Hong Kong. Robyn Parry BBus (Acc), MEd, MComm, CPA, AFAANZ Robyn prepared the testbank, PowerPoint slides and online chapter quizzes. Robyn has been an academic for over 12 years. She has taught accounting for decision and management accounting, corporate accounting, accounting theory and auditing i postgraduate accounting programs. Robyn is part of the academic team at the Univer was previously with James Cook University (Brisbane) and CQ University (Brisbane Robyn's career has evolved through public practice, including in the mining, cc sectors, before moving to accounting education, She has keen interest ir education and promoting the professional accounting bodies to students.Text at a glance ‘Real life’ features Chapter introduction Theory is one thing-but what happens in reality? The chapter introduction is an overview of the These short case studies provide examples of material to be covered, including links to relevant management and management accounting in topics in previous chapters. action largely within Australian and New Zealand org Key terms/margin definitions Key terms are bolded in the text where they first appear, defined in the margin and listed at the end of the chapter. Use the end-of-chapter Key terms checklist to test yourself when you finish the chapter. The definitions are also repeated in a full {glossary at the end of the book. ee Exhibits "These visual overviews of concepts, flow charts, The chapter summary is presented in dot point form for easy reading and revision, and links back to the learning objectives. Chapter summary tenesSelf-study problems and solutions These problems provide the perfect opportunity to better understand and revise key topics and techniques covered in the chapter. Reve ene Rees ame ene a) cream ee Review questions Short-answer questions test your knowledge of key words, terms and concepts presented in the chapter. nificant amount of new and updated end-< Exercises ‘These exercises provide an opportunity to apply some: of the techniques and concepts relating to the chapter ReviewQuestions Exercises Pilea ate adacennt tater PT staan ene eh mane ann Problems Longer, more in-depth problems allow you to apply quantitative techniques as well as theoretical concepts to organisational g° Problems Sie iceman yeasty Appendices | To help you extend and build your knowledge, end-of-_| chapter appendices provide in-depth visnaeta Cases Cases provide more comprehensive scenarios that require you to demonstrate your skils in applying both quantitative techniques and theoretical issues. cases provide opportunities for higher-level and may requie you to integrate material rom mai than one chapter,Acknowledgments We would like to thank a number of people who have helped us with the development of this textbook, including the hundreds of management accounting students we have taught over many years and the numerous managers and management accountants with whom we have interacted. Their enthusiasm, comments, ‘questions and experience have assisted our understanding and appreciation of management accounting. We ‘also thank our academic colleagues from around Australia and New Zealand who have provided feedback or reviewed parts of the manuscript. They include the following: Kenneth Ke, Curtin University Seventh edition Sumit Lodhia, University of South Australia (including their afiation at that time) Kathy Michael, Victoria University Refiuddin Ahmed, James Cook University, Carly Moulang, Monash University Zahir Ahmed, Auckland University of Technology Greg Van Mourik, Monash University Ranjith Appuhami, Macquarie University Jayce Naidoo, Victoria University David Bedford, University of Technology, Sydney Nirmala Nath, Massey University ‘Mandy Cheng, University of New South Wales John Niven, ADEA Glenda Davis, University of Western Sydney Jean Rear, Swinburne University of Technology John Donald, Deakin University Vg Sridharan, Deakin University Yuan Yuan Hu, Massey University Natasja Steenkamp, Central Queensland David Huelsbeck, The University of Melbourne University Zubaidah Ismail, Edith Cowen University Nicole Sutton, University of Technology, Sydney for providing the technical check, Gweneth Norris for her assistance with the to We thank lan Langfield: solutions manual and Robyn Parry for her work on the accompanying digital resources. We would also Ii ‘express our gratitude to the people at McGraw-Hill Education who guided this book through the publication process. In particular, we thank Robert Ashworth, Rosemary Noble, Carolina Bodin, Cynthia Moral, Claire Linsdell and Marisa Rey Bulen. a s David Emsley, Macquarie University Previous editions fei Fan, University of Canberra (including their afliation at that time) ‘Aldonio Ferriera, Monash University Robyn Alcock, Central Queensland University Peter Foreman, Deakin University Virmala Amirthalingam, Curtin University Carolyn Fowler, Victoria University of Wellington zard, Macquarie University Geoff Frost, University of Sydney Macquarie University Lynn Gallagher, Queensland University of Technology er, Macquarie University Peter Graham, University of Canberra Vicki Gelsby, Flinders University Bruce Gurd, University of South Australia Eva Heidhues, Macquarie University Kerry Jacobs, La Trobe University Stephen Jones, Open Polytechnic Louise Kloot, Swinburne University of Technology Dawn Lamminmki, Griffith University Michele Leung, University of Western Austral Phil Lignier, Central Queensland University Noel Loganathan, Northern Territory University ‘Tony McMurtrie, The University of Adelaide ‘Suzie Maloney, University of Southern Queensland (Bemie Mis Thet