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Cost Accounting: A Managerial Emphasis [Book Review]

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Abstract

1. The Accountant's Role in the Organization. 2. An Introduction to Cost Terms and Purposes. 3. Cost-Volume Profit Analysis. 4. Job Costing. 5. Activity-Based Costing and Activity-Based Management. 6. Master Budget and Responsibility Accounting. 7. Flexible Budgets, Variances, and Management Control: I 8. Flexible Budgets, Variances, and Management Control: II. 9. Inventory Costing and Capacity Analysis. 10. Determining How Costs Behave. 11. Decision Making and Relevant Information. 12. Pricing Decisions and Cost Management. 13. Strategy, Balanced Scorecard, and Strategic Profitability Analysis. 14. Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis. 15. Allocation of Support Department Costs, Common Costs and Revenues. 16. Cost Allocation: Joint Products and Byproducts. 17. Process Costing. 18. Spoilage Rework, and Scrap. 19. Quality, Time, and the Theory of Constraints. 20. Inventory Management, Just-in-Time, and Backflush Costing. 21. Capital Budgeting and Cost Analysis. 22. Management Control Systems, Transfer Pricing, and Multinational Considerations. 23. Performance Measurement, Compensation, and Multinational Considerations.
Book Reviews
Michael K. Shaub, Editor
Editor’s Note: Books for review should be sent to Michael K. Shaub, Texas
A&M University, Department of Accounting, 485H Wehner Building, 4353
TAMU, College Station, TX 77843–4353.
The policy of Issues in Accounting Education is to publish only those reviews
solicited by the Book Reviews Editor. Unsolicited reviews will not be ac-
cepted.
CHARLES T. HORNGREN, GEORGE FOSTER, SRIKANT M. DATAR,
MADHAV RAJAN, and CHRIS ITTNER, Cost Accounting: A Managerial Empha-
sis, Thirteenth Edition Upper Saddle River, NJ: Pearson Prentice Hall, 2009, pp.
xxvii, 870.
Cost Accounting: A Managerial Emphasis, Thirteenth Edition, is the most recent edition of
Horngren’s well-known cost accounting text. With the new edition, two new authors were added,
one from Wharton and another from Stanford. Interestingly, this edition focuses more on strategy
and decision making and emphasizes the use of different costs for different decision-making
needs. The first chapter introduces a general framework for decision making that is used in later
chapters. Conversely, the presentation of this edition is more simplified than the previous edition.
The content of the text is comprehensive, covering a wide range of cost-related topics in 23
chapters. Clearly, this is more information than can fit in a one-semester course. Each chapter
includes discussion of real companies and their cost accounting issues, which helps students see
the real world implications of cost accounting. The text is logically organized and generally well
written.
A strength of this text is how comprehensive it is, which allows the professor to choose the
chapters that most fit the course being designed. The first four chapters cover the basics of cost
terminology, cost behavior, cost-volume-profit analysis, and job costing, which are a good base to
start a cost accounting course. For a one-semester course in cost accounting, instructors will want
to choose an additional seven or eight chapters. The entire book could be covered in a two-
semester cost accounting course sequence, of course.
The end-of-chapter materials are another strength of this text. In each chapter, the exercises
and problems cover a variety of situations and methods, giving the instructor numerous choices
and allowing students access to plenty of practice problems. A large portion of these are updated
from the previous edition. The problems range from straightforward problem solving that rein-
forces specific cost accounting methods, to much more complex and lengthy problems that inte-
grate several concepts and require analysis and more advanced problem solving. This allows the
instructor to assign problems that range from short and simple to long and complex. This flex-
ibility is a nice option.
ISSUES IN ACCOUNTING EDUCATION American Accounting Association
Vol. 25, No. 4 DOI: 10.2308/iace.2010.25.4.790
2010
pp. 789–793
789
A weakness of this text is that since is it so comprehensive, it may be too massive for some
cost accounting courses. For schools with only one cost accounting course, some instructors, and
perhaps students, will balk at using a book with content that cannot possibly be covered in less
than two semesters. Others, however, may appreciate the flexibility of having choices among such
a wide range of relevant topics. The chapters do lend themselves to creativity in coverage order.
This flexibility for choosing which chapters to include and the order of coverage is a definite plus.
This text is appropriate for a one-semester cost accounting course, usually offered after the
completion of an introductory managerial course. Such a course will not use the entire text, of
course. This book could also easily fit a two-semester cost course sequence.
AMELIA ANNETTE BALDWIN
Professor
University of Arkansas at Fort Smith
DON R. HANSEN and MARYANNE M. MOWEN, Cornerstones of Cost Accounting,
First Edition Mason, OH: South-Western Cengage Learning, 2009, pp. xxxi, 1036.
Cornerstones of Cost Accounting presents a focused approach to the study of cost and mana-
gerial accounting by two authors with extensive textbook experience. This text is suitable for
undergraduate cost accounting courses and undergraduate managerial accounting courses for
which the prerequisite is completion of the undergraduate principles or introductory accounting
course. The text is also suitable for an M.B.A. course in managerial accounting for which the
prerequisite is completion of the undergraduate principles or introductory accounting course.
The text introduces topics in a logical sequence and the breadth of coverage is consistent with
what one would expect in a cost accounting text. Additionally, the text covers many managerial
topics listed among those tested on the BEC section of the uniform CPA examination.
The “Cornerstone” approach is a substantial strength of this text. In the Cornerstone approach,
the authors link examples in the text to specific exercises in the end-of-chapter materials. For the
most part, the Cornerstone examples are clearly developed and explained and thoroughly discuss
the selected issue. Each Cornerstone example concludes with a “what-if” scenario which serves to
encourage students to extend their understanding beyond the mere repetition of memorized tech-
niques. Additionally, some Cornerstone examples require the student to infer how a number was
computed.
Activity-based costing is introduced early in the text and is subsequently discussed in asso-
ciation with a number of allocation, budgeting, and forecasting issues. The authors provide a good
introduction to strategic cost management, and consistently discuss behavioral implications of
accounting choices. Additionally, the authors discuss managerial implications of cost allocation in
a number of different contexts. These discussions should help accounting/finance students begin to
understand the importance of communication between accountants and operational or executive
management. The discussions also illustrate that accounting and finance professionals are more
than just “number-crunchers” and that accounting/finance students must prepare themselves to be
integral members of management teams. The authors also include many “real world” examples in
the text which can serve to effectively motivate classroom discussion of the topics involved.
Cornerstones of Cost Accounting is particularly appropriate for an undergraduate program
with one undergraduate cost/managerial accounting course that students complete after the prin-
ciples or introductory accounting courses. Instructors at institutions in which the students can
790 Book Reviews
Issues in Accounting Education Volume 25, No. 4, 2010
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