Management Accounting for Non-specialists ^{3rd Ed.}

Accessible, learner-friendly and jargon-free, this best-selling text in management accounting is the ideal starting point for non-accounting students. Clear and concise it not only arms the reader with the basic principles of the subject but actively encourages students to build on these through an 'open-learning' approach, involving them in various questions and activities along the way.

The third edition has been thoroughly updated and revised improving existing features and expanding content.

Features include

• New Chapter 11 on strategic management accounting
• Added material on management accounting in practice
• An updated and revised selection of end-of-chapter, self-assessment, and review questions.
• Improved glossary of technical terms

Management Accounting for Non-specialists is suitable for all undergraduate and postgraduate students from any discipline taking an introductory course or module in management accounting. The 'open-learning' approach also makes it suitable for those studying independently or on distance-learning courses.

1. Introduction to management accounting
• Introduction
• Objectives
• What is accounting?
• Who are the users?
• Not-for-profit organisations
• How useful is accounting information?
• Accounting as a service function
• Costs and benefits of accounting information
• Accounting as an information system
• Management and financial accounting
• Management accounting information and management decisions
• Management accounting and human behaviour
• The changing nature of management accounting
• Management accounting and information technoogy
• The changing role of the management accountant
• Business objectives
• Summary
• Key terms
• Further reading
• Review questions
2. Relevant costs
• Introduction
• Objectives
• What is meant by 'cost'?
• A definition of cost
• Relevant costs: opportunity and outlay costs
• Sunk costs and committed costs
• Qualitative factors of decisions
• Self-assessment question 2.1
• Summary
• Key terms
• Further reading
• Review questions
• Exercises
3. Cost-volume-profit analysis
• Introduction
• Objectives
• The behaviour of osts
• Fixed costs
• Variable costs
• Semi-fixed (semi-variable) costs
• Break-even analysis
• Contribution
• Margin of safety and operating gearing
• Profit-volume charts
• The economist's view of the break-even chart
• Weaknesses of break-even analysis
• Marginal analysis
• Accepting/rejecting special contracts
• The most efficient use of scarce resources
• Make-or-buy decisions
• Closing or continuation decisions
• Self-assessment question 3.1
• Summary
• Key terms
• Further reading
• Review questions
• Exercises
4. Full costing
• Introduction
• Objectives
• The nature of full costing
• Uses of full cost information
• Criticisms of full costing
• Full costs in single-product operations
• Full costs in multi-product operations
• Direct and indirect costs
• Job costing
• Full costing and the behaviour of costs
• The problem of indirect costs
• Job costing: a worked example
• Selecting the basis for charging overheads
• Segmenting the overheads
• Dealing with overheads on a departmental basis
• Batch costing
• Full cost as the break-even price
• The forward-looking nature of full costing
• Full costing in service industries
• Self-assessment question 4.1
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
5. Managing in a competitive environment
• Introduction
• Objectives
• Costing and the changed business environment
• Activity-based costing
• Cost drivers
• Cost pools
• ABC and service industries
• Criticism of ABC
• Self-assessment question 5.1
• Pricing
• Economic theory
• Some practical considerations
• Full cost (cost-plus) pricing
• Relevant/marginal cost pricing
• Pricing strategies
• Recent developments in pricing and cost management
• Total life-cycle costing
• Target costing
• Kaizen costing
• Benchmarking
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
6. Budgeting
• Introduction
• Objectives
• Budgets, long-term plans and corporate objectives
• Step 1: Setting the aims and objectives of the business
• Step 2: Identifying the options available
• Step 3: Evaluating the options and making a selection
• Step 4: Setting detailed short-term plans or budgets
• Step 5: Collecting information on performance and exercising control
• Time horizon of plans and budgets
• Budgets and forecasts
• Periodic and continual budgets
• The interrelationship of various budgets
• The uses of budgets
• The budget-setting process
• Step 1: Establish who will take responsibility
• Step 2: Communicate budget guidelines to relevant managers
• Step 3: Identify the key, or limiting, factor
• Step 4: Prepare the budget for the area of the limiting factor
• Step 5: Prepare draft budgets for all other areas
• Step 6: Review and coordinate budgets
• Step 7: Prepare the master budgets
• Step 8: Communicate the budgets to all interesting parties
• Step 9: Monitor performance relative to the budget
• Incremental and zero-base budgeting
• An example of a budget: the cash budget
• Preparing other budgets
• Activity-based budgeting
• Non-financial measures in budgeting
• Self-assessment question 6.1
• Who needs budgets?
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
7. Accounting for control
• Introduction
• Objectives
• Using budgets for control — flexible budgets
• Feedback and feedforward controls
• Comparison of actual performance with the budget
• Flexing the budget
• Sales volume variance
• Sales price variance
• Materials variances
• Labour variances
• Fixed overhead variance
• Standard quantities and costs
• Labour cost standards and the learning-curve effect
• Reasons for adverse variances
• Non-operating profit variances
• Investigating variances
• Compensating variances
• Necessary conditions for effective budgetary control
• Limitations of the traditional approach to control through variances and standards
• Behavioural aspects of budgetary control
• Self-assessment question 7.1
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
8. Making capital investment decisions
• Introduction
• Objectives
• The nature of investment decisions
• Methods of investment appraisal
• Accounting rate of return (ARR)
• Payback period (PP)
• Net present value (NPV)
• Interest lost
• Risk
• Inflation
• Actions of a logical investor
• Why NPV is superior to ARR and PP
• Internal rate of return (IRR)
• Some practical points
• Investment decision making in practice
• Self-assessment question 8.1
• Dealing with risk in investment appraisal
• Assessing the level of risk
• Reacting to the level of risk
• Management of the investment project
• Stage 1: Determine investment funds available
• Stage 2: Identify profitable project opportunities
• Stage 3: Evaluate the proposed project
• Stage 4: Approve the project
• Stage 5: Monitor and control the project
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
• Appendix: Preset value table
9. Managing working captal
• Introduction
• Objectives
• The nature and purpose of working capital
• The scale of working capital
• Management of stocks
• Budgets of future demand
• Financial ratios
• Recording and reordering systems
• Levels of control
• Stock-management models
• Materials requirement planning (MRP) system
• Just-in-time (JIT) stock management
• Management of debtors
• Which customers should receive credit?
• Length of credit period
• Cash discounts
• Self-assessment question 9.1
• Collection policies
• Credit management and the small business
• Management of cash
• Why hold cash?
• How much cash should be held?
• Controlling the cash balance
• Cash budgets and the management of cash
• Operating cash cycle
• Cash transmission
• Management of trade creditors
• Controlling trade creditors
• Management of bank overdrafts
• Summary
• Key terms
• Further reading
• Review questions
• Exercises
10. Measuring and controlling divisional performance
• Introduction
• Objectives
• Why do businesses divisionalise?
• Divisional performance measurement
• Return on investment
• Residual income
• Divisional performance measures and long-term, performance
• Further measurement issues
• Self-assessment question 10.1
• Transfer pricing
• Transfer pricing olicies
• Market prices
• Variable cost of goods or services
• Full cost of goods or services
• Negotiated prices
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises
11. Strategic management accounting
• Introduction
• Objectives
• What is strategic management?
• What is strategic management accounting?
• Assessing a strategic change
• Competitor probability analysis
• Customer probability analysis
• The quest for shareholder value
• Creating shareholder value
• The need for new forms of measurement
• Net present value (NPV) analysis
• Extending NPV analysis: shareholder value analysis
• Measuring free cash flows
• Managing the business with SVA
• The implications of SVA
• Economic value added (EVA^®)
• EVA^® and SVA
• EVA^® or SVA?
• Non-financial measures of performance
• The balanced scorecard
• Self-assessment question 11.1
• Summary
• Key terms
• Further reading
• References
• Review questions
• Exercises

• Appendix A: Glossary of key terms
• Appendix B: Solutions to self-assessment questions
• Appendix C: Solutions to selected exercises

Oh NO! Why didn't I have this book while studying for my MBA?

Truth to tell, it is a bit thin, but very readable. Especially if you're not into accounting but only wants to know enough to become a pretty good manager.

Covers the basics very efficiently and fulfills its promise very well. Recommended.