i
ALTERNATIVE SUGGESTED CHAPTER SEQUENCES
The Preface to Cost Accounting noted that our aim in organizing the material was to present a
modular, flexible organization that permits a course to be custom tailored. This section presents
six possible sequences for a first course in cost accounting. For each of these six sequences, we
also present the sequence of a second course that would result in coverage of many or all of the
topics in Cost Accounting. Outlines I–V all include Chapters 1 to 9 in varying orders of
sequence. Outline VI has a strong (almost exclusive) focus on the decision making role of cost
accounting.
OUTLINE I: This basic course provides a balance of topics between the major purposes of cost
accounting:
OUTLINE II: This basic course covers the same chapters as Outline I but assigns Chapter 10
(Determining How Costs Behaves) immediately after Chapter 3 (Cost Volume-Profit Analysis).
It also assigns Chapter 12 on Strategy, Balanced Scorecard, and Strategic Profitability Analysis.
This first part of the second course emphasizes cost management and performance evaluation
before covering the six chapters (14–20) on cost allocation and other aspects of costing systems.
ii
OUTLINE IV: This basic course is similar to Outline II with one key exception: Chapter 17
(Process Costing) is covered immediately after Chapter 5. Many instructors prefer to cover job
costing and process costing in sequence so that their differences are highlighted.
OUTLINE V: This basic course emphasizes technical cost accounting topics more than the other
five outlines. Chapters 17 and 18 extend Chapters 4 and 5; covering 4, 5, 17, and 18 as a single
section of the course provides students with a solid understanding of product costing alternatives.
iii
OUTLINE I
OUTLINE II
OUTLINE III
BASIC
COURSE
Chapter
Number of
Sessions
Chapter
Number of
Sessions
Chapter
Number of
Sessions
1
(1)
1
(1)
1
(1)
2
(2)
2
(2)
2
(2)
3
(2)
3
(2)
3
(2)
4
(3)
10
(2)
4
(3)
SECOND
COURSE
Chapter
Number of
Sessions
Chapter
Number of
Sessions
Chapter
Number of
Sessions
12
(3)
21
(3)
10
(2)
14
(2)
22
(2)
13
(2)
15
(2)
23
(2)
21
(3)
16
(2)
14
(3)
15
(2)
17
(2)
15
(2)
17
(3)
18
(2)
16
(2)
18
(2)
19
(2)
17
(3)
19
(2)
20
(2)
18
(2)
20
(3)
21
(2)
19
(2)
22
(2)
22
(2)
20
(2)
23
(2)
23
(2)
Tests
(3)
Tests
(3)
Tests
(3)
Optional
(6)
Optional
(6)
Optional
(6)
32
32
32
5
(3)
4
(3)
5
(3)
6
(2)
5
(3)
6
(2)
7
(2)
6
(2)
7
(2)
8
(2)
7
(2)
8
(2)
9
(2)
8
(2)
9
(2)
11
(2)
11
(2)
12
(2)
13
(2)
12
(2)
14
(2)
13
(2)
15
(2)
Tests
(3)
Tests
(3)
Tests
(3)
Optional
(4)
Optional
(2)
Optional
(2)
32
32
32
iv
OUTLINE IV
OUTLINE V
OUTLINE VI
BASIC
COURSE
Chapter
Number of
Sessions
Chapter
Number of
Sessions
Chapter
Number of
Sessions
1
(1)
1
(1)
1
(1)
2
(2)
2
(2)
2
(2)
3
(2)
3
(2)
3
(2)
10
(2)
4
(3)
10
(2)
4
(2)
5
(3)
4
(2)
5
(2)
17
(3)
5
(2)
17
(2)
18
(2)
6
(2)
SECOND
COURSE
Chapter
Number of
Sessions
Chapter
Number of
Sessions
Chapter
Number of
Sessions
12
(3)
10
(2)
7
(2)
21
(3)
11
(2)
8
(2)
22
(2)
12
(2)
9
(2)
23
(2)
13
(3)
17
(3)
14
(3)
21
(3)
18
(2)
15
(2)
14
(2)
19
(2)
16
(2)
15
(2)
20
(2)
18
(2)
16
(2)
21
(3)
19
(2)
19
(2)
14
(2)
20
(2)
20
(2)
15
(2)
22
(2)
16
(2)
23
(2)
Tests
(3)
Tests
(3)
Tests
(3)
Optional
(6)
Optional
(3)
Optional
(5)
32
32
32
6
(2)
6
(3)
11
(2)
7
(2)
7
(2)
12
(2)
9
(2)
9
(2)
22
(2)
11
(2)
23
(2)
13
(2)
Tests
(3)
Tests
(3)
Tests
(3)
Optional
(4)
Optional
(4)
Optional
(5)
32
32
32
v
CATEGORIZATION OF ASSIGNMENT MATERIAL
The assignment material in the 15th edition has been developed to offer instructors a broad range
of options in developing a challenging and interesting course. The following exhibits assist
instructors in selecting assignment material.
1. SERVICE AND NONPROFIT SECTORS: These assignments include settings such as
accounting firms, law firms, advertising agencies, bank and finance companies, lodging
companies, transportation companies, and government agencies
2. MERCHANDISING SECTORS: These assignments include settings such as distributors,
wholesalers, and retailers
There is growing demand from instructors for assignment material in three specific areas—
ethics, global or international, and modern cost management. Exhibits P-3 to P-5 show
assignment material in the 15th edition on these three topics.
3. ETHICS. The second-to-last problem of many chapters incorporates an ethical issue
facing a management accountant or a manager. Examples include pressure for cooking
the books, concealing unfavorable information, and conflicts of interest between
management incentives and company values. Many of these problems require students to
consider the IMA Statement of Ethical Professional Practice on p.18 of the text.
vi
EXHIBIT P-1
ASSIGNMENT MATERIAL FROM SERVICE AND NOT-FOR-PROFIT SECTORS
Chapter
Number
Context
1
1-18
Fast-food restaurants; value chain, cost classification
1-20
Construction services; key success factors
1-24
House-painting service; five-step decision-making process
1-27
Internet company; planning and control
1-35
Publishing company; ethics; end-of-year actions
1-36
Shipping company; ethical challenges
4
4-18
Residential construction; job costing, normal, actual
4-21
Consulting firm, job costing
4-24
University press; job costing, journal entries
4-28
Canadian accounting firm; actual, normal and variation from normal costing
4-29
Web-design firm; actual, normal, and variation from normal costing
4-32
Law firm; job costing
4-33
Law firm; job costing
4-39
Printing; allocation and proration of overhead
4-41
Music contracting agency; job costing
5
5-17
Testing labs; activity-based costing, cost hierarchy
5-18
Professional services firm; alternative allocation bases
5-22
Architectural firm; department costing based on activities
5-23
Printing company; activity-based costing
5-28
Custom framing; activity-based costing
5-29
Banking; activity-based costing, product costing, cross-subsidization
5-30
Law firm; job costing, single direct- and indirect-cost categories
5-31
Law firm; job costing, multiple direct– and single indirect-cost categories
5-32
Law firm; job costing, multiple direct- and indirect-cost categories
5-34
Lawn care, landscaping; first-stage allocation, ABC
2
2-18
Marketing research; classification of costs
2-26
Food and music service; total costs and unit costs
3
3-18
Travel agency; CVP analysis
3-22
Restaurant; CVP analysis
3-29
Music Society; CVP analysis
3-33
Tourism; CVP analysis
3-34
Daycare; CVP analysis, target operating income
3-35
Tax preparer; CVP analysis, margin of safety
3-40
Printing company; breakeven; alternative cost structures, uncertainty, sensitivity
3-47
Museum of art; gross margin, contribution margin
vii
Chapter
Number
Context
6
6-16
Environmental testing; sales budget
6-23
Window-washing; budgeted cost of jobs
6-28
Tour company; responsibility accounting, stretch targets
6-34
Restaurant; purchasing agent responsibility accounting
6-42
Hair salon; human aspects of budgeting
7
7-28
7-31
Student loan financing; static and flexible budgets
Car detailing; variance analysis
10
10-17
Car rental contracts; variable-, fixed- and mixed-cost functions
10-22
Travel services; estimating a cost function, high-low method
10-23
Customer-service costs; estimating a cost function, high-low method
10-24
Consulting services; linear cost approximation
10-26
Catering company; regression analysis
10-31
Produce club; high-low method, regression analysis
10-32
Restaurant; sales and advertising, high-low method, regression analysis
10-34
Agricultural transportation; interpreting regression analysis
10-37
Nonprofit hospital; regression, choosing among models
10-38
Nonprofit hospital; multiple regression
11
11-24
Hospital; relevant costs, decision on closing surgery centers
11-26
Printing press; choosing customers
11-27
Pizza restaurant; relevance of equipment costs
11-33
Limousine service; opportunity costs, relevant costs
11-42
Fishing tours; dropping and adding tours
12
12-26
Consulting firm; strategy, balanced scorecard
12-27
Consulting firm; strategic analysis of operating income
12-28
Consulting firm; analysis of growth, price-recovery, and productivity
components
12-29
Consulting firm; identifying and managing unused capacity
8-37
Publishing company; activity-based costing
8-40
8-41
Pet food inspection; non-financial variances
Cloud services provider; overhead variances
9
9-30
Printing press; metrics to minimize inventory buildups
9-39
Hospital chain; cost allocation, downward demand spiral
9-40
Hospital chain; cost allocation, responsibility accounting, ethics
viii
Chapter
Number
Context
13
13-16
Tool repair shop; value-added, nonvalue-added costs
13-17
Architects; target operating income, value-added costs
13-20
Energy audits; target costs, effect of process-design changes on service
14
14-16
Hospitals; cost allocation
14-18
Repair service; customer profitability
14-21
Hotel; cost allocation to divisions
14-23
Sports team; variance analysis, multiple products
14-31
Interior design; customer-cost hierarchy and profitability analysis
15
15-19
Management consulting; direct and step-down support department cost
allocation
15-20
Management consulting; reciprocal method support department cost
allocation
15-23
Allocation of common living costs
15-24
Consulting services; allocation of common travel costs
15-29
University; fixed cost allocation
15-35
Hotel; revenue allocation, bundled products
15-36
Organized tours; direct, step-down, reciprocal support department
allocation
17
17-38
Publishing company; transferred-in costs, weighted-average method
17-39
Publishing company; transferred-in costs, FIFO method
19
19-21
Conference center; quality improvement, relevant costs and revenues
19-23
University; waiting time
19-24
University; waiting time, relevant costs, student satisfaction
19-28
Pizza delivery; quality improvement, Pareto diagram, cause-and-effect
diagram
19-34
Healthcare group; waiting time, patient satisfaction, compensation
20
20-31
Deli sandwich shop; supplier evaluation, costs of quality, timely deliveries
costs
13-21
Hotel management; cost-plus target return on investment pricing
13-24
Hotel; price discrimination
13-27
Amusement park; value-engineering, target costing, ABC
13-29
Repair services; cost-plus, time and materials, ethics
13-30
Temp labor agency; cost-plus and market-based pricing
13-31
Testing labs; cost-plus and market-based pricing
13-32
Industrial site cleanup; life-cycle costing
13-33
Airline; price discrimination
13-34
Airline; anti-trust laws, pricing
13-35
Interior decoration; preparing a bid, pricing, ethics
ix
Chapter
Number
Context
21
21-18
Hospital; capital budgeting methods, no income taxes
21-19
Hospital; capital budgeting methods, income taxes
21-22
21-33
Construction company; payback and NPV methods, no income taxes
Laundromat; payback methods, even and uneven cash flows
21-24
Bakery; new equipment purchase, income taxes
21-35
Entertainment center; recognizing cash flows for capital investment
projects
23-20
23-23
Reinsurance and financial services; ROI, RI, EVA
Venture capital; Capital budgeting, RI
23-31
Media group; ROI, RI, DuPont method, investment decisions, balanced
scorecard
x
EXHIBIT P-2
ASSIGNMENT MATERIAL FROM MERCHANDISING SECTORS
Chapter
Number
Context
2
2-19
Entertainment store; classification of costs
2-29
Department store; cost of goods purchased, cost of goods sold, and
income statement
2-30
Retail outlet store; cost of goods sold and income statement
5
5-25
Supermarket; ABC, product-line profitability
5-26
Furniture wholesaler; ABC, customer profitability
5-36
Pharmaceuticals distributor; ABC
5-42
Bookstore; activity-based costing and management
6
6-25
Convenience store chain; activity-based budgeting
6-26
Convenience store chain; activity-based budgeting, kaizen budgeting
6-29
Video game distributor; cash flow analysis
6-39
Wholesaler; cash budgeting
10
10-20
Coffee shop; account analysis method, high-low method
10-41
Clothing store; matching time periods, regression, ethics
10-42
Department store chain; cost drivers, ABC, simple regression analysis
10-43
Department store chain; cost drivers, ABC, multiple regression analysis
11
11-22
Food store; relevant costs, contribution margin, product emphasis
11-25
Convenience stores; relevant costs, closing and opening stores
12
12-18
T-shirts distributor; strategy, balanced scorecard
12-19
T-shirts distributor; strategic analysis of operating income
12-20
T-shirts distributor; analysis of growth, price-recovery,
and productivity components
12-21
T-shirts distributor; identifying and managing unused capacity
13
13-18
Distributor; target prices, target costs, ABC
3
3-19
Doughnut retailing; CVP
3-21
Car dealer; CVP analysis
3-23
Jeans wholesaler; CVP and sensitivity analysis
3-30
3-38
Shoe store; sales commissions, CVP analysis
3-39
Shoe store; sales commissions, CVP analysis
3-41
Sunglasses store; CVP, alternative cost structures
3-46
Luggage carrier retailer; sales mix, CVP analysis
xi
EXHIBIT P-2 (Continued)
Chapter
Number
Context
14
14-17
Environmental products distributor; customer profitability, customer-
cost hierarchy
14-19
Pharmaceutical distributor; customer profitability
14-24
Wine glass retailer; variance analysis, multiple products
14-29
Paper distributor; customer profitability
14-38
Gelato stores; variance analysis, multiple products
20
20-16
Sporting goods retailer; EOQ
20-17
Sporting goods retailer; EOQ, effect of parameter changes
20-18
Textile retailer; EOQ
20-20
Retailer; sensitivity of EOQ to changes in relevant ordering and carrying
costs, cost of prediction error
20-28
Online computer retailer; EOQ, performance evaluation
21
21-17
Hardware stores; capital budgeting methods, no income taxes
21-26
Retail outlets; project choice, taxes
21-36
Food retailer; NPV, inflation, income taxes
21-37
Construction and mining site supplier; NPV of information system,
income taxes
22
22-18
Supermarket chain; benefits and costs of decentralization
23
23-22
Automobile retailer; ROI, RI, EVA
23-26
Car battery sales; risk sharing, incentives, benchmarking, multiple tasks
15
15-21
Online book retailer; direct and step-down support department cost
allocation
15-25
Fragrance retailer; revenue allocation
15-26
Auto sales; allocation of common costs
15-27
Department store; single-rate, dual-rate and practical capacity allocation
xii
EXHIBIT P-3
ASSIGNMENT MATERIAL ON ETHICS
Chapter
Number
Context
1
1-25
Division performance
1-26
Division performance
1-33
Pharmaceutical company, budgeting
1-34
End-of-year actions
1-35
End-of-year actions
1-36
Global company, end-of-year actions
7
7-42
GPS manufacturer; price and efficiency variances, benchmarking, ethics
8
8-43
Overhead variances, ethics
9
9-40
Hospital chain; cost allocation, responsibility accounting, ethics
11
11-44
Dropping a customer, activity-based costing, ethics
13
13-29
Repair services; cost-plus, time and materials, ethics
13-35
Interior decoration; preparing a bid, pricing, ethics
14
14-39
Writing smaller orders; customer profitability and ethics
17
17-42
Rock-crushing plants; benchmarking, ethics
19
19-18
Car seats; costs of quality, ethics
19-35
Auto parts manufacturer; ethics and quality
20
20-36
Container manufacturer; JIT production, relevant benefits, relevant
costs, ethics
22
22-34
Container manufacturer; transfer pricing, goal congruence, ethics
3
3-48
Environmental costs, CVP analysis
4
4-40
Job costing, contracting, cost reimbursement
5
5-41
Electronics; ABC, implementation, ethics
6
6-41
Manufacturer; slack, ethics
xiii
EXHIBIT P-4
ASSIGNMENT MATERIAL WITH GLOBAL OR INTERNATIONAL SETTING
Chapter
Number
Context
1
1-36
Contract bidding, ethical and cultural issues
3
3-18
Travel agency, CVP analysis
3-26
International cost structure differences, CVP analysis
8
8-23
Telecommunications company; manufacturing overhead, standard–
costing system
10
10-34
10-39
10-40
Agricultural transportation in Canada; interpreting regression results
Smartphone manufacturing in Korea; cost estimation
Smartphone manufacturing in Korea; cost estimation, learning curves
11
11-31
International outsourcing; relevant costs, exchange rates
16
16-36
Flash memory chips manufacturer in Korea; joint-cost allocation, process
further or sell
21
21-28
Clothing manufacturer; selling a plant, income taxes
21-29
21-31
Prototype chip manufacturer; equipment replacement, no income taxes
Fragrance manufacturer; DCF, sensitivity analysis, no income taxes
4
4-28
Canadian accounting firm; actual, normal and variation from normal
6
6-20
Japanese motorcycle manufacturer; revenues, production and purchases
budgets
7-40
Memory card manufacturer in Taiwan; direct-cost and selling price
variances
xiv
EXHIBIT P-4 (Continued)
Chapter
Number
Context
22
22-19
Canadian lumber company; transfer-pricing methods, goal congruence
22-20
Multinational computer company; transfer pricing, alternative transfer–
pricing methods, global income tax minimization
22-23
Telecommunications equipment, global marketing; multinational transfer
pricing, global tax minimization
22-24
Telecommunications equipment, global marketing; multinational transfer
pricing, goal congruence
22-31
minimization
22-33
Component manufacturer; international transfer pricing, taxes, goal
congruence
23
23-24
Manufacturing, U.S. and Norway; multinational performance
measurement, ROI, RI
23-30
Multinational firm, U.S., Germany, and New Zealand; differing risk,
comparison of profit, ROI, and RI
xv
EXHIBIT P-5
ASSIGNMENT MATERIAL USING MODERN COST MANAGEMENT FRONTIER IDEAS
Chapter
Number
Context
1
1-16
Computer company; value chain, cost classification
1-17
Pharmaceutical company; value chain, cost classification
2
2-24
Smartphone company; value chain, cost drivers
5
5-16
Cost hierarchy at manufacturer
5-17
Testing labs; ABC, cost hierarchy
5-19
Automotive products; plantwide, department, ABC costing
5-20
Trophies and plaques manufacturer; plantwide, department, ABC costing
5-21
Calculator manufacturer; ABC, process costing
5-22
Architectural firms; Department costing based on activities
5-23
Printing company; activity-based costing
5-24
Door manufacturer; activity-based costing
5-25
Supermarket; ABC, product-line profitability
5-26
Furniture wholesaler; ABC, customer profitability
5-27
Food processing; ABC, area cost-driver rates, product cross-subsidization
5-28
Custom framing; activity-based costing
5-29
Banking; ABC, product costing, cross-subsidization
5-31
Law firm; job costing, multiple direct- and single indirect-cost categories
5-32
Law firm; job costing, multiple direct- and indirect-cost categories
5-33
Manufacturer; first-stage allocation, ABC
5-34
Lawn care, landscaping; first-stage allocation, ABC
5-35
Radiology center; department, activity-cost rates
5-36
Pharmaceuticals distributor; ABC
5-37
Bag manufacturer; activity-based costing and management
5-38
Health care; ABC system
management
5-40
Boat manufacturer; ABC
5-41
Electronics; ABC, implementation, ethics
5-42
Bookstore; activity-based costing and management
1-18
Fast food restaurant; value chain, cost classification
1-19
Key success factors
1-20
Key success factors
1-28
Making strategic decisions
1-29
Making strategic decisions
xvi
Chapter
Number
Context
6
6-25
Convenience store chain; activity-based budgeting
6-25
Convenience store chain; activity-based budgeting, kaizen budgeting
6-28
Tour company; responsibility accounting, stretch targets
7
7-23
T-shirt manufacturer; continuous improvement
7-37
Shawl manufacturer; variances, custom production, just–in-time inventory
7-38
Eyeglass lens manufacturer; use of variances for benchmarking
7-42
GPS manufacturer; variances, benchmarking, ethics
7-42
Electronics manufacturer; variances, standards, negotiations
7-27
Plastic container manufacturer; benchmarking against competitors
8
8-26
8-35
8-36
Jewelry maker; relationship between production-volume and sales-volume
variance analysis
Shoe manufacturer; activity-based costing, batch-level variance analysis
Recycled plastic shopping bag maker; relationship between overhead and
sales-volume variance analysis
8-37
Publishing company; activity-based costing, batch-level variance analysis
9
9-17
Auto company; throughput costing
9-19
Electronics manufacturer; throughput costing
9-24
Capacity management, denominator-level capacity concepts
9-25
Motorcycle manufacturer; alternative denominator-level capacities
9-30
Textbook publisher; metrics to minimize inventory buildups
operating income
9-35
Optical reader manufacturer; downward demand spiral
9-39
Hospital meal service; cost allocation, downward demand spiral
9-41
Electric car company; absorption, variable, and throughput costing
10
10-33
Manufacturing; cost drivers, ABC, simple regression analysis
10-39
Manufacturing; cost estimation
10-40
Manufacturing; cost estimation, learning curves
10-42
Department store chain; cost drivers, ABC, simple regression analysis
10-43
Department store chain; cost drivers, ABC, multiple regression analysis
6-31
T-shirt manufacturer; kaizen approach
6-34
Purchasing agent; responsibility accounting
6-35
Luggage manufacturer; activity-based budgeting
6-40
Plastic accessories manufacturer; activity-based budgeting
6-43
Footwear manufacturer; activity-based budgeting