Practical Connection Assignment

Practical Connection Assignment

Practical Connection Assignment:

Provide a reflection of at least 500 words (or 2 pages double spaced) of how the knowledge, skills, or theories of Managerial Accounting have been applied, or could be applied, in a practical manner to your current work environment. If you are not currently working, share times when you have or could observe these theories and knowledge could be applied to an employment opportunity in your field of study. 

Please find the attached text book for the managerial accounting course.


  • Provide a 500 word (or 2 pages double spaced) minimum reflection.
  • Use of proper APA formatting and citations. If supporting evidence from outside resources is used those must be properly cited.
  • Share a personal connection that identifies specific knowledge and theories from this course.
  • Demonstrate a connection to your current work environment. If you are not employed, demonstrate a connection to your desired work environment. 
  • You should NOT, provide an overview of the assignments assigned in the course. The assignment asks that you reflect how the knowledge and skills obtained through meeting course objectives were applied or could be applied in the workplace. 

Managerial Accounting Creating Value in a Dynamic Business Environment

Tenth Edition

Ronald W. Hilton Cornell University

David E. Platt University of Texas at Austin

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Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2014 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2011, 2009, and 2008. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 RJC/RJC 1 0 9 8 7 6 5 4 3

ISBN 978-0-07-802566-2 MHID 0-07-802566-4

Senior Vice President, Products & Markets: Kurt L. Strand Vice President, Content Production & Technology Services: Kimberly Meriwether David Director: Tim Vertovec Brand Manager: Donna M. Dillon Executive Director of Development: Ann Torbert Development Editor II: Katie Jones Director of Digital Content: Patricia Plumb Digital Development Editor: Julie Hankins Senior Marketing Manager: Kathleen Klehr Director, Content Production: Terri Schiesl Content Project Manager: Emily Kline Senior Buyer: Michael R. McCormick Design: Lisa King Cover Image: (main) © Volker Moehrke/Corbis; (top to bottom) © Aaron Roeth Photography; © UpperCut Images/Getty Images; © Michal Krakowiak/Getty Images; © JUPITERIMAGES/Creatas/Alamy; © Compassionate Eye Foundation/Robert Kent/Getty Images Content Licensing Specialist: Joanne Mennemeier Typeface: 10.5/12 Times Roman Compositor: Laserwords Private Limited Printer: R. R. Donnelley

Material from the Uniform CPA Examination, Questions and Unofficial Answers, Copyright 1978, 1979, 1980, 1981, 1982, 1983, 1984, 1987, 1990, 1991 by the American Institute of Certified Public Accountants, Inc. is adapted with permission.

Material from the Certificate in Management Accounting Examinations, Copyright 1977, 1978, 1979, 1980, 1981, 1982, 1983, 1984, 1987, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000 by the Institute of Management Accountants is adapted with permission.

Logos from Whole Foods Market, Inc., Caterpillar, Inc., Walmart, and Southwest Airlines Co. appear in this text with permission from those companies.

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Hilton, Ronald W. Managerial accounting : creating value in a dynamic business environment/Ronald W. Hilton, Cornell University, David E. Platt, University of Texas at Austin.—Tenth edition. pages cm Includes index. ISBN 978-0-07-802566-2 (alk. paper) ISBN 0-07-802566-4 (alk. paper) 1. Managerial accounting. I. Platt, David E. II. Title. HF5657.4.H55 2014 658.15’11—dc23 2013013379

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

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Ronald W. Hilton: To Meg, Brad, Tim, Kerry, and Liliana.

David E. Platt: To Nancy, Evan, and Hannah.

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“Extremely comprehensive, easy to read managerial accounting textbook that provides well-designed integrated examples along with coverage of service-based companies. ”

—Angela Sandberg, Jacksonville State University

“I am loving the book, and I see the students learning the concepts a lot quicker than my previous experience.” — Patti Brown, The University of Texas at Austin

“I would describe it as the Cadillac of core management accounting textbooks. ” — Bill Wempe, Texas Christian University

“This is an excellent text—well balanced, well organized, and up to date with current topics, including service industries and state-of-the-art manufacturing environments. I highly recommend it also for the excellent examples and illustrations through focus companies and contrasting companies. ”

— John C. Anderson, San Diego State University

“I’ve been using this text since its second edition, and it gets better each year with continuous improvement.” — Steve G. Green, United States Air Force Academy

“ Well written with good explanations of the ‘why’ and ‘how’ ” — Christa Morgan, Georgia Perimeter College

“Major strength is how it relates managerial accounting to the general management function and reveals the managerial accountant as an important member of the management team. ”

— Linda C. Bowen, University of North Carolina–Chapel Hill

“The book goes beyond covering the basics and organizes and integrates contemporary topics nicely. ” — Harrison McCraw, State University of West Georgia

“ Well written, well organized and excellent end of chapter problems.” — Kathleen Sevigny, Boston College

“The technology supplements and instructor resources are top-notch and very appropriate for our students.” — Marilyn Okleshen, Minnesota State University–Mankato

“The book is very thorough, well written, and still remains student-friendly. The supplements are outstanding.” — Ben Baker, Davidson College

“A solid, well-written, user-friendly book; can’t go wrong with it! ” — Rochelle Greenberg, Florida State University

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VI Preface

After Nine Editions of Innovation and Excellence, Hilton Managerial Accounting becomes Hilton & Platt.

Keeping pace with the speed of modern business, the authors combine their experience and expertise to make sure Managerial Accounting is the most relevant, accurate, and up-to-date textbook in the field.

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Preface VII

About the Authors

Ronald W. Hilton is a Professor of Accounting at Cornell University. With bachelor’s and master’s degrees in accounting from The Pennsylvania State University, he received his PhD from The Ohio State University.

A Cornell faculty member since 1977, Professor Hilton also has taught accounting at Ohio State and the University of Florida, where he held the position of Walter J. Matherly Professor of Accounting. Prior to pursuing his doctoral studies, Hilton worked for Peat, Mar- wick, Mitchell and Company and served as an officer in the United States Air Force.

Professor Hilton is a member of the Institute of Management Accountants and has been active in the American Accounting Asso- ciation. He has served as associate editor of The Accounting Review

and as a member of its editorial board. Hilton also has served on the editorial board of the Journal of Manage- ment Accounting Research. He has been a member of the resident faculties of both the Doctoral Consortium and the New Faculty Consortium sponsored by the American Accounting Association.

With wide-ranging research interests, Hilton has published articles in many journals, including the Journal of Accounting Research, The Accounting Review, Management Science, Decision Sciences, the Journal of Economic Behavior and Organization, Contemporary Accounting Research, and the Journal of Mathematical Psychology. He also has published a monograph in the AAA Studies in Accounting Research series, and he is a co-author of Cost Management: Strategies for Business Decisions, Budgeting: Profit Planning and Control, and Cost Accounting: Concepts and Managerial Applications. Professor Hilton’s current research interests focus on contemporary cost management systems and international issues in managerial accounting. In recent years, he has toured manufac- turing facilities and consulted with practicing managerial accountants in North America, Europe, Asia, and Australia.

David E. Platt is the Associate Dean for Undergraduate Pro- grams at the McCombs School of Business, University of Texas at Austin. He earned his BS in Economics from the Wharton School at the University of Pennsylvania, his MBA in Marketing from Syracuse University, and his PhD in Accounting from Cornell University. He received his CPA while working for Pricewaterhouse Coopers, followed by several years doing financial and product management in a supply chain systems integrator. Professor Platt has taught in the McCombs School of Business BBA, MPA, MBA and Executive MBA programs, receiving teaching awards at both the undergraduate and graduate levels. From 2000 until 2012, he directed UT-Austin’s Center for International Business Education and Research (CIBER) and has served as chairman of the Partnership in International Management, a

consortium of leading graduate business schools with 57 member schools in 35 countries. He has been a visit- ing lecturer at the Sorbonne Graduate Business School, and has delivered training for Dell and other companies in the U.S., Europe, Latin America, and China.

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VIII Preface

Managerial Accounting.

Business is changing dramatically, with a global marketplace for goods and services,

a worldwide supply chain, and dramatic increases in technological innovation. To keep

up, managers must be able to interpret the rapid fl ow of information and make the right

decisions. Assisted by the tools of managerial accounting, and by managerial account-

ing professionals, managers will work side by side in global cross-functional teams to

make the complex decisions that today’s dynamic business environment requires of

them. The goal of Managerial Accounting is to acquaint students of business with the

fundamental tools of managerial accounting and to promote their understanding of the

dramatic ways in which business is

changing. The emphasis through-

out the text is on using account-

ing information to help manage an

organization. Students should not

only be able to produce accounting

information, but also understand

how managers are likely to use and

react to the information in a range

of businesses.

“It is a well-written book with numerous well-selected cases, allowing students to see the contemporary business opera- tions and practices in the real world.”

— Dennis Hwang, Bloomsburg University

How Does Hilton & Platt 10e Prepare Students for the Businesses of Today and Tomorrow?

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Preface IX


Focus Companies provide a powerful strategy for

fostering learning, and the integration of Focus

Companies throughout the Hilton & Platt text is

unmatched by any other managerial accounting

book. Each chapter introduces important manage-

rial accounting topics within the context of a realis-

tic company. Students see the immediate impact of

managerial accounting decisions on companies and

gain exposure to different types of organizations.

“The company story acts as a hook to get students interested in the chapter material.”

— Michele Matherly, University of North Carolina at Charlotte

“I like the mix of company types.”

— Barbara Durham, University of Central Florida

“A nice intro textbook, with multiple perspectives on the behavioral aspects of managerial accounting. Touches many modern issues facing the field.”

Theodore Rodgers, Emory University

“Balanced, time-proven approach to managerial accounting.”

— Michael Flores, Wichita State University

“Perhaps what sets Hilton & Platt apart from the competition is its recognition that the world consists of more than manufac- turing firms and that managerial account- ing plays a significant role in service and not-for-profit organizations.”

— Lanny Solomon, University of Missouri–Kansas City


Hilton & Platt Managerial Accounting offers the most

balanced coverage of service and manufacturing com-

panies. The authors recognize that students will be work-

ing in a great variety of business environments and will

benefi t from exposure to diverse types of companies. A

wide variety of examples from retail, service, manufac-

turing, and nonprofi t organizations are included.


Hilton & Platt continues to be the leader in present-

ing the most contemporary coverage of managerial

accounting topics. The traditional tools of managerial

accounting such as budgeting and product costing

have been updated with current approaches. Emerg-

ing topics such as environmental cost management,

monetizing the Internet, and capacity management

are also covered.


Managerial Accounting is written in a modular format allowing topics to be covered in the order

you want. For example, some instructors prefer to cover contribution-margin approaches to

decision making and/or relevant costs early in the course. So Chapter 6 (cost behavior and

estimation), Chapter 7 (CVP), and Chapter 14 (relevant costs) are written so they can be covered

immediately after Chapter 2, which introduces basic cost concepts. A table showing the text’s

fl exibility is in the Introduction to the Instructor’s Manual.

“Very current with managerial account- ing topics (bar codes, RFID, . . . , ABC, outsourcing, decision making).”

— Maggie Houston, Wright State University

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X Preface

How Does Hilton & Platt 10e Help Students Learn Managerial Accounting in the Context of Business?


Students need to see the relevance of man-

agerial accounting information in order to

actively engage in learning the material. Ron

Hilton and Dave Platt use Focus Companies

to illustrate concepts, and students immedi-

ately see the significance of the material and

become excited about the content.

Whenever the Focus Company is

presented in the chapter, its logo is shown

so the student sees its application to the

text topic.

1 THIS CHAPTER’S FOCUS COMPANY is The Walt Disney Company. This

entertainment services company is a giant in the industry with theme parks,

feature film studios, animation studios, television broadcasting, hotels and resorts, and retail

stores. Using The Walt Disney Company as an illustration, we will introduce the field of managerial

accounting and its major themes. Some of you are excited about studying accounting.

But even more of you are asking, “Why do I need to study managerial accounting? I’m

not going to be an accountant!” That is a good question. We will explore how mana-

gerial accountants work in partnership with managers to add value to the organization,

and how managers also use managerial accounting tools to make their decisions.


The Changing Role of Managerial Accounting in a Dynamic Business Environment

Each chapter is built around a focus company, in which the chapter’s key points are illustrated. This chapter’s focus is on The Walt Disney Company. The focus companies in subsequent chapters are not real companies, but they are realistic scenarios built on actual company practices. Whenever the focus company is discussed in the chapter, the company logo appears in the margin.

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In contrast to the entertainment services setting of The Walt Disney Company,

we will turn our attention to Whole Foods Market, Inc. This fast-growing food

retailer has over 300 stores around North America and Europe. A leader in the area of corpo-

rate social responsibility, Whole Foods Market is frequently faced with challenging decisions

that require them to balance the need to run a profitable business and satisfy their investors

against the cost of their much-publicized commitment to organic foods and sustainable

production. We will explore managerial accounting’s contribution to Whole Foods Market’s

efforts to sell products that are more costly to produce in a competitive market while still

achieving appropriate returns for investors.