A while ago, I promised some Facebook friends to review some text books from bookboon.com, a website where you can download free accounting books. Given my teaching and research area is management accounting I choose the text on Managerial and Cost Accounting. As I am an author myself, I have had quite a bit of experience in both writing and reviewing text books. So, I will try to be critical but fair. So here goes.

First, the authors seem well experienced and qualified to write the text, so that’s good. The writing style is pretty clear, although it uses US English (not an issue, just a minor comment). There are a total of 21 chapters (see below for the full contents), which covers the vast majority of the important management accounting topics. Now to be fair, I have not read all chapters word-for-word, but the text does seem to cover all topics pretty well at an introductory level. The authors use some graphics to explain stuff and give normally one example of a technique per chapter.

So far so good, but now for the downsides. I suppose it must be remembered this a free text. And even though it is free, it is actually quite good in terms of basic content. But it does fall down on what I as an author/lecturer would expect of a textbook. The pitfalls are in the area of exercises within the text (I know there is a separate book of exercises, which I have not reviewed yet) and basic things from a pedagogical nature – learning objectives, key terms, real life examples and so on. The content, as I said previously, is also at an introductory level and for the more advanced or specialist management accounting courses simply would not be enough – for example, there is little is no references to academic research. The downloaded file also has adverts, which I can live with, but some might find this annoying.

And finally, as I am a bit of a techie, I tried to download the book first on my Android Tablet (in July 2012). This did not work. I actually think this is a major pitfall. Why? Well, the book is absolutely fine for a non-specialist introductory course in management accounting or accounting. The audience for this book is less likely to be those in universities in developed countries (although I have nothing to verify this, but I am quite sure that it would be difficult to challenge the embedded text books), but more so developing countries. I have read in The Economist and several other sources that countries like India are considering given cheap (less than $100) tablets to students with texts pre-loaded. This text would be ideal for such students to introduce them to the basics of management accounting, with the more traditional texts helping them in more advanced areas.

So my overall opinion, a reasonable book for the fact that it is free. But, I would suggest it is most suitable for introductory courses and get it working on tablets.

Table of Contents of the book.

Part 1. Introduction to Managerial Accounting

1. Managerial Accounting
1.1 Professional Certifications in Management Accounting

2. Planning, Directing, and Controlling
2.1 Decision Making
2.2 Planning
2.3 Strategy
2.4 Positioning
2.5 Budgets
2.6 Directing
2.6.1 Costing
2.6.2 Production
2.6.3 Analysis
2.7 Controlling
2.7.1 Monitor
2.7.2 Scorecard

3. Cost Components

4. Product Versus Period Costs
4.1 Period Costs

5. Financial Statement Issues that are Unique to Manufacturers
5.1 Schedule of Raw Materials
5.2 Schedule of Work in Process
5.3 Schedule of Cost of Goods Manufactured
5.4 Schedule of Cost of Goods Sold
5.5 The Income Statement
5.6 Reviewing Cost of Flow Concepts for a Manufacturer
5.7 Critical Thinking About Cost Flow

Part 2. Cost-Volume-Profit and Business Scalability

6. Cost Behavior
6.1 The Nature of Costs
6.2 Variable Costs
6.3 Fixed Costs
6.4 Business Implications of the Fixed Cost Structure
6.5 Economies of Scale
6.6 Dialing in Your Business Model

7. Cost Behavior Analysis
7.1 Mixed Costs
7.2 High-Low Method
7.3 Method of Least Squares
7.4 Recap

8. Break-Even and Target Income
8.1 Contribution Margin
8.2 Contribution Margin: Aggregated, per Unit, or Ratio?
8.3 Graphic Presentation
8.4 Break-Even Calculations
8.5 Target Income Calculations
8.6 Critical Thinking About CVP

9. Sensitivity Analysis
9.1 Changing Fixed Costs
9.2 Changing Variable Costs
9.3 Blended Cost Shifts
9.4 Per Unit Revenue Shifts
9.5 Margin Beware
9.6 Margin Mathematics

10. CVP for Multiple Products
10.1 Multiple Products, Selling Costs, and Margin Management

11. Assumptions of CVP

Part 3. Job Costing and Modern Cost Management Systems

12. Basic Job Costing Concepts
12.1 Cost Data Determination
12.2 Conceptualizing Job Costing
12.3 Tracking Direct Labor
12.4 Tracking Direct Materials
12.5 Tracking Overhead
12.6 Job Cost Sheets
12.7 Expanding the Illustration
12.8 Another Expansion of the Illustration
12.9 Database Versus Spreadsheets
12.10 Moving Beyond the Conceptual Level

13. Information Systems for the Job Costing Environment
13.1 Direct Material
13.2 Direct Labor
13.3 Overhead and Cost Drivers

14. Tracking Job Cost Within the Corporate Ledger
14.1 Direct Material
14.2 Direct Labor
14.3 Applied Factory Overhead
14.4 Overview
14.5 Financial Statement Impact Scenarios
14.6 Cost Flows to the Financial Statements
14.7 Subsidiary Accounts
14.8 Global Trade and Transfers

15. Accounting for Actual and Applied Overhead
15.1 The Factory Overhead Account
15.2 Actual Overhead
15.3 The Balance of Factory Overhead
15.4 Underapplied Overhead
15.5 Overapplied Overhead
15.6 Influence of Gaap

16. Job Costing in Service, Not For-Profit, and Governmental Environments
16.1 The Service Sector
16.2 Capacity Utilization

17. Modern Management of Costs and Quality
17.1 Global Competition
17.2 Kaizen
17.3 Lean Manufacturing
17.4 Just in Time Inventory
17.5 Total Quality Management
17.6 Six Sigma
17.7 Reflection on Modern Cost Management

Part 4. Process Costing and Activity-Based Costing

18. Process Costing
18.1 Process Costing
18.2 Comparing Job and Process Costing
18.3 Introduction to the Cost of Production Report
18.4 Job Costing Flows
18.5 Process Costing Flows
18.6 Job Costing Flows on Job Cost Sheets
18.7 Process Costing Flows on Cost of Production Reports

19. Equivalent Units
19.1 Factors of Production
19.2 An Illustration of Equivalent Units Calculations
19.3 Cost per Equivalent Unit

20. Cost Allocation to Completed Units and Units in Process
20.1 Cost of Production Report
20.2 Journal Entries
20.3 Subsequent Departments
20.4 The Big Picture
20.5 FIFO Process Costing

21. Activity-Based Costing
21.1 Pros of ABC
21.2 Cons of ABC
21.3 The Reality of ABC
21.4 A Closer Look at ABC Concepts
21.5 The Steps to Implement ABC
21.6 A Simple Analogy
21.7 A Case Study in ABC
21.8 Study Process and Costs
21.9 Identify Activities
21.10 Determine Traceable Costs and Allocation Rates
21.11 Assign Costs to Activities
21.12 Determine Per-Activity Allocation Rates
21.13 Apply Costs to Cost Objects
21.14 What Just Happened?
21.15 A Great Tool, But not a Panacea