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MANAGEMENT
ACCOUNTING
FOR DECISION MAKERS
F01 Management Accounting for Decision Makers 49459.indd 1 23/09/2020 17:05

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To learn more, please visit us at www.pearson.com/uk

TENTH EDITION
MANAGEMENT
ACCOUNTING
Peter Atrill and
Eddie McLaney FOR DECISION MAKERS
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney
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First published 1995 by Prentice Hall Europe (print)

Second edition published 1999 by Prentice Hall Europe (print)
Third edition published 2002 by Pearson Education Limited (print)
Fourth edition published 2005 (print)
Fifth edition published 2007 (print)
Sixth edition published 2009 (print)
Seventh edition published 2012 (print and electronic)
Eighth edition published 2015 (print and electronic)
Ninth edition published 2018 (print and electronic)
Tenth edition published 2021 (print and electronic)
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ISBN: 978-1-292-34945-9 (print)

978-1-292-34946-6 (PDF)
978-1-292-34951-0 (ePub)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Atrill, Peter, author. | McLaney, E. J., author.
Title: Management accounting for decision makers / Peter Atrill and Edward
McLaney.
Description: Tenth edition. | Harlow, England ; New York : Pearson, 2021. |
Includes bibliographical references and index. | Summary: “In this
edition, we have taken the opportunity to improve the book. We have
expanded on the changing role of management accountants to enable them
to retain their place at the centre of the decision-making and planning
process. In Chapter 1, we have included the recently developed statement
of Global Management Accounting Principles. These principles have been
identified (by the leading management accounting professional bodies in
the UK and US) as those to be followed when determining the information
that managers need. In Chapter 7, we have brought in a discussion of
current thinking and practice in the area of management control.
Throughout this new edition, we have included additional, and more
up-to-date, examples of management accounting in practice. We have also
added more in-chapter questions and diagrams”-- Provided by publisher.
Identifiers: LCCN 2020032735 | ISBN 9781292349459 (hardback)
Subjects: LCSH: Managerial accounting. | Decision making.
Classification: LCC HF5657.4 .A873 2021 | DDC 658.15/11--dc23
LC record available at https://lccn.loc.gov/2020032735
10 9 8 7 6 5 4 3 2 1
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Front cover image Singora/Shutterstock
Print edition typeset in 9.25/13 pt Helvetica Neue LT W1G by SPi Global
Printed in Slovakia by Neografia
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

Brief contents
Preface xvii
How to use this book xix
Acknowledgements xxi
1 Introduction to management accounting 1

2 Relevant costs and benefits for decision making 42
3 Cost–volume–profit analysis 66
4 Full costing 107
5 Costing and cost management in a competitive environment 154
6 Budgeting 197
7 Accounting for control 243
8 Making capital investment decisions 286
9 Managing risk 333
10 Strategic management accounting: performance
evaluation and pricing in a competitive environment 360
11 Measuring divisional performance 413
12 Managing working capital 459
Appendix A Glossary of key terms 513

Appendix B Solutions to self-assessment questions 522
Appendix C Solutions to critical review questions 534
Appendix D Solutions to selected exercises 544
Appendix E Present value table 584
Index 587
Credits 601
BRIEF CONTENTS v

Contents
Preface xvii
How to use this book xix
Acknowledgements xxi
1 Introduction to management accounting 1

Introduction 1
Learning outcomes 1
What is the purpose of a business? 2
How are businesses organised? 3
How are businesses managed? 6
Establish mission, vision and objectives 7
Undertake a position analysis 9
Identify and assess the strategic options 10
Select strategic options and formulate plans 10
Perform, review and control 10
The changing business landscape 11
What is the financial objective of a business? 12
Balancing risk and return 14
What is management accounting? 16
How useful is management accounting information? 18
Providing a service 18
Weighing up the costs and benefits 20
Management accounting as an information system 22
It’s just a phase 23
What information do managers need? 25
Reporting non-financial information 27
Influencing managers’ behaviour 28
Reaping the benefits of information technology 29
From bean counter to team member 30
Reasons to be ethical 32
Management accounting and financial accounting 34
Summary 36
Key terms 39
References 39
Further reading 39
Critical review questions 39
Exercises 40
CONTENTS vii

2 Relevant costs and benefits for decision making 42
Introduction 42
Learning outcomes 42
Cost–benefit analysis 43
What is meant by ‘cost’? 44
Relevant costs: opportunity and outlay costs 46
Irrelevant costs: sunk costs and committed costs 49
Sunk cost fallacy 50
Determining the relevant cost of labour and materials 51
Labour 51
Materials 54
Non-measurable costs and benefits 56
Summary 58
Key terms 59
Further reading 59
Exercises 60
3 Cost–volume–profit analysis 66
Introduction 66
Cost behaviour 67
Fixed cost 67
Variable cost 69
Semi-fixed (semi-variable) cost 70
Analysing semi-fixed (semi-variable) costs 70
Finding the break-even point 72
Contribution 78
Contribution margin ratio 79
Margin of safety 79
Achieving a target profit 81
Operating gearing and its effect on profit 82
Profit–volume charts 84
The economist’s view of the break-even chart 85
The problem of breaking even 87
Weaknesses of break-even analysis 87
Using contribution to make decisions: marginal analysis 90
Pricing/assessing opportunities to enter contracts 91
The most efficient use of scarce resources 93
Make-or-buy decisions 95
Closing or continuation decisions 97
Summary 100
Key terms 101
Further reading 101
Exercises 102
viii CONTENTS

4 Full costing 107
Introduction 107
What is full costing? 108
Why do managers want to know the full cost? 108
Single-product businesses 110
Process-costing problems 111
Multi-product businesses 113
Direct and indirect cost 114
Job costing 115
Full costing and cost behaviour 116
The problem of indirect cost 118
Overheads as service renderers 118
Job costing: a worked example 118
Selecting a basis for charging overheads 123
Segmenting the overheads 126
Dealing with overheads on a cost centre basis 127
Batch costing 137
Non-manufacturing overheads 139
Full (absorption) costing and estimation errors 140
Full (absorption) costing and relevant costs 141
Full (absorption) costing versus variable costing 142
Which method is better? 144
Summary 146
Key terms 148
Reference 148
Further reading 148
Exercises 149
5 Costing and cost management in a

competitive environment 154
Introduction 154
Cost determination in the changed business environment 155
Costing and pricing: the traditional way 155
Costing and pricing: the new environment 155
Cost management systems 157
The problem of overheads 157
Taking a closer look 157
Activity-based costing 158
Assigning overheads 159
ABC and the traditional approach compared 160
ABC and service industries 161
Benefits and costs of ABC 165
ABC in practice 167
CONTENTS ix

Managing costs over the product life cycle 169
Total life-cycle costing 170
Target costing 172
Kaizen costing 175
Other approaches to managing costs in the modern environment 178
Value chain analysis 178
Benchmarking 180
Total quality management 184
Managing quality costs 186
An alternative view 188
Summary 191
Key terms 192
Reference 192
Further reading 192
Exercises 193
6 Budgeting 197
Introduction 197
How budgets link with strategic plans and objectives 198
Exercising control 199
Time horizon of plans and budgets 201
Budgets and forecasts 202
Periodic and continual budgets 202
Limiting factors 203
How budgets link to one another 203
How budgets help managers 206
The budget-setting process 208
Step 1: Establish who will take responsibility 208
Step 2: Communicate budget guidelines to relevant managers 208
Step 3: Identify the key, or limiting, factor 208
Step 4: Prepare the budget for the area of the limiting factor 209
Step 5: Prepare draft budgets for all other areas 209
Step 6: Review and coordinate budgets 209
Step 7: Prepare the master budgets 210
Step 8: Communicate the budgets to all interested parties 210
Step 9: Monitor performance relative to the budget 210
Using budgets in practice 211
Incremental and zero-base budgeting 213
Preparing budgets 216
The cash budget 216
Preparing other budgets 220
Activity-based budgeting 222
Non-financial measures in budgeting 225
Budgets and management behaviour 225
Problems with budgets 226
Beyond conventional budgeting 228
The future of budgeting 230
x CONTENTS

Summary 233
Key terms 234
References 234
Further reading 234
Exercises 235
7 Accounting for control 243

Introduction 243
Budgeting for control 244
Types of control 245
Variances from budget 247
Flexing the budget 247
Sales volume variance 248
Sales price variance 251
Materials variances 252
Labour variances 253
Fixed overhead variance 254
Reconciling the budgeted profit with the actual profit 255
Reasons for adverse variances 259
Variance analysis in service industries 261
Non-operating-profit variances 261
Investigating variances 261
Variance analysis in practice 264
Compensating variances 264
Standard quantities and costs 265
Setting standards 266
Who sets the standards? 266
How is information gathered? 266
What kind of standards should be used? 267
The learning-curve effect 267
Other uses for standard costing 268
Some problems 269
The new business environment 271
Making budgetary control effective 272
Behavioural issues 273
Failing to meet the budget 274
Budgets and management autonomy 275
Types of management control 275
Direct control 275
Indirect control 276
Summary 278
Key terms 280
Reference 280
Further reading 280
Exercises 281
CONTENTS xi

8 Making capital investment decisions 286
Introduction 286
The nature of investment decisions 287
Investment appraisal methods 288
Accounting rate of return (ARR) 290
ARR and ROCE 291
Problems with ARR 292
Payback period (PP) 294
Problems with PP 296
Net present value (NPV) 298
Why does time matter? 299
Interest lost 299
Risk 299
Inflation 300
What should managers do? 300
Dealing with the time value of money 301
Calculating the net present value 303
Using present value tables 304
The discount rate and the cost of capital 305
Why NPV is better 306
NPV and economic value 306
Internal rate of return (IRR) 307
Problems with IRR 310
Some practical points 311
Investment appraisal in practice 314
Investment appraisal and strategic planning 317
Managing investment projects 318
Stage 1: Determine investment funds available 318
Stage 2: Identify profitable project opportunities 319
Stage 3: Evaluate the proposed project 319
Stage 4: Approve the project 319
Stage 5: Monitor and control the project 320
Summary 323
Key terms 324
References 325
Further reading 325
Exercises 326
9 Managing risk 333

Introduction 333
Dealing with risk 334
xii CONTENTS

Assessing the level of risk 334
Sensitivity analysis 334
Strengths and weaknesses of sensitivity analysis 341
Scenario analysis 343
Expected values 343
Reacting to the level of risk 351
Summary 352
Key terms 353
Further reading 354
Exercises 354
10 Strategic management accounting: performance

evaluation and pricing in a competitive environment 360
Introduction 360
What is strategic management accounting? 361
Facing outwards 362
Competitor analysis 362
Customer profitability analysis 366
Competitive advantage through cost leadership 370
Non-financial measures of performance 372
The balanced scorecard 373
Scorecard problems 380
Measuring shareholder value 380
The quest for shareholder value 381
How can shareholder value be created? 381
The need for new measures 382
Economic value added (EVA®) 383
Shareholder value-based management in practice 388
Just another fad? 389
Pricing 389
Economic theory 389
Some practical considerations 397
Full cost (cost-plus) pricing 398
Pricing on the basis of marginal cost 400
Target pricing 402
Pricing strategies 402
Summary 406
Key terms 407
References 407
Further reading 407
Exercises 408
CONTENTS xiii

11 Measuring divisional performance 413
Introduction 413
Divisionalisation 414
Why do businesses divisionalise? 414
Devolving decisions 414
Divisional structures 416
Is divisionalisation a good idea? 416
Measuring divisional profit 421
Contribution 421
Controllable profit 422
Divisional profit before common expenses 422
Divisional profit for the period 423
Divisional performance measures 424
Return on investment (ROI) 424
Residual income (RI) 428
Looking to the longer term 429
Comparing performance 431
EVA® revisited 432
Transfer pricing 433
The objectives of transfer pricing 434
Transfer pricing and tax mitigation 436
Transfer pricing policies 438
Market prices 438
Variable cost 439
Full cost 439
Negotiated prices 440
Divisions with mixed sales 441
Differential transfer prices 443
Transfer pricing and service industries 445
Non-financial measures of performance 445
What is measured? 446
Choosing non-financial measures 449
Who should report? 449
Summary 451
Key terms 453
Further reading 453
Exercises 454
12 Managing working capital 459

Introduction 459
What is working capital? 460
Managing working capital 461
The scale of working capital 461
xiv CONTENTS

Managing inventories 464
Budgeting future demand 466
Financial ratios 466
Recording and reordering systems 466
Levels of control 469
Inventories management models 471
XYZ inventories management 477
Managing trade receivables 478
Which customers should receive credit and how much should they be
offered? 479
Length of credit period 480
An alternative approach to evaluating the credit decision 483
Cash discounts 484
Debt factoring and invoice discounting 485
Credit insurance 485
Collection policies 485
Reducing the risk of non-payment 489
Managing cash 490
Why hold cash? 490
How much cash should be held? 490
Controlling the cash balance 491
Cash budgets and managing cash 492
Operating cash cycle 493
Cash transmission 497
Bank overdrafts 498
Managing trade payables 498
Taking advantage of cash discounts 499
Controlling trade payables 500
Managing working capital 500
Summary 503
Key terms 505
Further reading 506
Exercises 507
Appendix A Glossary of key terms 513

Appendix B Solutions to self-assessment questions 522
Appendix C Solutions to critical review questions 534
Appendix D Solutions to selected exercises 544
Appendix E Present value table 584
Index 587
Credits 601
Lecturer Resources ON THE

WEBSITE
For password-protected online resources tailored to
support the use of this textbook in teaching, please visit
go.pearson.com/uk/he/resources
CONTENTS xv

Preface
Welcome to the tenth edition of Management Accounting for Decision Makers. This book is
directed primarily at those following an introductory course in management accounting. Many
readers will be studying at a university or college, perhaps majoring in accounting or in another
area, such as business studies, IT, tourism or engineering. Other readers, however, may be
studying independently, perhaps with no qualification in mind.
The book is written in an ‘open learning’ style, which has been adopted because we believe
that readers will find it more ‘user-friendly’ than the traditional approach. Whether they are
using the book as part of a taught course, or for personal study, we feel that the open learning
approach makes it easier for readers to learn.
In writing this book, we have been mindful of the fact that most readers will not have studied
management accounting before. We have tried to make the topic accessible to readers in a
number of ways. This includes avoiding unnecessary jargon. Where technical terminology is
unavoidable, we have given clear explanations. At the end of the book (in Appendix A) there
is a glossary of technical terms, which readers can use to refresh their memory if they come
across a term whose meaning is in doubt. In the book, we also introduce topics gradually,
explaining everything as we go. We have included frequent questions and tasks of various
types to try to help readers to understand the subject fully, in much the same way as a good
lecturer would do in lectures and tutorials. These questions and tasks have been framed in a
way that is designed to encourage readers to help improve their critical thinking. Many of the
questions and tasks require readers to think beyond the material in the text and/or to link the
current topic with material covered earlier in the book. More detail on the nature and use of
these questions and tasks is given in the ‘How to use this book’ section immediately following
this preface.
A note to students from the authors

Management accounting is concerned with providing information to those who need to make
financial/economic decisions about their organisation. Such decisions could involve such
things as:
■ assessing how much inventories (stock) a retail outlet should hold for optimal profitability;
■ deciding whether to abandon a particular product by a manufacturing business on the basis
of its profitability:
■ appraising the economic desirability of investing in new equipment that would enable a
business to provide a new service to its customers; and
■ a government weighing the costs and benefits of building a high-speed rail link from London
to Birmingham and the North.
It should be clear that these types of decision have a real impact on businesses, those who
work for them and for their customers. Getting these decisions wrong could have profound
effects, perhaps leading to a business collapsing, throwing its employees out of work and
PREFACE xvii

depriving customers of a product or service that they wish to buy. In the case of the rail link,
the impact is felt by the taxpayer who will fund the project, people who live on or near the
proposed route and, eventually, those who will travel on the line.
To relate the subject matter of the book to real life, each chapter includes a number of
‘Real world’ examples. These are generally short case studies that examine how a particular
business has approached a particular management accounting issue. In some cases, they are
presentations of research evidence as how organisations, in general, deal with such issues.
Evidence from students who have used past editions indicates that these can help to bring
the subject to life.
When you have completed your studies and are working in an organisation, you will need
to have the ability to solve problems. It is also crucial for you to be able to communicate your
solutions to colleagues and to customers. To do this you will need to develop a capacity to
think critically. ‘Critical thinking’ can be defined as the analysis of facts to form a judgement.
In analysing the facts, it is important that factual evidence is used in a logical way. It is also
important that a sceptical and questioning approach to the evidence is applied. When recruit-
ing, organisations are increasingly looking for evidence that potential employees can think
critically when seeking to solve problems.
In writing this book, we have been aware of the need to encourage critical thinking. The
‘Activities’ (typically short questions) that are interspersed throughout the book are designed,
among other things, to try to develop the appropriate critical thinking skills. This is also true
of the ‘Critical review questions’ at the end of each chapter. Similarly with many of the end-
of-chapter ‘Exercises’.
We hope that students will find the book readable and helpful.
A note to lecturers and tutors from the authors

In this edition, we have taken the opportunity to improve the book. We have expanded on the
changing role of management accountants to enable them to retain their place at the centre
of the decision-making and planning process. In Chapter 1, we have included the recently
developed statement of Global Management Accounting Principles. These principles have
been identified (by the leading management accounting professional bodies in the UK and US)
as those to be followed when determining the information that managers need. In Chapter 7,
we have brought in a discussion of current thinking and practice in the area of management
control. Throughout this new edition, we have included additional, and more up-to-date, exam-
ples of management accounting in practice. We have also added more in-chapter questions
and diagrams.
This text is supported by its own MyLab Accounting which is an environment that gives
unlimited opportunities for practice using a range of questions, and which provides timely
feedback. Updates to MyLab Accounting for the 10th edition include the enhancement of
over 45 previously static questions so that these are now algorithmic, which means that each
student is able to work on a numerical problem that is individual to him or her. In addition to
the Case Studies, useful self-study suggestions in the Study Plan, and vast range of exercises
(over 940) to select from, better feedback has been incorporated in MyLab Accounting for
this edition, providing a greater quality of response to help students learn from their incorrect
answers and make progress in their learning.
For access to MyLab Accounting, students need both a course ID and an access card (see
the advert on the inside back cover of the book).
Peter Atrill
Eddie McLaney
xviii PREFACE

How to use this book
Whether you are using the book as part of a lecture/tutorial-based course or as the basis for a
more independent mode of study, the same approach should be broadly followed.
Order of dealing with the material

The contents of the book have been ordered in what is meant to be a logical sequence. For
this reason, it is suggested that you work through the book in the order in which it is presented.
Every effort has been made to ensure that earlier chapters do not refer to concepts or terms
which are not explained until a later chapter. If you work through the chapters in the ‘wrong’
order, you may encounter points that have been explained in an earlier chapter which you
have not read.
Working through the chapters

You are advised to work through the chapters from start to finish, but not necessarily in one
sitting. Activities are interspersed within the text. These are meant to be like the sort of ques-
tions which a good lecturer will throw at students during a lecture or tutorial. Activities seek
to serve two purposes:
■ To give you the opportunity to check that you understand what has been covered so far.
■ To try to encourage you to think beyond the topic that you have just covered, sometimes
so that you can see a link between that topic and others with which you are already familiar.
Sometimes, activities are used as a means of linking the topic just covered to the next one.
You are strongly advised to work through all the activities. Answers are provided immediately
after each activity. These answers should be covered up until you have arrived at a solution,
which should then be compared with the suggested answer provided.
Towards the end of Chapters 2–12, there is a ‘self-assessment question’. This is rather
more demanding and comprehensive than any of the activities. It is intended to give you an
opportunity to see whether you understand the main body of material covered in the chapter.
The solutions to the self-assessment questions are provided in Appendix B at the end of the
book. As with the activities, it is very important to make a thorough attempt at the question
before referring to the solution. If you have real difficulty with a self-assessment question you
should go over the chapter again, since it should be the case that careful study of the chapter
will enable completion of the self-assessment question.
End-of-chapter assessment material

At the end of each chapter there are four ‘critical review questions’. These are short ques-
tions that require you to analyse a topic dicussed in the chapter and to form a judgement. In
providing that answer you will need to apply some critical thinking skills (see ‘Note to students
HOW TO USE THIS BOOK xix

from the authors’ in the Preface). The questions attempt to raise many of the key issues in the
chapter concerned. Suggested answers to these questions are provided in Appendix C at the
end of the book. Again, a serious attempt should be made to answer these questions before
referring to the suggested answers.
At the end of each chapter, there are normally eight exercises. These are more demanding
and extensive questions, mostly computational, and should further reinforce your knowledge
and understanding. We have attempted to provide questions of varying complexity.
Answers to five out of the eight exercises in each chapter are provided in Appendix D at the
end of the book. These exercises are marked with a coloured number, but a thorough attempt
should be made to answer these questions before referring to the answers. Answers to the
three exercises that are not marked with a coloured number are given in a separate teacher’s
manual.
xx HOW TO USE THIS BOOK

Acknowledgements
The publisher thanks the following reviewers for their very valuable comments on the book:
Martyn Jones, University of Winchester

Ed Tew at the University of Reading
Christos Begkos, University of Manchester
Anis Zras, University of Southampton
Mohamed Fadzly, University of Birmingham
Jatin Pancholi, Middlesex University
ACKNOWLEDGEMENTS xxi

Chapter 1
INTRODUCTION TO
MANAGEMENT
ACCOUNTING
INTRODUCTION
Welcome to the world of management accounting! Management
accounting is concerned with collecting and analysing financial and other
information and then communicating this to managers. This information
is intended to help managers within businesses and other organisations
make better decisions. In this introductory chapter, we examine the role of
management accounting within a business. To understand the context for
management accounting, we begin by examining the nature and purpose
of a business. Thus, we first consider what businesses seek to achieve,
how they are organised and how they are managed. Having done this, we
go on to explore how management accounting information can be used
within a business to improve the quality of managers’ decisions. We also
identify the characteristics that management accounting information must
possess to fulfil its role. Management accounting has undergone significant
advances in response to changes in the business environment and to the
increasing size and complexity of business entities. In this chapter we shall
discuss some of the more important changes that have occurred.
Learning outcomes
When you have completed this chapter, you should be able to:
■ identify the purpose of a business and discuss the ways in which a
business may be organised and managed;
■ discuss the issues to be considered when setting the long-term direction
of a business;
■ explain the role of management accounting within a business and
describe the key principles upon which management accounting rests;
and
■ explain the changes that have occurred over time in both the role of
the management accountant and the kind of information provided by
management accounting systems.
M01 Management Accounting for Decision Makers 49459.indd 1 23/09/2020 16:31

WHAT IS THE PURPOSE OF A BUSINESS?
Peter Drucker, an eminent management thinker, has argued that ‘The purpose of business is
to create and keep a customer’ (see Reference 1 at the end of the chapter). Drucker defined
the purpose of a business in this way in 1967, at a time when most businesses did not adopt
this strong customer focus. His view therefore represented a radical challenge to the accepted
view of what businesses do. Now, more than 50 years later, his approach forms part of the
conventional wisdom. It is now widely accepted that, in order to succeed, businesses must
focus on satisfying the needs of the customer.
Although the customer has always provided the main source of revenue for a business, this
has often been taken for granted. In the past, too many businesses assumed that the customer
would readily accept whatever services or products were on offer. When competition was weak
and customers were passive, businesses could operate under this assumption and still make a
profit. However, the era of weak competition has passed. Today, customers have much greater
choice and are much more assertive concerning their needs. They now demand higher quality
services and goods at cheaper prices. They also require that services and goods be delivered
faster with an increasing emphasis on the product being tailored to their individual require-
ments. If a business cannot meet these criteria, a competitor often can. Thus, the business
mantra for the current era is ‘the customer is king’. Most businesses now recognise this fact
and organise themselves accordingly.
Real World 1.1 describes how the Internet and social media have given added weight to
this mantra. It points out that dissatisfied customers now have a powerful medium for broad-
casting their complaints.
Real World 1.1
The customer is king

The mantra that the ‘customer is king’ has gained even greater significance among busi-
nesses in recent years because of the rise of the Internet and social media. In the past, a
dissatisfied customer might tell only a few friends about a bad buying experience. As a result,
the damage to the reputation of the business concerned would normally be fairly limited.
However, nowadays, through the magic of the Internet, several hundred people, or more,
can be very speedily informed of the poor service.
Businesses are understandably concerned about the potential of the Internet to damage
reputations, but are their concerns justified? Do customer complaints, which wing their way
through cyberspace, have any real effect on the businesses concerned? A Harris Poll survey
of 2,000 adults in the UK and US suggests they do and so businesses should be concerned.
It seems that social media can exert a big influence on customer buying decisions.
The Harris Poll survey, which was conducted online, found that around 20 per cent of
those surveyed use social media when making buying decisions. For those in the 18 to 34
age range, the figure rises to almost 40 per cent. Furthermore, 60 per cent of those surveyed
indicated that they would avoid buying from a business that receives poor customer reviews
for its products or services.
The moral of this tale appears to be that, in this Internet age, businesses must work even
harder to keep their customers happy if they are to survive and prosper.
Source: Based on information in Miesbach, A. (2015) Yes, the Customer Is Still King, 30 October, www.icmi.com
2 CHAPTER 1 INTRODUCTION TO MANAGEMENT ACCOUNTING

HOW ARE BUSINESSES ORGANISED?
Nearly all businesses that involve more than a few owners and/or employees are set up as
limited companies. Finance will come from the owners (shareholders) both in the form of a
direct cash investment to buy shares (in the ownership of the business) and through the share-
holders allowing past profits, which belong to them, to be reinvested in the business. Finance
will also come from lenders (banks, for example) as well as through suppliers providing goods
and services on credit.
In larger limited companies, the owners (shareholders) tend not to be involved in the daily
running of the business; instead they appoint a board of directors to manage the business on
their behalf. The board is charged with three major tasks:
■ setting the overall direction for the business;

■ monitoring and controlling the activities of the business; and
■ communicating with shareholders and others connected with the business.
Each board has a chairman who is elected by the directors. The chairman is responsible
for the smooth running of the board. In addition, each board has a chief executive officer
(CEO) who leads the team that is responsible for running the business on a day-to-day
basis. Occasionally, the roles of chairman and CEO are combined, although it is usually
considered to be good practice to separate them. It prevents a single individual having
excessive power.
The board of directors represents the most senior level of management. Below this level,
managers are employed, with each manager being given responsibility for a particular part of
the business’s operations.
Activity 1.1
Why doesn’t just one manager manage larger businesses as a single unit? Try to think of
at least one reason.
Three common reasons are:
■ The sheer volume of activity or number of employees makes it impossible for one person
to manage them.
■ Certain business operations may require specialised knowledge or expertise.
■ Geographical remoteness of part of the business operations may make it more practical
to manage each location as a separate part, or set of separate parts.
The operations of a business may be divided for management purposes in different ways.
For smaller businesses offering a single product or service, separate departments are often
created. Tasks are grouped according to functions (such as marketing, human resources and
finance) with each department responsible for a particular function. The managers of each
department will then be accountable to the board of directors. In some cases, a departmental
manager may also be a board member. A typical departmental structure, organised along
functional lines, is shown in Figure 1.1.
HOW ARE BUSINESSES ORGANISED? 3

Board of directors
Human
Finance Marketing Operations
resources
This is a typical departmental structure organised according to business functions.
Figure 1.1 A departmental structure organised according to business functions
Departments based around functions permit greater specialisation, which, in turn, can pro-
mote greater efficiency. The departmental structure, however, can become too rigid. This can
lead to poor communication between departments and, perhaps, a lack of responsiveness to
changing market conditions.
The structure set out in Figure 1.1 may be adapted according to the particular needs of
the business. Where, for example, a business has few employees, the human resources func-
tion may not form a separate department but rather form part of another department. Where
business operations are specialised, separate departments may be created to deal with each
specialist area. Example 1.1 illustrates how Figure 1.1 may be modified to meet the needs of
a particular business.
Example 1.1
Supercoach Ltd owns a small fleet of coaches that it hires out with drivers for private group
travel. The business employs about 60 people. It could be departmentalised as follows:
■ Marketing department, dealing with advertising, answering enquiries from potential

customers, maintaining good relationships with existing customers and entering into
contracts with customers.
■ Routing and human resources department, responsible for the coach drivers’ routes,
schedules, staff duties and rotas as well as problems that arise during a particular job
or contract.
■ Coach maintenance department, looking after repair and maintenance of the coaches,
buying spares, and giving advice on the need to replace old or inefficient coaches.
■ Finance department, responsible for managing cash flows, costing business activities,
pricing new proposals, measuring financial performance, preparing budgets, borrowing,
paying wages and salaries, billing and collecting amounts due from customers, and
processing and paying invoices from suppliers.
For large businesses with a diverse geographical spread and/or a wide product range, the
simple departmental structure set out in Figure 1.1 will usually have to be adapted. Separate
divisions are often created for each geographical area and/or major product group. Each
division will be managed separately and will usually enjoy a degree of autonomy. This can
produce more agile responses to changing market conditions. Within each division, however,

departments are often created and organised along functional lines. Those functions that
provide support across the various divisions, such as human resources, may be carried out
at head office to avoid duplication. The managers of each division will be accountable to the
board of directors. In some cases, individual board members may also be divisional managers.
A typical divisional organisational structure is set out in Figure 1.2. Here the main basis of
the structure is geographical. Thus, North Division deals with production and sales in the north
and so on.
Board of directors
North South East West

Division Division Division Division
Finance Finance Finance Finance
Operations Operations Operations Operations
Marketing Marketing Marketing Marketing
Other Other Other Other
This is a typical organisational structure for a business that has been divided into separate
operating divisions.
Figure 1.2 A divisional organisational structure
Once a particular divisional structure has been established, it need not be permanent.
Successful businesses constantly strive to improve their operational efficiency. This could well
result in revising their divisional structure. Real World 1.2 includes an extract from a press
release that describes how one well-known business restructured in order to simplify opera-
tions and to reduce costs.
Real World 1.2
Engineering change
Rolls-Royce plc, the engineering business, announced in 2018 that it would simplify its busi-
ness operations. This involved consolidating its five operating divisions into three core units
based around Civil Aerospace, Defence and Power Systems.
Chief Executive Warren East justified the restructuring of the business as follows:
Building on our actions over the past two years, this further simplification of our business means
Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much
➔
HOW ARE BUSINESSES ORGANISED? 5

greater pace in meeting the vital power needs of our customers. It will create a Defence operation
with greater scale in the market, enabling us to offer our customers a more integrated range of
products and services. It will also strengthen our ability to innovate in core technologies and ena-
ble us to take advantage of future opportunities in areas such as electrification and digitalisation.
The business made the restructuring announcement not long after reporting a massive
pre-tax loss of £4.6 billion. It is expected that the move towards a simpler structure will
generate significant cost savings.
Source: Extract from Roll-Royce (2018) Rolls-Royce announces further simplification of business, strategic review of
Commercial Marine operation and plans to restructure support and management functions, Rolls-Royce.com Press
Release, 17 January.
While both divisional and departmental structures are very popular in practice, it should be
noted that other organisational structures will be found.
HOW ARE BUSINESSES MANAGED?
Over the past three decades, the environment in which businesses operate has become
increasingly turbulent and competitive. Various reasons have been identified to explain these
changes, including:
■ the increasing sophistication of customers (as we have seen);

■ the development of a global economy where national frontiers have become less important;
■ rapid changes in technology;
■ the deregulation of domestic markets (for example, electricity, water and gas);
■ increasing pressure from owners (shareholders) for competitive economic returns; and
■ the increasing volatility of financial markets.
The effect of these environmental changes has been to make the role of managers more
complex and demanding. This, along with the increasing size of many businesses, has led
managers to search for new ways to manage their businesses. One important tool that has
been developed in response to managers’ needs is strategic management. This is concerned
with establishing the long-term direction for the business. It involves setting long-term goals
and then ensuring that they are implemented effectively. To help the business develop a
competitive edge, strategic management focuses on doing things differently rather than simply
doing things better.
Strategic management provides a business with a clear sense of purpose along with a
series of steps to achieve that purpose. The steps taken should link the internal resources
of the business to the external environment of competitors, suppliers, customers and so
on. This should be done in such a way that any business strengths, such as having a skilled
workforce, are exploited and any weaknesses, such as being short of investment finance,
are not exposed. To achieve this requires the development of strategies and plans that take
account of the business’s strengths and weaknesses, as well as the opportunities offered
and threats posed by the external environment. Access to a new, expanding market is an
example of an opportunity; the decision of a major competitor to reduce prices is an example
of a threat.
Real World 1.3 provides an indication of the extent to which strategic planning is carried
out in practice.

Real World 1.3
Strategic planning high on the list

A recent survey investigated the use of various management tools throughout the world. It
found that strategic planning is used by 48 per cent of those businesses that took part in the
survey. This made it the most popular management tool. The survey, which is conducted
annually, has ranked strategic planning highly, in terms of both usage and satisfaction,
over many years. Figure 1.3 reveals the level of usage and satisfaction concerning this
technique.
Percentage 5 = highest
of respondents satisfaction
100% 5
80 4
60 3
40 2
20 1
0 0
1996 2017
Total usage Overall satisfaction
The results were based on a survey of 1,268 senior executives throughout the world.
Source: Rigby, D. and Bilodeau, B. (2018) Management Tools and Trends 2018, Bain and Company.
Figure 1.3 The level of satisfaction with, and usage of, strategic planning
We can see that the level of satisfaction with this technique has remained remarkably stable
over time. However, there has been a decline in usage in recent years.
The strategic management process may be approached in different ways. One popular
approach, involving five steps, is described below.
1 Establish mission, vision and objectives

The first step is to establish the mission of a business, which may be set out in the form of a
mission statement. This is a concise declaration of the overriding purpose of the business. It
addresses the question ‘What business are we in?’ To answer this question, managers should
focus on those customer needs that the business seeks to satisfy rather than on the products
currently produced. Thus, a publisher of novels might, for example, conclude that it is really in
the entertainment business. The vision statement is closely connected to the mission state-
ment and declares the business’s aspirations. It addresses the question ‘What do we want
to achieve?’ Once again, it should be in as concise a form as possible. By answering both
questions, managers are provided with a clear focus for decision making. Unless managers
are clear as to what is the overall aim of the business, they have no basis for setting out plans
and making decisions.
HOW ARE BUSINESSES MANAGED? 7

Another random document with
no related content on Scribd:
The Project Gutenberg eBook of Plane Jane
This ebook is for the use of anyone anywhere in the United States
and most other parts of the world at no cost and with almost no
restrictions whatsoever. You may copy it, give it away or re-use it
under the terms of the Project Gutenberg License included with this
ebook or online at www.gutenberg.org. If you are not located in the
United States, you will have to check the laws of the country where
you are located before using this eBook.
Title: Plane Jane
Author: Frederick C. Davis
Release date: April 27, 2024 [eBook #73483]
Language: English
Original publication: New York, NY: Flying Stories, Inc, 1928
Credits: Roger Frank and Sue Clark
*** START OF THE PROJECT GUTENBERG EBOOK PLANE JANE

***
PLANE JANE
By Frederick C. Davis
Author of “Haunted Hangars,” “Ordeal By Air,” etc.
Don’t go wonderin’ if I’m a expert on the subject, but ain’t there a

kind of girl that looks her prettiest when she’s wearin’ a kitchen dress
and rollin’ out biscuits? And ain’t there another sort of girl who
transforms herself into the most beautiful when she appears in a
filmy evenin’ gown and waits for you to waft her out into the
moonlight? Then there’s another that becomes the one and only
when she is wool from head to toe and cuddlin’ beside you on a
toboggan. And there’s one who is a shade above Venus when she
comes slashin’ out of the surf glistenin’ and lithe and fresh.
Jane Alton wasn’t any of these kinds, but, oh, what a dream she
was in a flyin’ suit! Jane was born to ornament the air. With a stick in
her hand and flyin’ joy in her eyes, she was an angel—and, of
course, bein’ an angel, she belonged in the sky. She put herself
there every chance she got!
It was a mornin’ full of smooth air and high visibility when Jane
came rompin’ around the hangars, shinin’ leather all over and, seein’
us, smiled brighter ’n the sun and ran straight for our plane.
Ned Knight was in the fore cubby, jazzin’ the motor, ready for a
take-off. He grinned and remarked over his shoulder:
“Benny, ol’ nut-twister, here’s where you lose your seat, back
there. Jane’s all set to take another trip to her home port, Heaven,
and there’s no use tryin’ to stop her. Better start gettin’ out.”
I’d already begun startin’, and I was all the way out when Jane
came up laughin’.
“Thank you, you ol’ darlin’,” she said to me, and I ain’t so old,
either. “I can’t wait another minute to get up into all that glorious sky.
Ned, would you mind changin’ back to Benny’s seat?”
“What!” barked Ned. “Listen, Jane. I’m takin’ this little Alton up for
a check-ride. Your Dad is waitin’ for the data on it. Just this time
won’t you ride in back, just this once, and lemme—”
“Ned Knight,” came back Jane, “am I not the holder of a pilot’s
license?”
“Yes, but—”
“Haven’t you, my only instructor, pronounced me to be a flyer
equal to any other you know?”
“You sure are, Jane, but—”
“Can’t I handle that stick and do a good job of gatherin’ data
myself?”
“I’m not sayin’ you can’t, but—”
“Do you want me to go up in another plane, without you, Ned
Knight?”
“No!” said Ned, and so he began gettin’ out!
Me, I couldn’t ’ve held out half that long against Jane Alton. I was
plenty crazy about that girl, but bein’ only a grease-monkey, and
havin’ a map resemblin’ a mauled-up bulldog’s, I confined myself to
bein’ just her slave. Ned Knight, however, being the best flyer in the
state, and the handsomest in six, got a lot of time from her. I
suspected maybe that there was some kind of romance goin’ on
there, between the flyer and the daughter of the plant owner, ’cause
they flew a lot together, those two.
So, with Ned back in the rear pit, Jane climbed into the front one,
settled to the controls, jazzed the motor, and waved one tiny gloved
hand to me. I socked the blocks; she stepped on the gas; and the
Alton was off. It trundled to the other edge of the sand, and Jane
pulled it up neatly; she circled twice, got herself a nice lot of altitude,
rode a few air waves in sheer joy, and then deadheaded across the
blue.
Now and then she cut the motor. Say, there wasn’t any tellin’ what
went on between them two, all alone up there, so close to Heaven! I
know they didn’t exactly dislike the open solitude of that sky! I
remember once, when Jane hopped out of the Alton, after a spell of
hootin’ with Ned, she said to him: “I love to be all alone with you up
there!” And Ned was never quite the same when he came down from
a flit with Jane, anyhow!
Well, while the Alton was banking and skimming at about a
thousand, Robert Bennett Alton himself came out onto the field. He
was owner of the field, and of the factory where the Altons were
made. He was manufacturing a sturdy, speedy, almost foolproof
plane that was just about the ultimate in aviation on a small scale. A
man dissatisfied with anything short of perfection—that was Alton.
And a fine man, in and out from the heart. He stood beside me,
watching his little moth weave across the sky.
“What a ship!” I said. “What a joy of a ship!”
“It seems to handle well, Benny,” was all Alton said. “What—
what’s that?”
Starin’, I went cold. From the front of the plane some black smoke
spouted out; and then came the flashin’ of fire. Fire it was! The nose
of that plane was bein’ licked by the flames leapin’ back from the
engine. One second it had been all o. k., and the next it was pushin’
a bonfire through the sky! If the fire reached the gasoline lines and
the tank—if it kindled the linen—it meant disaster! And I, myself, I
had inspected that ship to make sure it was o. k. All but passin’ out, I
continued to stare, and Mr. Alton got as white as the clouds.
“Benny, who’s pilotin’ that ship?”
“Jane!”
“What!”
Now the plane was sideslippin’ away from the flames; it tore off
them, and they disappeared.
“And Jane knows her stuff!” I shouted.
Once havin’ snapped away from the danger, Jane dove at full
throttle, but the fire flashed out again, worse than before. As soon as
it did, Jane sideslipped again, and the wind put the fire out. This time
when she recovered she banked steep, gradually losin’ altitude and
made for the T. Mushin’ out, she cut the gun, and the Alton glided for
the sand. The fire popped out again, not so bad this time, but bad
enough!
The burnin’ ship trundled in, and before it stopped Ned Knight
was out of it. Jane jumped right behind him. Ned scooped up sand
and threw it on the fire, and Jane worked just as fast. Mr. Alton and
me and some of the other boys ran for the ship, but by the time we
got there, the fire was all out.
Ned Knight, plenty mad, stepped up to me chin first. “Benny, your
job is to keep these ships in trim, ain’t it—’specially this one, that’s
goin’ to fly the race—or was! Then how come the timin’ is off, and
fire got sucked back into the carburetor? I’ll bet my hat that the
screen and drain is in bad shape, too, you—. Good gosh!”
“Well, I got it out all right, didn’t I?” inquired Jane, who seemed to
think that any scrape wasn’t very bad if she got out of it alive.
“You sure did! You got us out like a veteran. Jane, you’re all right.
Benny, dang you—”
I wasn’t wastin’ time standin’ there and bein’ bawled out. I put my
head into that motor, and it took only a minute for me to find out that
some monkey business had been goin on—grease-monkey
business! The engine had been tampered with. Our pet Alton! The
ship we were dressin’ for the race! And with Jane in it! Lord!
I whirled around and barked out my troubles. And then there was
plenty of quiet for a minute.
Ned Knight moved first. Some other members of the hangar crew
had come out to share the excitement. He singled out a pilot named
Stud Walker, and stepped right up to him. Ugly eyes that man had,
and an ugly face, and an ugly heart—Walker. His eyes sort of
flashed with fear, and he tried to back away, but Ned had him nailed.
“Walker, lemme ask you some questions! Last night, while I was
fussin’ around the field, I heard somebody inside this Alton’s hangar.
That was strange. By the time I got it unlocked, and went inside, the
noises stopped, and the hangar was empty. But I found a hole in the
sand, under the tin wall, that was fresh dug, and that hole was hid by
two empty oil barrels. You know anything about that? I’ll answer for
you. You know all about it. You’re the man that tampered with the
plane!”
“You can’t prove—” Walker gulped.
“Your guilty face proves it for me! I’m goin’ to smash—”
Ned began to sail in with both hands and feet, but I grabbed him.
While he was talkin’, two other greaseballs had got behind Walker,
and blocked his retreat. Also, they kept Ned from killin’ him. And right
then Mr. Robert Bennett Alton himself stepped up and spoke.
“Ned, if you’re accusin’ this man of tamperin’ with that plane, I
hope you can prove what you say.”
“Mr. Alton,” Ned came back, “some time ago I caught Walker
tappin’ a gin bottle on the field, and ever since then I’ve been
watchin’ him. A few days ago he acted funny. I watched closer. After
dark a sedan drew up, and Walker got in. The car stayed, and I
watched it. Inside it was Gifford, at the wheel—Gifford, of the
Stormbird people. He and Walker were talkin’ low. Then I saw Gifford
pass money to Walker. That is proof enough for me that he’s in
Gifford’s pay, working against us. He was clever enough to jim the
plane so I couldn’t find the trouble last night, but he’s got now!”
Walker looked plenty sick. Alton looked at him, and he couldn’t
look back. He might ’ve killed Ned Knight and Jane—Jane!—with his
trick, done for pay. He couldn’t face the man that had hired him out
of good faith.
“Walker, you look guilty!” Alton spoke up. “You’ve tried to cripple
us in favor of the Stormbird people—so they can win over us, of
course, in the air derby tomorrow. Thank the Lord you won’t have a
chance to get in any more of your dirty work! The Stormbirds are so
afraid that we’ll outfly them that they have to hire crooks to beat us,
eh? Do you know, Walker, that you could be jailed for what you’ve
done?”
Walker was white around the gills.
“Walker, I don’t want to bother with you. I think too little of you and
what you’ve done to prefer charges against you. Now, Walker, get off
this field. Get off! If you show your face on it again, man, I’ll break
you with my bare hands!”
Alton didn’t usually say much, but this was plenty for the
occasion, and he meant every word. Alton’s contempt was worse
than a lickin’ for Walker to take. Let loose, he shambled away, looks
of disgust and hate followin’ him. When he disappeared around the
hangars, the field seemed like a better place to stay.
Mr. Alton spoke quietly now to the boys, askin’ ’em to look over
the planes careful, suggestin’ that a guard be put around the
hangars tonight so that nothin’ could happen to the planes before the
start of the air race the next day; and they’d better keep a gun
handy; and—
“Ned!” Jane called out, not bein’ able to hold herself in any longer.
“Please, let’s get another plane out and go right back up!”
“Jane,” Mr. Alton said, “I want to talk with Ned a little, so you’d better
let the flyin’ go a while. Benny, is that ship damaged much?”
“No, sir,” I answered. “By adjusting the timer and putting in a
screen, and some new ignition wires—they’re burned off—she’ll be
shipshape again.”
“Start on it right away,” Mr. Alton told me. “Ned, how did the ship
feel today?”
“Better than ever before,” Knight answered. “Jane was at the
stick, but I could feel the pull of the new prop. We get the proper revs
now when we’re climbing.”
“The stabilizer?”
“Works like a dream. The ship’s as steady as a Rolls Royce on
Fifth Avenue and she stays that way. Also, it’s easier to hold her
head up. And the ailerons can be used when she’s throttled way
down—that’s somethin’ that’s improved with the new prop and
stabilizer. She’s ready for any race now, Mr. Alton.”
“Good!” said the Boss.
The boys’d been helpin’ me to roll the plane tail-to into the
hangar, and then, leavin’ Mr. Alton, Jane, Ned and me in there alone,
they went back to work. I tore off the old ignition wires while Mr. Alton
talked.
“Ned, are you ready to fly your best tomorrow? Goin’ to reach
Curtiss ahead of all the other entries, are you?”
“Sure he is!” spoke up Jane. “I’m his mascot!”
“I think your plane is a better flyer than any other in the line-up,
Mr. Alton,” Ned answered. “The Stormbird will tail us, but we’ll win.”
“I hope so!” Mr. Alton came back, sighin’. “Ned, I’m goin’ to take
you into my confidence. You’re goin’ to pilot that ship tomorrow, and
Benny will be along with you, and you both ought to know that I’m
bankin’ on you boys heavily. Aside from the purse—which, of course,
the pilot is goin’ to keep, for he’s the man that is goin’ to earn it—the
reputation of the Alton is at stake. The number of accidents that have
happened recently in Altons has given us a black-eye, Ned—you
know that.”
“People’ll forget that when we zip across the finish field first,” Ned
answered.
“They will—if we win,” Mr. Alton answered. “That will help. But
that’s not all. That ill will has hurt our business. We have been
runnin’ on a shoestring—and we’ve just about reached the end of it.
We need the winnin’ place in this race because of the good it will do
our business. If we don’t come in number one, Ned, I’m afraid that
we’ll have to be closing up the plant soon.”
Ned got pale, and I forgot work, and Jane listened plumb excited.
Mr. Alton was talkin’ in a low, serious tone. Since the Alton plant was
all any of us had in life right then, it was serious. We knew business
had been bad, but we never suspected it was that bad—never
suspected that this air derby was becomin’ a life and death matter for
Alton planes.
“I’ll explain a little more,” Mr. Alton went on, solemn and quiet.
“You know that the United Airways is holding up a large order of
planes—enough to keep us busy for the better part of a year—and
will place its order dependin’ on the outcome of the race tomorrow.
They’re lookin’ for speed and stamina, and they think they’ll find it in
the winnin’ ship. I had a talk with Finley, the manager, last night. ‘Win
the race, and I’ll place my order with you,’ he said. That’s how the
matter stands. And that United order, if we get it, will save our lives.”
Lord!
“There are other orders in the balance, too,” Mr. Alton went on.
“The government is going to give the winner some places in the air
mail and border patrol fleets, to replace the antiquated DeHavilands.
There’s a passenger airport in Texas that I’ve been tryin’ to land,
that’s waitin’ for the winner to take the order away from it. I could
name half a dozen more such examples; but it isn’t necessary.
“You understand, Ned, that when you fly tomorrow, you’ll be flyin’
to win—win not only the purse for yourself, but a new life for us. And
if you lose—but we won’t think about that now. You’re goin’ to win.”
“Yes, sir,” said Ned. “We’re goin’ to win!” He gave a look at Jane,
and Jane’s eyes sparkled. “There’s still another reason why I’m goin’
to win, Mr. Alton!”
“There is?”
“A pilot that ain’t married usually hasn’t got a habit of savin’ his
money—and I’ve spent all mine, till lately. But if I had to buy a house
and a lot of furniture, right now, I couldn’t do it. But with that purse in
my pocket—five thousand dollars—it wouldn’t be so hard! I want to
do that, Mr. Alton. I want to win that race, and then step up to you,
and say, ‘Sir, I want to marry your daughter!’”
Mr. Alton smiled. “From Jane’s conversation at home, which has
just two subjects—flyin’ and Ned—I’d suspected the situation.” He
chuckled. “I’d rather have a pilot for a son-in-law than anybody else,
and of all the pilots I know, you rate highest with me, Ned. Well, after
you win that race, and step up to me, and say your say, I’ll talk with
you about it!”
“Thanks!”
Mr. Alton walked out of the hangar, havin’ said his say to us—
which was plenty. For a few minutes I was stunned. Things was
comin’ too fast for me. That whole big plant, out there, was in danger
of vanishin’. Those peppy little Altons were in danger of eventually
droppin’ out of the air. Altons had been the subject of our talk and
dreams for years, and if they went—it would be worse than a death
in the family. And yet, there the whole matter was, flat up and lookin’
us in the face— and all of us swore, right then, that this Alton had to
win that race!
I turned and got to work on it—and how I began to work!
Somethin’ that happened behind me sounded a whole lot like a
kiss.
“So!” said Jane Alton. “You think, do you, Ned Knight, that you’re
goin’ to win me in a race as though I was a kewpie doll on a rack?”
“Why—”
“And if you don’t win the race, you won’t ask me to marry you at
all?”
“Well, gosh!”
“Young man,” said Jane in her most business-like manner, “I have
somethin’ to say to you—in private!”
She tugged him out of the hangar. Beyond the doors I could hear
’em whisperin’. Then they moved away, and I didn’t see either of ’em
again that day—because I wasn’t lookin’ at anythin’ but that plane.
I worked on her like a maniac. I forgot lunch and dinner and kept
workin’ on her till my arms were about ready to drop off. I wouldn’t let
anybody else touch her. I tested her everywhere, tuned her to the
prettiest pitch she could give, tightened her everywhere she would
tighten. There wasn’t any dingus on that plane that I overlooked.
When I called a halt it was after midnight.
Then I put blankets beside her, and tried to go to sleep; but I
couldn’t sleep. I had to get up and look her over again. Every half
hour after that I was up, to make sure I’d tested somethin’ that I
thought I might have overlooked. I couldn’t stay away from that
plane. Too much was dependin’ on it and the shape it was in.
And at last, as I was for the tenth time feelin’ over the control
wires, I saw light comin’ through the cracks of the door, and I knew it
was tomorrow.
The day of the Trans-state Air Derby had come!
It was the day of days. All over the country, airplane makers had
been lookin’ forward to this day, and preparin’ for it. Every maker of
light planes was goin’ to be represented with the best job they could
turn out. A string of single-motored planes was goin’ to line up, every
one ready to do its best, and compete for the championship—and
the competition was goin’ to be murder! A big Commission was
behind the project, directin’ it. Newspapers all over the world were
runnin’ notices of it, ’cause the results were goin’ to be official; and
the winner’s name was goin’ to be written right into air history in big
red letters.
There’d been guards outside the hangar all night; and when a
knock came, I opened the doors. Ned Knight, fresh and dapper,
came in, bringin’ a early mornin’ paper. He showed it to me.
Splashed all over the front page was big headlines: Planes Ready
For Big Cross Country Race! There below was the list of makers:
Alton, Stormbird, Zephyr, Lightning, Ranbros, Impco, and all of ’em.
And then the pilot’s name: Alton carryin’ Ben Benson and piloted by
Ned Knight. Stormbird carryin’ William Carson and piloted by—
“Good gosh, Ned!” I busted out. “That must be a misprint!”
“Nope, Benny; it must be true. Stormbird’s made a change in
pilots at the last minute.”
Right there in black and white it said that the pilot of the Stormbird
entry was goin’ to be Stud Walker! Stud Walker, the self-same crook
that we’d fired off the field—who had been in Stormbird pay, and
jimmed our plane! It was easy to see that Stormbird was usin’ him
because Walker would be hell-bent to beat us out, for our handlin’ of
him. We were goin’ to have a real enemy flyin’ against us!
“Gosh!” I croaked. “Ned, we can sure count on Walker’s beatin’
us if he possibly can. He’ll fly like a wild man to beat us!”
“I’m goin’ to do some flyin’ myself,” Ned came back. “Is the plane
ready, Benny? If it is, we’d better be gettin’ over the field. We’ve got
to check in and get lined up. Mr. Alton has drawn third place for us.”
“Third? Who’s second and first?”
“Impco is second.”
“And—?”
“Stormbird is first.”
“Hang it all! They’re gettin’ the breaks all around. I suppose it
figures out all right in the end, but— I hate to have ’em leadin’ us at
the very start!”
“Benny, aren’t you goin to dress up? Those overalls of yours ’re
dirty enough to walk around by themselves.”
“I wouldn’t change ’em for a suit of ermine, Ned,” I answered.
“They may be dirty as mud, but I love ’em!”
Then, Ned tells me, we should be on our way. We roll the plane
out, and block her; Ned gets in, contacts her, and we pump the prop.
She roars off, higher and higher, and the engine begins to warm and
sing a sweet song. When she’s hot, she’s the sweetest soundin’
motor I ever heard. Grinnin’ all over our faces, Ned and I get set.
She steps off down the field, swings into the air, and away we go, for
the startin’ field, as full of hope as any man could be without bustin’.
Pretty soon the field slides into view. There’s a crowd pushin’
around on it, and lined up, staggered in back of each other, are
planes. We circle and come down, and taxi smoothly across the
field. Then we ground-loop neatly, and come amblin’ back. Ned cuts
the motor, and we hop out. For a minute we’re busy registerin’, and
then official greaseballs push the plane into place, third in the line.
And there’s the Stormbird, our deadly opponent, with its nose
’way out in front. As we come past it, the pilot comes away from it. It
is Walker, lookin’ uglier ’n ever, with gloatin’ eyes and crooked sneer.
We give him hard looks and want to go on, but he has somethin’ to
say.
“Yesterday was your innin’, you hooters. Today is mine. I’m goin’
to fly you off the map!”
“Not in that wash-tub!” I come back.
“Hush up, Benny!” Ned nudges me. “Walker, you’re takin’ all the
joy out of this race. We want to fly with real flyers, not with crooks.
Depend on it, man, we don’t intend to be beaten by dirty play. And if
you fly square, Walker— you’ve only primed yourself for the lickin’ of
your life!”
Walker glares a killin’ look at us, and cusses us out as we pass
on.
Then there’s a squeal, and Jane Alton comes rushin’ around the
line of officials, followed by her Dad. She runs up to Ned and, right
out in public, gives him a big kiss. She talks fast as a whirlwind, bein’
all jazzed up with excitement and hope. Her Dad just shakes us by
the hand and says:
“In a few minutes you’ll be off, boys. Remember—we’re goin’ to
win.”
We promise him—our hearts in our throats. That big Stormbird
looks like a flyin’ devil to us and winnin’ won’t be a cinch for anybody.
Jane asks, breathless: “Ned, won’t you please take me along?”
Ned laughs. “No, Jane. It can’t be done. I’m sorry.”
“Oh, please!” she begs.
And he chuckles again, “No!”
Mr. Alton closes in then for a confidential talk with Ned; and Jane,
in a minute, grabs my sleeve and pulls me a little bit aside.
“Benny, will you do somethin’ for me?”
“Jane,” I says, “All you’ve got to do is ask.”
She pulls me aside a little farther. “Would you do it for me, even if
it meant a lot to you?”
“Well, Jane,” I say, “I guess I can equal anybody so far as doin’
things for you is concerned. You know that.”
She tugs me still farther, and we’re gettin’ close to the locker
room.
“Benny,” she says then, “I want to fly in this race with Ned.”
I choke up at that unexpected request, but I might ’a’ known Jane
would ’ve been dyin’ to get up in the air on this big occasion.
“Gosh, Jane!” I say. “We couldn’t stow you away. It’d overweight
the plane and hurt our chances to—”
“Oh, I don’t want to stowaway!” she says. “I want you to let me
take your place!”
Oh, boy! She was askin’ the impossible. There she was, with her
implorin’ blue eyes close to mine, eyes shinin’ with hope and fire,
and beggin’ me, beggin’ me. No, sir, I couldn’t let her do that—but
there she was, a girl I just couldn’t refuse if she’d asked for my life.
Lettin’ her go up in my place would be a crazy thing to do, but she
kept beggin’ me with little pleases and won’t-yous, and Bennies,
spoken soft like, and—Lord!
“If you let me get into your coveralls, and helmet and goggles,
nobody’ll ever know the diff’rence!” she said.
“Jane, please don’t go beggin’ me!” I begged her. “It ain’t fair to
me. I can’t resist you any more ’n the tail of a plane can resist the
prop. You know Ned would blow up if he heard of it, and your Dad—
and Lord!”
“Benny, it’s the only thing I’ve ever asked of you; and it means
more to me than anything else in the world right now. I’ve got to fly in
that race—got to. Benny—Benny—please!”
“Oh, Lord!”
“All you’d have to do is slip into that private locker and take off
those overalls, and then stay out of sight. I’d just get in ’em, and
climb into the plane, and stay there. Benny—please?”
“You can’t do any good up there—”
“Don’t you know that Ned will fly worlds better if I’m along with
him? And you want us to win, don’t you?”
“Oh, Lord!” I said. “Well—here goes!”
Right then she flung her arms around my neck, hugged me close,
and kissed me one, two, three times right on the lips, and said, “Oh,
Benny!” And after that I wasn’t nearly in my right mind. I dived into
the locker, shed my overalls, and eased out again. With one last look
at her, I dived into the crowd and lost myself.
Jane hurried into the locker, and in a minute she was out, in my
coveralls and helmet and goggles. I could hardly believe my eyes,
she looked so much like me! It was sure astonishin’. She eased back
toward the planes, just when a guy in a megaphone was shoutin’ the
last warnin’. Jane walked right past Ned and Mr. Alton and made for
the plane.
“I’ve got to get into the ship!” Ned said. “Say, where’s Jane? Ain’t
she goin’ to wish me good luck?”
They looked around for her, while she was within ten feet of ’em.
“Say, Benny, have you seen Jane?” Ned hollered at her; and she
wags her head: no!
The last minute is gone; and Ned is forced to his plane. Jane was
already in when he got there; he climbs in, not givin’ her any special
notice. There is a poppin’ and roarin’ of motors all around, up and
down the line. Greaseballs turn the Alton over, and she sings a
sweet tune. The whole line-up is stirrin’ up a tornado when bang! a
shot-gun goes off—which means the race is started!
The Stormbird tears off like a maniac, lifts, climbs steady, and
then deadheads on. Thirty seconds pass, forty, fifty, sixty. Then,
bango! the gun goes off again, and the Imp plane stretches itself out
across the sand. It lifts, roars, pulls on, and flies in the wake of the
Stormbird.
Ned Knight bends to his stick and glues his eyes to the
instrument. The seconds are tickin’ off. Forty—fifty—sixty! Whacko!
The gun! Ned stomps on the gas. Away goes the Alton. It takes off
quick, climbs fast and, roarin’ high, plows into the sky.
And I, back on the field, watch it go with tears in my eyes!
One by one, at sixty-second intervals, the planes take off, and
soon they’re parading along the sky, and trailin’ out of sight. Once
they’re gone, there is nothin’ to do but wait for reports along the way.
The crowd lingers, and I avoid Mr. Alton. He goes to his car; I just
float around. What’s happenin’ to Ned and Jane now, I wonder?
What’s goin to happen to ’em as they drive across half a dozen
states. Are they goin’ to pull onto Long Island and get down to
Curtiss first? Oh, Lord!
Well, plenty happened in that plane on the way, and this is what!
Ned Knight concentrated on his controls as he had never
concentrated before. In the back seat Jane just sat and enjoyed
herself. Little by little the Alton went up to her top speed. With the
throttle gradually opened, she tore through the sky screaming. With
the wires shrieking, the struts rattling, the whole plane trembling and
throbbing, it roared on its way, hell-bent for victory.
The string of planes kept goin’ across the sky spaced like they
were at the take off for a while. At the Ohio line one of them began to
drop, and took to the ground, disabled, and disqualified, ’cause the
race was a non-stop affair. Another one soon followed. Others began
to draw back a little, and still others drove ahead a little. And while
Ned was strivin’ to pass the Impco and reach the Stormbird, Jane
removed her helmet and goggles, and then reached forward and
gently tapped his shoulder.
Ned looked back; for a minute he thought he was dreamin’. Then
he shouted something that was lost in the thunder of the motors, and
bored on. He couldn’t snap off the ignition a minute; ’t would slow the
plane. Jane smiled at him, still enjoyin’ every minute; and then he
looked back again, and grinned. He’d caught onto the joy of the thing
and then Jane was satisfied.
Ned bent to his controls again, for the Impco was slippin’ closer. It
wasn’t bearin’ up under the continued, terrific strain. Ned grasped
the opportunity and kept the throttle wide open. Bit by bit the Impco
slid back, and Ned gave it a wide berth. Slowly, but surely, the Alton
advanced. For miles the planes bobbed side by side; and then the
Alton crept forward, inch by inch, until it was leadin’.
Jane gaily waved at the Impco pilot and threw him a couple of
kisses!
The Alton bored on, and Ned concentrated on the Stormbird. It
was still thundering on, a strong ship, much better than the Imp,
perhaps equal to ours—perhaps even better! Ned kept the throttle
wide; and Jane settled down to the serious business of takin’ the
lead.
The earth was bobbin’ below the planes, slidin’ by gentle but fast;
one town and another came into view and disappeared. And then the
Alton began to wobble. The motor roared up and down. Ned was
actin’ funny with the controls. Jane watched him close; and then she
saw Ned’s head bob, and his shoulders slide forward. Just then the
ship began to dive and lose speed.
“Ned!” Jane screeched, grabbing his shoulder and shakin’ him.
“What’s the matter?”
He pulled himself together some, looked around; and in his eyes
was a dreamy, sick look. Jane shook him again; but he acted almost
drunk. His lips mumbled words that were lost in the motor’s roar; but
Jane knew that something was very much wrong with him.
The ship was losin’ speed; the Stormbird was leading by a long
distance; and even the Imp was drawing close again. Jane didn’t
wait for any more trouble. She unsnapped her safety belt and, calm
as you please, put one leg across and into the fore pit. Then she
pulled forward, and came into the pit with Ned. She crammed herself
down into and on him, and grabbed the stick. Ned’s feet were loose
on the rudder-bars, but the stabilizer kept the plane on an even keel
without much help from the controls.
Jane shook Ned again; and he was conkin’ out fast. He pulled off
one glove and looked at his right hand. It was red and swole up, and
across it was a red streak, a scratch. He looked up with eyes full of
pitiful request for help, and tried to talk. Jane was desperate; she cut
the switch to hear him.
“Sick,” he mumbled. “Scratch—somebody on field. Bumped
against me. Must be—poisoned. Oh,—I can’t—go on——”
And he slumped forward in the pit. Jane snapped on the ignition,
kept the stick steady, pulled Ned back up, and pleaded in his ear.
“Try, Ned! Try to get up! Try to get back into the other pit. I’ll
handle the stick. You get back—try! Please try!”
Sick as he was, he tried. He dragged himself up and tottered in
the air, while Jane assisted all she could. Then Ned tumbled into the
rear pit, half on the seat, and without makin’ a move to get up,
passed out completely.
Jane settled to the controls with all the fire she had—which was
plenty! She snapped on the ignition and opened the throttle wide as
she could. The motor blasted. The plane almost jumped ahead. The
Imp, which was almost nose to nose with the Alton again, gradually
dropped back. There was the Stormbird, far ahead. Jane fixed her
blue eyes on that plane, and kept the throttle open, and prayed.
She didn’t understand perfectly then what had happened to Ned.
It was this: while he was on the field, talkin’ with Alton—while Jane
was talkin’ with me, private!—somebody brushed past him, and then
Ned discovered a scratch on his hand, lookin’ like it was made by a
pin. He thought nothin’ of it, but that scratch was full of a drug. What
it was we don’t know yet, but it was powerful, and without the
shadow of a doubt it had been used by somebody in the Stormbird
people’s pay—somebody, probably at Stud Walker’s behest. The
object was to put the Alton out of the race by cripplin’ its pilot—and, if
it hadn’t been for Jane, the trick would have succeeded! But with
Jane at the stick, it was far from succeedin’!

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Management Accounting for Decision

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Financial Accounting for Decision Makers 10th Edition

(eBook PDF) Financial Accounting for Decision Makers

(eBook PDF) Management Accounting for Decision Makers

(eBook PDF) Financial Accounting The Impact on Decision

(Original PDF) Financial Management for Decision Makers

(eBook PDF) Financial & Managerial Accounting for

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F01 Management Accounting for Decision Makers 49459.indd 1 23/09/2020 17:05

We combine innovative learning technology with trusted

From classroom to boardroom, our curriculum materials, digital

Every day our work helps learning flourish, and

To learn more, please visit us at www.pearson.com/uk

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First published 1995 by Prentice Hall Europe (print)

ISBN: 978-1-292-34945-9 (print)

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1 Introduction to management accounting 1

Appendix A Glossary of key terms 513

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1 Introduction to management accounting 1

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F01 Management Accounting for Decision Makers 49459.indd 8 23/09/2020 17:05

5 Costing and cost management in a

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7 Accounting for control 243

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9 Managing risk 333

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10 Strategic management accounting: performance

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12 Managing working capital 459

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Appendix A Glossary of key terms 513

Lecturer Resources ON THE

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A note to students from the authors

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A note to lecturers and tutors from the authors

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Order of dealing with the material

Working through the chapters

End-of-chapter assessment material

HOW TO USE THIS BOOK xix

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xx HOW TO USE THIS BOOK

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Martyn Jones, University of Winchester

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M01 Management Accounting for Decision Makers 49459.indd 1 23/09/2020 16:31

Real World 1.1

The customer is king

2 CHAPTER 1 INTRODUCTION TO MANAGEMENT ACCOUNTING

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■ setting the overall direction for the business;

Three common reasons are:

HOW ARE BUSINESSES ORGANISED? 3

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This is a typical departmental structure organised according to business functions.

Figure 1.1 A departmental structure organised according to business functions