Beruflich Dokumente
Kultur Dokumente
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Work of Management
Planning Planning Directing and Directing and Motivating Motivating
Controlling Controlling
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Planning
Identify Identify alternatives. alternatives. Select alternative that does Select alternative that does the best job of furthering the best job of furthering organizations objectives. organizations objectives. Develop budgets to guide Develop budgets to guide progress toward the progress toward the selected alternative. selected alternative.
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Controlling
The control function ensures The control function ensures that plans are being followed. that plans are being followed. Feedback in the form of performance reports Feedback in the form of performance reports that compare actual results with the budget that compare actual results with the budget are an essential part of the control function. are an essential part of the control function.
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Begin
Decision Making
Implementing Implementing plans (Directing plans (Directing and Motivating) and Motivating)
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Learning Objective 1
Identify the major differences and similarities between financial and managerial accounting.
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Managerial Accounting
Managers who plan for and control an organization Future emphasis Emphasis on relevance for planning and control Emphasis on timeliness Focuses on segments of an organization Need not follow GAAP or any prescribed format Not Mandatory
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Learning Objective 2
Identify and give examples of each of the three basic manufacturing cost categories.
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Manufacturing Costs
Direct Direct Materials Materials Direct Direct Labor Labor Manufacturing Manufacturing Overhead Overhead
The Product
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Direct Materials
Raw materials that become an integral part of the product and that can be conveniently traced directly to it.
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Direct Labor Those labor costs that can be easily traced to individual units of product.
Example: Wages paid to automobile assembly workers Example: Wages paid to automobile assembly workers
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Manufacturing Overhead
Manufacturing costs cannot be traced directly to specific units produced.
Examples: Indirect materials and indirect labor Examples: Indirect materials and indirect labor
Wages paid to employees who are not directly involved in production work.
Examples: Maintenance workers, janitors and security guards.
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Learning Objective 3 Distinguish between product costs and period costs and give examples of each.
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Period costs are not included in product costs. They are expensed on the income statement.
Expense
Sale
Balance Sheet
Income Statement
Income Statement
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Quick Check
Which of the following costs would be considered a period rather than a product cost in a manufacturing company? (There may be more than one correct answer.) A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions.
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Quick Check
Which of the following costs would be considered a period rather than a product cost in a manufacturing company? (There may be more than one correct answer.) A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions.
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Prime Cost
Conversion Cost
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MegaLoMart
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Balance Sheet
Merchandiser
Current Assets
Cash Receivables Prepaid Expenses Merchandise Inventory
Manufacturer
Current Assets
Cash Receivables Prepaid Expenses Inventories:
1. Raw Materials 2. Work in Process 3. Finished Goods
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Balance Sheet
Merchandiser
Current Assets
Cash Receivables Prepaid Expenses Merchandisecomplete Partially Inventory products some material, labor, or overhead has been added.
Manufacturer
Current Assets
Cash Receivables Materials waiting to Prepaid Expenses be processed. Inventories:
1. Raw Materials 2. Work in Process 3. Finished Goods
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Learning Objective 4 Prepare an income statement including calculation of the cost of goods sold.
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Manufacturing Company
Cost of goods sold: Beg. finished goods inv. + Cost of goods manufactured Goods available for sale - Ending finished goods inventory = Cost of goods sold
(12,100) $ 236,250
(12,100) $236,250
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Inventory Flows
Beginning Beginning balance balance Additions Additions to inventory to inventory Ending Ending balance balance Withdrawals Withdrawals from from inventory inventory
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Quick Check
If your inventory balance at the beginning of the month was $1,000, you bought $100 during the month, and sold $300 during the month, what would be the balance at the end of the month? A. $1,000. B. $ 800. C. $1,200. D. $ 200.
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Quick Check
If your inventory balance at the beginning of the month was $1,000, you bought $100 during the month, and sold $300 during the month, what would be the balance at the end of the month? $1,000 + $100 = $1,100 A. $1,000. $1,100 - $300 = $800 B. $ 800. C. $1,200. D. $ 200.
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Learning Objective 5
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Calculates the manufacturing costs associated with goods that were finished during the period.
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+ =
raw materials inventory and raw materials inventory and placed into the production placed into the production process, they are called direct process, they are called direct materials. materials.
Manufacturing Work As Costs are removed from items are removed from As items In Process
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Manufacturing Costs
Direct materials + Direct labor + Mfg. overhead = Total manufacturing costs
+ =
Work Conversion Conversion In Process costs are costs costs are costs incurred to incurred to convert the convert the direct materials direct materials into a finished into a finished product. product.
As items are removed from raw As items are removed from raw materials inventory and placed into materials inventory and placed into the production process, they are the production process, they are called direct materials. called direct materials.
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Manufacturing Costs
Direct materials + Direct labor + Mfg. overhead = Total manufacturing costs
Work In Process
+ =
Beginning work in process inventory + Total manufacturing costs = Total work in process for the period Ending work in All manufacturing costs incurred All manufacturing costs incurred process inventory Cost of goods during the period are added to the during the period =are added to the manufactured. beginning balance of work in
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+ =
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Finished Goods
Beginning finished goods inventory + Cost of goods manufactured = Cost of goods available for sale - Ending finished goods inventory Cost of goods sold
+ = =
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Finished Goods
Period Costs
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Quick Check
Beginning raw materials inventory was $32,000. During the month, $276,000 of raw material was purchased. A count at the end of the month revealed that $28,000 of raw material was still present. What is the cost of direct material used? A. $276,000 B. $272,000 C. $280,000 D. $ 2,000
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Quick Check
Beginning raw materials inventory was $32,000. During the month, $276,000 of raw material was purchased. A count at the end of the month revealed that $28,000 of raw material was still present. What is the cost$of32,000 Beg. raw materials Beg. raw materials $ 32,000 + Raw materials direct material used? + Raw materials purchased 276,000 purchased 276,000 A. $276,000 = Raw materials available = Raw materials available for use in production $ 308,000 for use in production $ 308,000 B. $272,000 Ending raw materials Ending raw materials C. $280,000 inventory 28,000 inventory 28,000 = Raw materials used D. $ 2,000 = Raw materials used
in production in production
$ 280,000 $ 280,000
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Quick Check
Direct materials used in production totaled $280,000. Direct labor was $375,000 and factory overhead was $180,000. What were total manufacturing costs incurred for the month? A. $555,000 B. $835,000 C. $655,000 D. Cannot be determined.
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Quick Check
Direct materials used in production totaled $280,000. Direct labor was $375,000 and $ 280,000 Direct Materials $ 280,000 factory overhead wasDirect MaterialsWhat were $180,000. + Direct Labor 375,000 + Direct Labor 375,000 total manufacturing + Mfg. Overhead for the 180,000 costs Overhead incurred + Mfg. 180,000 month? = Mfg. Costs Incurred = Mfg. Costs Incurred for the Month $ 835,000 for the Month $ 835,000 A. $555,000 B. $835,000 C. $655,000 D. Cannot be determined.
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Quick Check
Beginning work in process was $125,000. Manufacturing costs incurred for the month were $835,000. There were $200,000 of partially finished goods remaining in work in process inventory at the end of the month. What was the cost of goods manufactured during the month? A. $1,160,000 B. $ 910,000 C. $ 760,000 D. Cannot be determined.
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Quick Check
Beginning work in process was $125,000. Manufacturing costs incurred for the month were $835,000. There were $200,000 of partially finished goods remaining in work in Beginning work in process inventory at the end of the month.125,000 process inventory $ + Mfg. manufactured What was the cost of goodscosts incurred for the period 835,000 during the month? = Total work in process during the period $ 960,000 A. $1,160,000 Ending work in B. $ 910,000 process inventory 200,000 C. $ 760,000 = Cost of goods manufactured $ 760,000 D. Cannot be determined.
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Quick Check
Beginning finished goods inventory was $130,000. The cost of goods manufactured for the month was $760,000. The ending finished goods inventory was $150,000. What was the cost of goods sold for the month? A. $ 20,000. B. $740,000. C. $780,000. D. $760,000.
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Quick Check
Beginning finished goods inventory was $130,000. The cost of goods manufactured for the month was $760,000. The ending finished goods inventory was $150,000. What was the cost of goods sold for the month? A. $ 20,000. $130,000 + $760,000 = $890,000 B. $740,000. $890,000 - $150,000 = $740,000 C. $780,000. D. $760,000.
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Learning Objective 6
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Variable Cost
Your total texting bill is based on how many texts you send.
Total Texting Bill Number of Texts Sent
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Fixed Cost
Your monthly contract fee for your cell phone is fixed for the number of monthly minutes in your contract. The monthly contract fee does not change based on the number of calls you make.
Monthly Cell Phone Contract Fee Number of Minutes Used Within Monthly Plan
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Fixed
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Quick Check
Which of the following costs would be variable with respect to the number of cones sold at a Baskins & Robbins shop? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers.
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Quick Check
Which of the following costs would be variable with respect to the number of cones sold at a Baskins & Robbins shop? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers.
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Learning Objective 7
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Indirect costs
Costs that cannot be easily and conveniently traced to a unit of product or other cost object. Example: Manufacturing overhead
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Learning Objective 8
Understand cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs.
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Cost Classifications for Decision Making Every decision involves a choice between at least two alternatives.
Only those costs and benefits that differ between alternatives are relevant to the decision. All other costs and benefits can and should be ignored.
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Opportunity Costs The potential benefit that is given up when one alternative is selected over another.
Example: If you were not attending college, you could be earning $15,000 per year. Your opportunity cost of attending college for one year is $15,000.
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Sunk Costs
Cannot be changed by any decision. They are not differential costs and should be ignored when making decisions.
Example: You bought an automobile that cost $10,000 two years ago. The $10,000 cost is sunk because whether you drive it, park it, trade it, or sell it, you cannot change the $10,000 cost.
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Quick Check
Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you dont want to waste money needlessly. Is the cost of the train ticket relevant in this decision? In other words, should the cost of the train ticket affect the decision of whether you drive or take the train to Portland? A. Yes, the cost of the train ticket is relevant. B. No, the cost of the train ticket is not relevant.
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Quick Check
Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you dont want to waste money needlessly. Is the cost of the train ticket relevant in this decision? In other words, should the cost of the train ticket affect the decision of whether you drive or take the train to Portland? A. Yes, the cost of the train ticket is relevant. B. No, the cost of the train ticket is not relevant.
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Quick Check
Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you dont want to waste money needlessly. Is the annual cost of licensing your car relevant in this decision? A. Yes, the licensing cost is relevant. B. No, the licensing cost is not relevant.
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Quick Check
Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you dont want to waste money needlessly. Is the annual cost of licensing your car relevant in this decision? A. Yes, the licensing cost is relevant. B. No, the licensing cost is not relevant.
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Quick Check
Suppose that your car could be sold now for $5,000. Is this a sunk cost? A. Yes, it is a sunk cost. B. No, it is not a sunk cost.
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Quick Check
Suppose that your car could be sold now for $5,000. Is this a sunk cost? A. Yes, it is a sunk cost. B. No, it is not a sunk cost.
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Decision Making
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End of Chapter 1