Beruflich Dokumente
Kultur Dokumente
An Introduction to
Managerial Accounting
and Cost Concepts
Work of Management
Planning
Planning
Directing
Directing and
and
Motivating
Motivating
Controlling
Controlling
Planning
Identify
Identify
alternatives.
alternatives.
Select
Select alternative
alternative that
that does
does
the
the best
best job
job of
of furthering
furthering
organization’s
organization’s objectives.
objectives.
Develop
Develop budgets
budgets to
to guide
guide
progress
progress toward
toward the
the
selected
selected alternative.
alternative.
Directing and Motivating
Directing and Motivating
The
The control
control function
function ensures
ensures
that
that plans
plans are
are being
being followed.
followed.
Feedback
Feedback inin the
the form
form ofof performance
performance reports
reports
that
that compare
compare actual
actual results
results with
with the
the budget
budget
are
are an
an essential
essential part
part of
of the
the control
control function.
function.
Planning and Control Cycle
Formulating
Formulatinglong-
long- Begin
and
andshort-term
short-termplans
plans
(Planning)
(Planning)
Comparing
Comparingactual
actual Implementing
Implementing
to
toplanned
planned Decision plans
performance Making plans(Directing
(Directing
performance and
(Controlling) andMotivating)
Motivating)
(Controlling)
Measuring
Measuring
performance
performance
(Controlling)
(Controlling)
Comparison of Financial and Managerial
Accounting
Learning Objective
LO1
Direct
Direct Direct
Direct Manufacturing
Manufacturing
Materials
Materials Labor
Labor Overhead
Overhead
The Product
Direct Materials
Example:
Example: A
A radio
radio installed
installed in
in an
an automobile
automobile
Direct Labor
Example:
Example: Wages
Wages paid
paid to
to automobile
automobile assembly
assembly workers
workers
Manufacturing Overhead
Direct
Direct Direct
Direct Manufacturing
Manufacturing
Material
Material Labor
Labor Overhead
Overhead
Prime Conversion
Cost Cost
Non-manufacturing Costs
Administrative
Selling Costs
Costs
To distinguish between
product costs and
period costs and give
examples of each
Product Costs Versus Period Costs
Product costs include Period costs are not
direct materials, direct included in product
labor, and costs. They are
manufacturing expensed on the
overhead. income statement.
Cost of
Inventory Goods Sold
Expense
Sale
Balance
BalanceSheet
Sheet
Product Costs
(manufacturing Current
Current assets
assets
costs) as and
and inventory
inventory
incurred
When
When goods
goods
Income
Income are
aresold.
sold.
Statement
Statement
Period Costs Revenue
Revenue
(operating COGS
COGS
expenses and Gross
Gross profit
profit
income taxes.) Expenses
Expenses
as Net
Netincome.
income.
incurred
Quick Check
MegaLoMart
Inventories of a Manufacturing Business
Raw
Raw materials
materials-- inventory
inventoryon
on
hand
handand
and available
availableforfor use.
use.
Finished
Finished Work
Work in
in
goods-
goods- process
process --
completed
completed partially
partially
goods
goodsawaiting
awaiting completed
completed
sale.
sale. goods.
goods.
The Flow of Physical Goods
Materials Factory
Direct Direct
Warehouse
materials materials
purchased used
Merchandiser Manufacturer
Current assets Current Assets
Cash ❖ Cash
Receivables ❖ Receivables
❖ Prepaid Expenses
Prepaid expenses
❖ Inventories:
Merchandise
Raw Materials
inventory
Work in Process
Finished Goods
Balance Sheet
Merchandiser Manufacturer
Current assets Current Assets
Cash ❖ Cash
Receivables ❖ Receivables
Materials waiting to
❖ Prepaid Expenses
be processed.
Prepaid expenses
Partially complete ❖ Inventories:
Merchandise
products – some Raw Materials
inventory
material, labor, or Work in Process
overhead has been
Finished Goods
added.
Completed products
awaiting sale.
Learning Objective
LO3
To prepare an income
statement including
calculation of the cost of
goods sold
The Income Statement
Cost of goods sold for manufacturers differs only slightly from cost of
goods sold for merchandisers.
Merchandising Company
Cost of goods sold:
Beg. merchandise
inventory $ 14,200
+ Purchases 234,150
Goods available
for sale $ 248,350
- Ending
merchandise
inventory (12,100)
= Cost of goods
sold $ 236,250
Inventory Flows
Withdrawals
Withdrawals
Beginning
Beginning Additions
Additions Ending
Ending
balance
balance
+ to
to inventory
inventory
= balance
balance
+ from
from
inventory
inventory
Quick Check
To prepare the
schedule of cost of
goods manufactured
Schedule of Cost of Goods Manufactured
How
How aa cost
cost will
will react
react to
to
changes
changes in
in the
the level
level of
of
business
business activity.
activity.
Total
Total variable
variable costs
costs
change
change when
when activity
activity
changes.
changes.
Total
Total fixed
fixed costs
costs remain
remain
unchanged
unchanged when
when activity
activity
changes.
changes.
Total Variable Cost
Minutes Talked
Variable Cost Per Unit
Telephone Charge
Per Minute
Minutes Talked
Total Fixed Cost
Variable Total variable cost changes Variable cost per unit remains
as activity level changes. the same over wide ranges
of activity.
Fixed Total fixed cost remains Average fixed cost per unit goes
the same even when the down as activity level goes up.
activity level changes.
Quick Check
Financial reporting
Predicting cost behavior
Assigning costs to cost objects
Decision making
End of Chapter 1