Statement #4/Managerial Cost Accounting Concepts and Standards ...
Chapter 1 Managerial Accounting Concepts and Principles.
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Transcript of Chapter 1 Managerial Accounting Concepts and Principles.
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Chapter 1Chapter 1
Managerial AccountingManagerial Accounting
Concepts and PrinciplesConcepts and Principles
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Financial AccountingFinancial Accounting ExternalExternal
ShareholdersShareholders CreditorsCreditors Government AgenciesGovernment Agencies General PublicGeneral Public
GAAPGAAP Direct current operationsDirect current operations Plan future operationsPlan future operations Evaluate past activitiesEvaluate past activities
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Managerial AccountingManagerial Accounting
Meets the specific needs of a company’s Meets the specific needs of a company’s managementmanagement
Historical data (objective)Historical data (objective) Estimated data (subjective)Estimated data (subjective) Prepared as needed for management Prepared as needed for management
needsneeds
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Financial Accounting and Managerial Accounting
1-1
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Management ProcessManagement Process
Planning (strategic/operational)Planning (strategic/operational) DirectingDirecting ControllingControlling ImprovingImproving Decision MakingDecision Making
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Operations of a BusinessOperations of a Business
ServiceService MerchandisingMerchandising ManufacturingManufacturing
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CostsCosts
Cost objectCost object Direct vs Indirect CostDirect vs Indirect Cost
Direct Materials Cost (D)Direct Materials Cost (D) Direct Labor Cost (D)Direct Labor Cost (D) Factory Overhead Cost (I)Factory Overhead Cost (I)
Prime Cost/Conversion CostPrime Cost/Conversion Cost Product/Period Costs Product/Period Costs
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Example Exercise 1-2
Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a baseball glove manufacturer.
1-2
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1. _______________ Leather used to make a baseball glove
2. _______________ Coolants for machines that sew baseball gloves
3. _______________ Wages of assembly line employees4. _______________ Ink used to print a player’s
autograph on the baseball glove
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Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a baseball glove manufacturer.ss
1-2
28
1. _______________ Leather used to make a baseball glove
2. _______________ Coolants for machines that sew baseball gloves
3. _______________ Wages of assembly line employees4. _______________ Ink used to print a player’s
autograph on the baseball glove
Follow My Example 1-2
For Practice: PE 1-2A, PE 1-2B
(a) Direct materials
(c) Factory overhead
(b) Direct labor
(c) Factory overhead
Left click mouse for answers.
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Example Exercise 1-4
Identify the following costs as a (a) product cost, or (b) period cost for a baseball glove manufacturer.
1-2
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1. _______________ Leather used to make a baseball glove
2. _______________ Cost of endorsement from a professional baseball player
3. _______________ Office supplies used at the company
headquarters4. _______________ Ink used to print a player’s
autograph on the baseball glove
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For Practice: PE 1-5A, PE 1-5B
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Follow My Example 1-4
1-2
Identify the following costs as a (a) product cost, or (b) period cost for a baseball glove manufacturer.
(a) Product cost
(b) Period cost
(b) Period cost
(a) Product cost
1. _______________ Leather used to make a baseball glove
2. _______________ Cost of endorsement from a professional baseball player
3. _______________ Office supplies used at the company
headquarters4. _______________ Ink used to print a player’s
autograph on the baseball gloveLeft click the mouse to reveal answers.
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Financial Statements Financial Statements (Manufacturing (Manufacturing Company)Company)
Balance SheetBalance Sheet Materials (Raw) InventoryMaterials (Raw) Inventory Work in Process (WIP) InventoryWork in Process (WIP) Inventory Finished Goods InventoryFinished Goods Inventory
Income StatementIncome Statement Cost of Goods ManufacturedCost of Goods Manufactured
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Flow of Manufacturing Costs 1-3
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Determining the Cost of Goods Manufactured
Materials inventory, December 1, 2008 $ 65,000Add: materials purchased during December 100,000Cost of materials available for use $165,000Less: materials inventory, Dec. 31, 2008 35,000
Cost of materials placed in production $130,000 to total manu-
facturing cost
STEP 1:
1-3
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Determining the Cost of Goods Manufactured
Cost of materials placed in production $130,000
from Step 1
STEP 2:
1-3
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Determining the Cost of Goods Manufactured
Cost of materials placed in production $130,000Direct labor 110,000
to cost of goods manufactured section
Factory overhead 44,000Total manufacturing costs added $284,000
STEP 2:
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1-3
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50
Determining the Cost of Goods Manufactured
Work in process inventory, Dec. 1, 2008 $ 30,000Add: total manufacturing costs added 284,000
from Step 2
STEP 3:
1-3
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Determining the Cost of Goods Manufactured
Work in process inventory, Dec. 1, 2008 $ 30,000Add: total manufacturing costs added 284,000Total manufacturing costs $314,000Less: work in process inventory 24,000Cost of goods manufactured $290,000
STEP 3:
1-3
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Manufacturing Company—Income Statement with
Statement of Cost of Goods Manufactured (cont’d)
to income statement
1-3
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Manufacturing Company—Income Statement with
Statement of Cost of Goods Manufactured
from statement of cost of goods manufactured
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1-3