Managerial Accounting Rock & Roll All Nite Concepts ... Chapt… · Managerial Accounting Concepts...
Transcript of Managerial Accounting Rock & Roll All Nite Concepts ... Chapt… · Managerial Accounting Concepts...
Managerial Accounting
Concepts & PrinciplesChapter 16
Teacher VersionRock & Roll All Nite
Paul Stanley would be nowhere without his guitar. Right? Of Course I am right!
What does this all have to do with Managerial Accounting?
● how to manufacture? ● how to account for costs?● how much to charge?● how many to sell to cover costs/make a profit?● how many employees needed for each section?● should we automate v cost of manufacturing each guitar?
In this chapter we will discuss:❏ Managerial Accounting❏ Management Process❏ Role of Managerial Accounting❏ Characteristics of Reports, Terms & Uses of Information
Financial vs Managerial AccountingFinancial
Information is reported at fixed intervals as financial statements
Information is used by external users:
ShareholdersCreditorsGovernment agenciesGeneral Public
Managerial
Information is designed to meet the specific needs of management
Information includes historical data: measure past operations and future decision making
Information is used by internal users.
Produce a Name TentYou will need:
Blank piece of paper
pen/pencil
You Must:
follow instructions precisely
Managerial AccountingInternals User Include principals in the hierarchy of the company.
Line Dept: provide goods/services
Staff Dept: provide assistance/advice to line
Management ProcessThe Management Process has five basic phases as shown below:
Goals
Day-to-Day Operations
monitoring results
employees, processes, products
alternative actions
Role of Managerial Accounting
Direct = wood for guitar - can be traced to specific objectIndirect = salaries - cannot be traced to specific object
Direct materials = integral part of finished productDirect Labor = wages of employees who cut wood, assemblyOverhead = indirect: heating, taxes, etc
Financial Statements● Retained Earnings and Cash Flow for
a manufacturing business are similar to service and merchandising business.
● Balance Sheet and Income Statement for a manufacturing business are more complex:
○ Manufacturer makes the products that it sells
○ Manufacturer must record and report product costs
Uses of Managerial Accounting❏ cost = selling price❏ compare cost to monitor/control direct materials, direct labor, overhead❏ performance reports used to identify large amounts of scrap or employee
downtime.❏ analyze potential efficiencies and $ savings in purchasing fixed assets to
increase production process❏ analyze # of products need to be sold to cover operating costs/expenses❏ set up monthly selling targets and bonuses for sales personnel