Managerial Accounting Ch.1

Why is Managerial Accounting Important: (management responsibilities) Operational Planning

Focuses on short- term action. dealing with day-today operations (1 year)

Why is Managerial Accounting Important: (management responsibilities) Strategic Planning

Developing long-term strategies to achieve company goals (3 years)

Why is Managerial Accounting Important: (management responsibilities) Directing

Running the day to day operations of a company

Why is Managerial Accounting Important: (management responsibilities) Controlling

Monitoring the day to day operations and keeping the company on track

Why is Managerial Accounting Important: Managerial accounting

Focuses on internal user, managers & employees

Why is Managerial Accounting Important: Purposes of managerial accounting

Give info to management so they can plan better for operations within their company

Why is Managerial Accounting Important: Focus & time dimension of the info of managerial accoutning

Managers need relevant info and focus on the future (proving the business in the future)

Why is Managerial Accounting Important: Rules & restrictions in managerial accounting

Does not need to follow GAAP n=and less restrictions

Why is Managerial Accounting Important: scope of info in managerial acc.

Managers need detailed reports on parts of the company on a daily or weekly basis, broken down into diff departments, territories and products

Why is Managerial Accounting Important: behavioral in managerial accounting

Concern about how reports will affect employee behavior 

How are costs classified: Business are classify as a?

Service company, merchandise company or manufacturing company.

How are costs classified: Service company

They DO NOT carry any inventor7

How are costs classified: Merchandising company

They carry inventory which they sell to consumers

How are costs classified: Manufacturing company

How are costs classified: Manufacturing company— Raw materials inventory

Materials used to manufacture a product

How are costs classified: Manufacturing company— Work- in- process inventory

Goods that have been started in the manufacturing process but not yet complete

How are costs classified: Manufacturing company— Finished goods inventory

completed goods that have not yet been sold

How are costs classified: Direct and indirect costs

A costs is often traced to a costs object: a product, department, sales territory, or activity

How are costs classified: Manufacturing costs— Direct materials

Materials that become a physical part of a finished product and whose costs are easily traced t the finished product

Ex: 

How are costs classified: Manufacturing costs— direct labor

The labor costs of employees who convert raw materials into finished products

Ex: Assembly workers in a car dealership, those who actually work on the assembly line and convert the raw materials into a finished car, are considered direct labor.

How are costs classified: Manufacturing costs— Manufacturing overhead

How are costs classified:

How are costs classified: Prime costs

Direct Materials plus direct labor

• The primary costs in a labor- intensive manufacturing process meaning in the car ex most of the workers are doing the work

• So if its labor intensive, management will focus most of their effort on controlling prime costs

How are costs classified: Conversion costs

Direct labor plus manufacturing overhead

• Primary costs in a machine-intensive manufacturing process

• If its machine intensive managment will focus most of their attention on conversion costs

How are costs classified: Period costs

How are costs classified: Product costs

How do manufacturing companies prepare financial statements: Service company

How do manufacturing companies prepare financial statements: Merchandising company

How do manufacturing companies prepare financial statements: Manufacturing company

How do manufacturing companies prepare financial statements: Product cost flows- manufacturing

How do manufacturing companies prepare financial statements: Calculating costs of goods manufactured

How do manufacturing companies prepare financial statements: Step 1. Breakdown of calculating cost of goods manufactured

How do manufacturing companies prepare financial statements: Step 2. Breakdown of calculating cost of goods manufactured

How do manufacturing companies prepare financial statements: Step 3. Breakdown of calculating cost of goods manufactured

How do manufacturing companies prepare financial statements: Final summary of the 3 steps of costs of goods manufacturing

How do manufacturing companies prepare financial statements: Calculating cost of goods sold

How do manufacturing companies prepare financial statements: Calculating cost of goods sold

How do manufacturing companies prepare financial statements: Flow of costs through inventory accounts

How do manufacturing companies prepare financial statements: Calculating unit product cost example Part 1

How do manufacturing companies prepare financial statements: Calculating unit product cost example part 2

What business trend are affecting managerial accounting: Enterprise resource planning

A software system that can integrate all of a company’s functions, departments, and data into a single system

• E- commerce

What business trend are affecting managerial accounting: Just in time management

Producing products just in time to satisfy needs (limit inventory)

What business trend are affecting managerial accounting: Emerging technologies

Recent advances in technology can equal competitive advantage

What business trend are affecting managerial accounting: Cloud-based services

What business trend are affecting managerial accounting: Total quality management

What business trend are affecting managerial accounting: The triple bottom line

How is managerial accounting used in service and merchandising companies: Calculating cost per service

How is managerial accounting used in service and merchandising companies: Calculating cost per item