1 Chapter 2 Part 1 SV16 - Student - Chapters 1 & 2...

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Chapters 1 & 2Managerial Accountingand Cost Concepts
Chapters One & Two AgendaFinancial vs Managerial AccountingGeneral Cost ClassificationsCost Behavior Cost Classifications
Introduction toManagerial AccountingAccountingis a systematic collectionand processing of financialinformation for use by decisionmakers.
Introduction toManagerial AccountingFinancial accountingCollection of financial data for preparing financialstatementsMandatory for publicly traded firmsGAAP determines the content and formatPrimarily uses historical dataPrepared mainly for external parties such aspotential investors, shareholders, and banks
Introduction toManagerial AccountingManagerial AccountingCollection of financial data with primary emphasison product cost dataNot mandatoryNo required format - depends on the particulardecision a manager facesPrimarily uses data related to current costs orestimates of future costsPrepared mainly for internal users in makingmarketing, production, investment decisions
Introduction toManagerial AccountingDetermining the cost of making a product orproviding a serviceDecision makingPlanningPerformance Evaluation/Control
Comparison of Financial andManagerial AccountingAt most 1 qon thisFinancial AccountingManagerial Accounting1. UsersExternal persons whoManagers who plan formake financial decisionsand control an organization2. Time focusHistorical perspectiveFuture emphasis3. VerifiabilityEmphasis onEmphasis on relevanceversus relevanceverifiabilityfor planning and control4. Precision versusEmphasis onEmphasis ontimelinessprecisiontimeliness5. SubjectPrimary focus is onFocuses on segmentsthe whole organizationof an organization6. GAAPMust follow GAAPNeed not follow GAAPand prescribed formatsor any prescribed format7. RequirementMandatory forNotexternal reportsMandatory
Introduction to Product CostsCost of a product– sacrifice of all resources necessary tomanufacture the productExample: Cost of manufacturing Nike athletic shoesOut-of-pocket costs– costs of inputs required tomanufacture the shoes:Cash paid for raw materials (leather, rubber)Cash paid for labor (wages of workers who assemblethe shoes)Cash paid for machinery and equipment used to makethe product (depreciation of the cutting and stitchingmachines)Cash paid for utilities needed to run manufacturingfacilities (electricity, gas, water)
General Cost Classifications:Manufacturing vs Non-ManufacturingAll costs incurred by the firm must be accounted for inits financial statementsMANUFACTURING COSTSDirect Materials (DM)Direct Labor (DL)Manufacturing Overhead (MOH)Indirect MaterialsIndirect LaborOtherNON-MANUFACTURING COSTSMarketing or Selling CostsAdministrative CostsImportant vocab
Manufacturing Costs - DM1. Direct Materials (DM)Materials that are consumed in themanufacturing process and physicallyincorporated in the finished productMaterials whose cost is sufficiently large tojustify the record keeping expenses necessary totrace the costs to individual products

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Term
Fall
Professor
CHERNY
Tags
Managerial Accounting, Cost Accounting, Chapter 2, Fixed Costs, Financial Vs Managerial, General Cost Classifications, Cost Behavior Cost Classificat, Variable Costs, MOH

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