m3l1 - Spring 2008 Module 3 Accounting Finance Lecture 1...

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David Robinson © D. Robinson, 2008 Spring 2008 Module 3 Accounting & Finance Lecture 1: Managerial Accounting
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Module Overview Accounting & Finance Accounting Finance Managerial Financial Auditing How investors use their money How firms raise money Three financial statements Forms of business
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3 Managerial Accounting Overview of Terms Managerial Accounting: Concerns t he question of costs Cost/volume/profit relationships Achieving “Break-even” Costs relevant and not-relevant Opportunity cost
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4 Accounting Accounting versus Bookkeeping Accounting involves analysis Bookkeeping is just recording Accounting involves keeping track of: How much we have (money, inventory) How well we are doing What is owed to us, and what we owe
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5 Accounting:  The Language of Business Two different styles of accounting: Managerial Accounting for internal users Financial Accounting for external constituencies Shareholders Regulators
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6 Managerial Accounting 1. Reports are usually more frequent ( weekly is not unusual) 1. Often contain industry-specific measures (e.g. sales/square foot; comparable store sales; revenue passenger miles) 2. Focus on costs
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ACCOUNTING FOR COSTS Costs are Fixed or Variable 7
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8 Costs are  Fixed   or  Variable 1 Fixed Cost:   A cost that doesn’t change over a period of time Doesn’t matter how much we sell, or How many we make Examples: Screen charge for printing t-shirts (one-time charge) Cost to hire a D-J for a party
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9 Costs are  Fixed   or  Variable 2.  Variable Cost: A cost that changes depending on the level of production or sales Depends on how much we sell, or How many we make Examples: Cost of “raw” t-shirts, & cost of printing each one Cost of each soda at a party
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