Final_Exam_Summary_Slides Sp08

Final_Exam_Summary_Slides Sp08 - Final Exam Summary Slides...

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Final Exam Summary Slides
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Differences Between Financial and Managerial Accounting Financial Managerial Accounting Accounting 1. Users External persons who Managers who plan for make financial decisions and control an organization 2. Time focus Historical perspective Future emphasis 3. Verifiability Emphasis on Emphasis on relevance versus relevance verifiability for planning and control 4. Precision versus Emphasis on Emphasis on timeliness precision timeliness 5. Subject Primary focus is on Focuses on segments the whole organization of an organization 6. Requirements Must follow GAAP Need not follow GAAP and prescribed formats or any prescribed format
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What are the three major elements of product costs in a manufacturing company? Direct Materials Manufacturing Overhead Direct Labor
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Product Costs Versus Period Costs Product costs include direct materials, direct labor, and manufacturing overhead. Period costs are not included in product costs. They are expensed on the income statement. Inventory Cost of Good Sold Balance Sheet Income Statement Sale Expense Income Statement
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Direct Costs and Indirect Costs Direct costs Costs that can be easily and conveniently traced to a unit of product or other cost objective. Examples: direct material and direct labor Indirect costs Costs cannot be easily and conveniently traced to a unit of product or other cost object. Example: manufacturing overhead
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Classifications of Costs Direct Material Direct Labor Manufacturing Overhead Prime Cost Conversion Cost Manufacturing costs are often classified as follows:
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Cost Classifications for Predicting Cost Behavior Behavior of Cost (within the relevant range) Cost In Total Per Unit Variable Total variable cost changes Variable cost per unit remains as activity level changes. the same over wide ranges of activity. Fixed Total fixed cost remains Fixed cost per unit goes the same even when the down as activity level goes up. activity level changes.
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Product Costs - A Closer Look
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Types of Costing Systems Used to Determine Product Costs Process Costing Job-order Costing Many different products are produced each period. Products are manufactured to order. Cost are traced or allocated to jobs. Cost records must be maintained for each distinct product or job. Chapter 4
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Types of Costing Systems Used to Determine Product Costs Process Costing Job-order Costing Typical job order cost applications: Special-order printing Building construction Also used in the service industry Hospitals Law firms
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Job-Order Cost Accounting PearCo Job Cost Sheet Job Number A - 143 Date Initiated 3-4-01 Date Completed 3-5-01 Department B3 Units Completed 2 Item Wooden cargo crate Direct Materials Direct Labor Manufacturing Overhead Req. No. Amount Ticket Hours Amount Hours Rate Amount X7-6890 116 $ 36 8 88 $ 8 4 $ 32 $ Cost Summary Units Shipped Direct Materials 116 $ Date Number Balance Direct Labor 88 $ Manufacturing Overhead 32 $ Total Cost 236 $ Unit Cost 118 $
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Estimated total manufacturing
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Final_Exam_Summary_Slides Sp08 - Final Exam Summary Slides...

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