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Chapters 1-3 - Managerial Accounting Interim Exam#1 Notes...

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Managerial Accounting Interim Exam #1 Notes Managerial accounting consists of concepts and procedures to provide relevant information to managers o Information is for internal use o Tends to be forward looking (prediction rather than past) o No mandatory rules (unlike GAAP for financial accounting) performance, emphasis is on relevance to managers o Managerial accounting focuses on smaller units such as products, department, segment and etc o Measuring efficiency and performance Managers Goals: Maximize return from available resources, by: o Planning considering alternatives and choosing those that maximize return o Implement create internal organization, workflow, generate the finance needed and governance structure o Control to measure performance and provide feedback and take corrective action when necessary Managers want to increase revenue and decrease cost Cost: o Is the value given to acquire a resource of perform an activity or to achieve a goal. o Often measured in dollars ($) Revenue – CGS= Gross Profit Merchandising firm cost of goods purchased Manufacturing firm cost of goods manufactured All costs are divided into two: o Product costs all manufacturing costs o Period costs any non-product cost (marketing, general administration, etc) Direct easy to attach cost to a particular batch of a product Indirect Manufacturing Overhead (MOH). Must allocate indirect cost Direct Labor, Direct Raw Material & MOH WIP Finished goods DM + DL= Prime costs DL + MOH = Conversion costs (convert raw material into finished goods) Inventoriable costs (product costs) can appear in inventory On the balance sheet of a merchandising firm , you will find one merchandise inventory On the balance sheet of a manufacturing firm , you will find three types of
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