Ch01 - 1-1 Chapter 1 An Introduction to Managerial...

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1-1 Chapter 1 An Introduction to Managerial Accounting and Cost Concepts Work of Management Planning Planning Controlling Controlling Directing and Motivating Directing and Motivating Planning Identify alternatives. Select alternative that does the best job of furthering organization’s objectives. Develop budgets to guide progress toward the selected alternative.
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1-2 Directing and Motivating Directing and motivating involves managing day- to-day activities to keep the organization running smoothly. n Employee work assignments. n Routine problem solving. n Conflict resolution. n Effective communications. Controlling The control function ensures that plans are being followed. Feedback in the form of performance reports that compare actual results with the budget are an essential part of the control function. Planning and Control Cycle Decision Making Formulating long- and short-term plans (Planning) Measuring performance (Controlling) Implementing plans (Directing and Motivating) Comparing actual to planned performance (Controlling) Begin
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1-3 Comparison of Financial and Managerial Accounting Financial Accounting Managerial 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. GAAP Must follow GAAP Need not follow GAAP and prescribed formats or any prescribed format 7. Requirement Mandatory for Not external reports Mandatory Learning Objective 1 Identify and give examples of each of the three basic manufacturing cost categories. The Product Direct Materials Direct Labor Manufacturing Overhead Manufacturing Costs
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1-4 Direct Materials Raw materials that become an integral part of the product and that can be conveniently traced directly to it. Example: A radio installed in an automobile Direct Labor Those labor costs that can be easily traced to individual units of product. Example: Wages paid to automobile assembly workers Manufacturing Overhead Manufacturing costs cannot be traced directly to specific units produced. Examples: Indirect materials and indirect labor Wages paid to employees who are not directly involved in production work. Examples: Maintenance workers, janitors and security guards. Materials used to support the production process. Examples: Lubricants and cleaning supplies used in the automobile assembly plant.
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1-5 Classifications of Nonmanufacturing Costs Selling Costs Costs necessary to get the order and deliver the product.
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Ch01 - 1-1 Chapter 1 An Introduction to Managerial...

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