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Unformatted text preview: Acct 2200 Chapter 2 Lecture Notes (Spring 2012) Learning Objectives: LO1 Identify the major differences and similarities between financial and managerial accounting. LO2 Identify and give examples of each of the three basic manufacturing cost categories. LO3 Distinguish between product costs and period costs and give examples of each. LO4 Prepare an income statement including calculation of the cost of goods sold. LO5 Prepare a schedule of cost of goods manufactured. LO6 Understand the differences between variable costs and fixed costs. LO7 Understand the differences between direct and indirect costs. LO8 Understand cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs. Part I. The work of management and the need for managerial accounting information Work of management Need for managerial accounting information (1) Planning : involves identifying alternatives, selecting alternative that does the best job of furthering organizations objectives, and developing budgets to guide progress toward the selected alternative. Budget (2) Directing & Motivating : managing day-to-day activities to keep the organization running smoothly. Daily sales report, daily cost report, etc. (3) Controlling: ensures that plans are being followed. Performance Report (A detailed report to management comparing budgeted data to actual data for a specific time period.) Part II. Comparison of financial accounting and managerial accounting M cGraw-Hill/ Irwin S l id e 8 C o m p a ris o n o f F in a n c ia l a n d M a na g e ria l A cc o u n tin g F in an cial Ac co u n tin g M an a g erial Acco u n tin g 1. U se rs Ex te rn a l p e rso n s w h o M a n a g e rs w h o pla n fo r m a ke fin a n cia l d e cisio n s a n d co n tro l a n o rg a n iz a tio n 2. T im e fo cu s H isto rica l p e rsp e ctive Fu tu re e m p h a sis 3. V e rifia b ility Em p h a sis o n Em p h a sis o n re le va n ce ve rsu s re le va n ce ve rifia b ility fo r p la n n in g a n d co n trol 4. P re cisio n ve rsu s Em p h a sis o n Em p h a sis o n tim e lin e ss p re cisio n tim e lin e ss 5. S u b je ct P rim a ry focu s is o n F o cu se s o n se g m e n ts the w h o le o rg a n iz a tio n of a n o rg a n iz a tio n 6. G A A P M u st fo llo w G A A P N e e d n o t fo llo w G A A P a n d p re scrib e d fo rm a ts o r a n y p re scrib e d fo rm a t 7. R e q u ire m e n t M a n d a to ry fo r N o t e x te rn a l re p o rts M a n d a to ry In addition to placing less emphasis on precision than financial accounting, managerial accounting places much more weight on nonmonetary data....
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