201-Wk1-2-Intro,Cost Def-S'12-STUD

201-Wk1-2-Intro,Cost Def-S'12-STUD - Mgmt. 201 Managerial...

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Page 1 Mgmt. 201 – Managerial Accounting – Weeks 1 & 2 Introduction to the course and basic cost terms Professor Thoman Page 2 Definition of accounting: Systematic processing and organizing of financial information—costs, revenues, cash flows, capital expenditures Formatting of the data should enable someone to do something better
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Page 3 Who is using the information to do something better? Financial Accounting Managerial Accounting People “outside” the firm People “inside” the firm Investors CFO, CEO Banks Current shareholders Managers at all levels Page 4 What are users doing with the information? Financial Accounting Managerial Accounting Making better decisions How much to invest How much to loan; what interest rate to charge When to sell a stock What products to make What price to charge What technology to use When to outsource What to advertise Controlling/motivating employees and evaluating their performance Monitoring CEO Motivating CEO to act in the interests of shareholders Monitoring managers Motivating managers to act in the interests of shareholders
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Page 5 Any restrictions on how the information is formatted? Financial Accounting Managerial Accounting In U.S. format for publicly traded firms is regulated—this is what you studied in Mgmt. 200 (U.S. GAAP). Format is not regulated.* Different companies use different approaches. Use cost-benefit analysis to decide what information to collect and how to process the information. *We will determine COGS and Inventory values for a manufacturing firm--these values are regulated since they are part of the financial statements. Page 6 How does accounting differ from other business areas? Most business disciplines (and business school classes) use financial data (accounting numbers) to help a firm make good decisions: Marketers (and marketing classes) use accounting information about the cost to make a product when determining the price of the product, say a bicycle. How is accounting different? Other disciplines and courses take the accounting numbers as given when solving their problems: When setting the price of the bicycle, marketers take the cost to make the bicycle as given. Accountants know that the cost of the bicycle can be computed in many different ways. Thus an accountant must both: Understand all of the different ways to cost the bicycle. Be able to determine the “best” way to cost the bicycle when setting the price.
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Page 7 Two ideas we will see often Numbers are not unique. There is no such thing as “true” or “actual” numbers/costs. The same number can be computed in many different ways; hence, given an accounting number (e.g., the cost to manufacture a bike), one needs to understand how it was derived. There are better and worse numbers.
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201-Wk1-2-Intro,Cost Def-S'12-STUD - Mgmt. 201 Managerial...

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