Chapter 6
Cost of goods sold and inventory
Cost of goods sold model:
Inventory at the beginning
Purchases of inventory
Cost of goods available for sale
Inventory at the end
Cost of goods sold
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Purchases:
Gross purchases
Purchases returns and allo
NAME:
Chapter 9: Long-Term Liabilities (NOTE: We will not be covering Objective 4 on the Effective Interest
Method or Appendix 9A on the Pricing of Long-term Debt)
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Illinois State University
College of Business
Department of Accounting
Managerial Accounting (ACC 132)
Summer 2015
MISSION STATEMENT OF THE COLLEGE OF BUSINESS:
To be highly respected college of business that develops professionals with the personal
dedic
2-1
Learning Objective 5
Prepare income
statements for a
merchandising
company using the
traditional and
contribution
formats.
2-2
The Traditional and Contribution
Formats
Used primarily for
external reporting.
2-3
Uses of the Contribution Format
The cont
2-1
Learning Objective 6
Understand the
differences between
direct and indirect
costs.
2-2
Assigning Costs to Cost Objects
Direct costs
Indirect costs
Costs that can be
easily and
conveniently traced
to a unit of product
or other cost object.
Costs that
2-1
Learning Objective 4
Analyze a mixed cost
using a scattergraph
plot and the highlow method.
2-2
Scattergraph Plots An Example
Assume the following hours of maintenance work and the total maintenance costs for six months.
2-3
The Scattergraph Method
Pl
2-1
Learning
Objective 3 Cost
Behavior Patterns
2-2
Mixed Costs
(also called semivariable costs)
A mixed cost contains both variable and fixed
A mixed cost contains both variable and fixed
elements. Consider the example of utility cost.
elements. Consider
2-1
Learning Objective 1
Identify and give
examples of each of
the three basic
manufacturing cost
categories.
2-2
Classifications of Manufacturing
Costs
Direct
Direct
Materials
Materials
Direct
Direct
Labor
Labor
The Product
Manufacturing
Manufacturing
Ov
2-1
Learning Objective 2
Distinguish between
product costs and
period costs and
give examples of
each.
2-2
Product Costs Versus Period Costs
Product costs include
direct materials, direct
labor, and
manufacturing
overhead.
Inventory
Cost of Good Sold
Peri
2-1
Learning Objective 7
Understand cost
classifications used
in making decisions:
differential costs,
opportunity costs,
and sunk costs.
2-2
Cost Classifications for Decision
Making
Every decision involves a choice
between at least two
alternatives.
On
2-1
2-1
Learning Objective 2
Distinguish between
product costs and period
costs and give examples
of each.
2-2
Product Costs Versus Period Costs
Product costs include
direct materials, direct
labor, and
manufacturing
overhead.
Inventory
Cost of Good Sold
NAME:
Chapter 4
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top of the page. Answer the following questions based on reading the textbook. Submit your
completed ticket-in as an attachment to the assign
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Chapter 1
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1. (Ignore income taxes in this problem.) The management of Helberg Corporation is considering a
project that would require an investment of $203,000 and would last for 6 years. The annual net
operating income from the project would be $103,000, which inc
1. In a statement of cash flows, issuing bonds payable affects the:
a. operating activities section.
B. financing activities section.
c. investing activities section.
D. free cash flow activities section
2. An increase in the Inventory account of a compan
Pre-Built Ch. 15 Problems
Problem 1
Part A.
Working Capital = Current Assets Current Liabilities
Part B.
Current Ratio = Current Assets / Current Liabilities
Part C.
Acid-Test Ratio = (Cash + Marketable Sec. + Acc. Rec) / Current Liabilities
Problem 2
Par
1. Selling used equipment at book value for cash will:
a. increase working capital.
B. decrease working capital.
c. decrease the debt-to-equity ratio.
D. increase net income.
2. The ratio of total cash, marketable securities, accounts receivable, and shor
1-1
Accounting Majors
Many accounting graduates
begin working for public
accounting firms. However,
most leave at some point to
work in other organizations.
80%
The IMA estimates that 80%
of professional accountants in
the U.S. work in non-public
accounti
1-1
Code of Conduct for
Management Accountants
The Institute of Management Accountants (IMA)
Statement of Ethical Professional Practice
consists of two parts that offer guidelines for:
Ethical behavior.
Resolution for an ethical conflict.
1-2
IMA Guidel
1-1
Lean Production
Customer places
an order
Create Production
Order
Generate component
requirements
Goods delivered
when needed
Production begins
as parts arrive
Components
are ordered
Lean Production is often called Just-In-Time (JIT) production.
1-2
Le
2-1
2-1
Mixed Costs
(also called semivariable costs)
A mixed cost contains both variable and fixed
elements. Consider the example of utility cost.
Total Utility Cost
Y
Variable
Cost per KW
X
Fixed Monthly
Activity (Kilowatt Hours)
Utility Charge
2-2
Mixed
2-1
2-1
Learning Objective 1
Identify and give
examples of each of the
three basic
manufacturing cost
categories.
2-2
Classifications of Manufacturing Costs
Direct
Materials
Direct
Labor
Manufacturing
Overhead
The Product
2-3
Direct Materials
Raw material
2-1
2-1
Learning Objective 4
Analyze a mixed cost
using a scattergraph plot
and the high-low
method.
2-2
Scattergraph Plots An Example
Assume the following hours of maintenance work
and the total maintenance costs for six months.
2-3
The Scattergraph Meth
5-1
Learning Objective 6
Determine the
break-even point.
5-2
Break-even Analysis
The equation and formula methods can be used to
determine the unit sales and dollar sales needed to
achieve a target profit of zero. Lets use the RBC
information to complete
5-1
Learning Objective 5
Determine the level
of sales needed to
achieve a desired
target profit.
5-2
Target Profit Analysis
We can compute the number of units
that must be sold to attain a target
profit using either:
(1) Equation method, or
(2) Formula me
5-1
Learning Objective 4
Show the effect on
net operating
income of changes
in variable costs,
fixed costs, selling
price, and volume.
5-2
The Variable Expense Ratio
The variable expense ratio is the ratio of variable
expenses to sales. It can be computed
5-1
Learning Objective 3
Use the contribution
margin ration (CM
ratio) to compute
changes in
contribution margin
and net operating
income resulting
from changes in
sales volume.
5-2
Contribution Margin Ratio (CM Ratio)
The CM ratio is calculated by dividi
5-1
Learning Objective 2
Prepare and
interpret a costvolume-profit (CVP)
graph and a profit
graph.
5-2
CVP Relationships in Graphic Form
The relationships among revenue, cost, profit, and volume
can be expressed graphically by preparing a CVP graph.
Racin
