Management
By: SxTeri Notes
, IndeX
Accounting .........................................................................................3
Session 1 - Intro to MA + CVP
Session 2 - Budgeting
Session 3 - Limiting factors + costing methods
Session 4 - Variance Analysis
Session 5 - Capital Investment
Session 6 - Intro to Financial Accounting
Session 7 - Year End Adjustments and LTD Companies
Session 8 - Statement of Cash Flows
Session 9 - Analysis of Financial Statements
SxTeri Notes 2
, Accounting
Session 1 - Intro to MA + CVP
Management Accounting: the provision of nancial and non- nancial information to
management for strategic decisions; costing; for planning operations and e ciency resources
usage; control and performance; designing and funding capital structure; risk management; and
for decision making.
→ One major di erence: nancial is for external use; management is internal use within the
organisation
Financial Accounting Management accounting
• For outside users e.g. shareholders • Used within the business
• Rules set by accounting professionals and • No rules
government • Based on past or future
• Primarily based on fact; past > future info • Produced quickly
• Need accuracy for long-term + short-term • For quick decision-making
decision making • Information in greater detail to keep managers
• Takes long time well informed
• Provide a summary of performance of business • Varies between companies
• Little information = little room for error • Prepared when required - monthly, weekly,
• Prepared at regular (annual intervals) quarterly
Manufacturing costs
→ 3 main categories: direct materials, direct labour and manufacturing overheads (indirect cost)
• Direct materials: all materials directly attributable to nal product
• Direct labour: all labour directly attributable to nal product
• Manufacturing overheads: all costs of manufacturing expect direct materials and direct labour
- costs not identi able with each unit of production e.g. maintenance and repair, heat, light,
straight-line depreciation, tax and insurance
Indirect material + indirect labour
• Direct/Prime Costs: clearly “traced” to each unit of production e.g. cost of good sold/wage &
salary
Direct material + direct labour
• Conversion cost: direct labour and overhead costs are incurred in the conversion of materials
to nal product
Manufacturing overhead + direct labour
• Non-manufacturing costs would include:
1. Marketing and selling costs: all costs necessary to secure customers orders and get
nished product into hands of customer
2. Administrative costs: all executive, organisational and clerical costs associated with
management
• Fixed Costs: do not vary with output but may vary on a
per unit basis e.g. rent
• Variable Costs: proportionate with total amount of
activity but are xed on a per-unit basis e.g. cost of
materials
• Total Costs = total variable costs + total xed costs
SxTeri Notes 3
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By: SxTeri Notes
, IndeX
Accounting .........................................................................................3
Session 1 - Intro to MA + CVP
Session 2 - Budgeting
Session 3 - Limiting factors + costing methods
Session 4 - Variance Analysis
Session 5 - Capital Investment
Session 6 - Intro to Financial Accounting
Session 7 - Year End Adjustments and LTD Companies
Session 8 - Statement of Cash Flows
Session 9 - Analysis of Financial Statements
SxTeri Notes 2
, Accounting
Session 1 - Intro to MA + CVP
Management Accounting: the provision of nancial and non- nancial information to
management for strategic decisions; costing; for planning operations and e ciency resources
usage; control and performance; designing and funding capital structure; risk management; and
for decision making.
→ One major di erence: nancial is for external use; management is internal use within the
organisation
Financial Accounting Management accounting
• For outside users e.g. shareholders • Used within the business
• Rules set by accounting professionals and • No rules
government • Based on past or future
• Primarily based on fact; past > future info • Produced quickly
• Need accuracy for long-term + short-term • For quick decision-making
decision making • Information in greater detail to keep managers
• Takes long time well informed
• Provide a summary of performance of business • Varies between companies
• Little information = little room for error • Prepared when required - monthly, weekly,
• Prepared at regular (annual intervals) quarterly
Manufacturing costs
→ 3 main categories: direct materials, direct labour and manufacturing overheads (indirect cost)
• Direct materials: all materials directly attributable to nal product
• Direct labour: all labour directly attributable to nal product
• Manufacturing overheads: all costs of manufacturing expect direct materials and direct labour
- costs not identi able with each unit of production e.g. maintenance and repair, heat, light,
straight-line depreciation, tax and insurance
Indirect material + indirect labour
• Direct/Prime Costs: clearly “traced” to each unit of production e.g. cost of good sold/wage &
salary
Direct material + direct labour
• Conversion cost: direct labour and overhead costs are incurred in the conversion of materials
to nal product
Manufacturing overhead + direct labour
• Non-manufacturing costs would include:
1. Marketing and selling costs: all costs necessary to secure customers orders and get
nished product into hands of customer
2. Administrative costs: all executive, organisational and clerical costs associated with
management
• Fixed Costs: do not vary with output but may vary on a
per unit basis e.g. rent
• Variable Costs: proportionate with total amount of
activity but are xed on a per-unit basis e.g. cost of
materials
• Total Costs = total variable costs + total xed costs
SxTeri Notes 3
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