Managerial accounting
1. Identify features of managerial accounting and functions
of management
P and L = profit and lost = resultatenrekening
BS = balance sheet
SG and A = general and administration
Managerial accounting = provides economic & fin information for managers and other internal users
GOAL = to make informed business decisions
Management functions:
Planning
- To look ahead
- To establish objectives
Directing
- Coordinating a company’s diverse activities and human resources to produce a smooth-running
operation
Controlling
- Keeping the company’s activities on track
- Whether planned goals are met
Decision-making is the outcome of these functions
NW, it’s an output of financial accounting
W
W
NW, financial accounting
NW, financial accounting
, 2. Describe the classes of manufacturing costs and the
difference between product and period costs
Planning, directing, controlling? Good information about costs
Direct materials: raw materials that can be physically and directly associated with
the finished product during the manufacturing process
Direct labor: work of factory employees that can be physically and directly
associated with converting raw materials into finished goods
Manufactering overhead: costs that are indirectly associated with
manufacturing the finished product
Indirect materials
Indirect labor
o Not physically part of finished product
o Impractical to trace to finished goods
Find best method to allocate manufacturing overhead to products
1. predetermined overheid rate
2. activity based costing
recorded in inventory account, not an expense until goods are sold
3. Compute cog manufactured & prepare fin statement for
manufacturer
Cost of goods manufactured (COGM): p&l line reflecting costs to produce the manufactured products
Work in process (jan 1)
+ direct materials (raw materials (jan 1) +
raw materials purchases – raw materials (dec 31))
+ direct labor
+ manufacturing overhead
- work in process (dec 31)
Cost of goods sold (COGS): p&l line reflecting costs to produce the sold products
Finished goods (jan 1)
+ cost + goods manufactured
- finished goods (dec 31)
= financial statement for a manufacturer
4. Discuss trends in managerial
accounting
Service industries
Focus value chain = all business processes associated with providing product or performing service
o Lean manufacturing: reviewing all business processes to increase productivity & eliminate waste
o Just-in time (JIT): goods are manufactured or purchased just in time for sale
o Total quality management (TQM): to reduce defects in finished products, with goal of zero
defects
o Theory of constraints: indentify constraint and eliminate it, move on to fix the next constraint
o Entreprise resource planning (SAP)
o Activity-based costing (ABC)
1. Identify features of managerial accounting and functions
of management
P and L = profit and lost = resultatenrekening
BS = balance sheet
SG and A = general and administration
Managerial accounting = provides economic & fin information for managers and other internal users
GOAL = to make informed business decisions
Management functions:
Planning
- To look ahead
- To establish objectives
Directing
- Coordinating a company’s diverse activities and human resources to produce a smooth-running
operation
Controlling
- Keeping the company’s activities on track
- Whether planned goals are met
Decision-making is the outcome of these functions
NW, it’s an output of financial accounting
W
W
NW, financial accounting
NW, financial accounting
, 2. Describe the classes of manufacturing costs and the
difference between product and period costs
Planning, directing, controlling? Good information about costs
Direct materials: raw materials that can be physically and directly associated with
the finished product during the manufacturing process
Direct labor: work of factory employees that can be physically and directly
associated with converting raw materials into finished goods
Manufactering overhead: costs that are indirectly associated with
manufacturing the finished product
Indirect materials
Indirect labor
o Not physically part of finished product
o Impractical to trace to finished goods
Find best method to allocate manufacturing overhead to products
1. predetermined overheid rate
2. activity based costing
recorded in inventory account, not an expense until goods are sold
3. Compute cog manufactured & prepare fin statement for
manufacturer
Cost of goods manufactured (COGM): p&l line reflecting costs to produce the manufactured products
Work in process (jan 1)
+ direct materials (raw materials (jan 1) +
raw materials purchases – raw materials (dec 31))
+ direct labor
+ manufacturing overhead
- work in process (dec 31)
Cost of goods sold (COGS): p&l line reflecting costs to produce the sold products
Finished goods (jan 1)
+ cost + goods manufactured
- finished goods (dec 31)
= financial statement for a manufacturer
4. Discuss trends in managerial
accounting
Service industries
Focus value chain = all business processes associated with providing product or performing service
o Lean manufacturing: reviewing all business processes to increase productivity & eliminate waste
o Just-in time (JIT): goods are manufactured or purchased just in time for sale
o Total quality management (TQM): to reduce defects in finished products, with goal of zero
defects
o Theory of constraints: indentify constraint and eliminate it, move on to fix the next constraint
o Entreprise resource planning (SAP)
o Activity-based costing (ABC)
