Table of Contents
Hoofdstuk 1: The manager & management accounting...................4
1. Management vs financial accounting................................................4
Hoofdstuk 2: Cost terms and purposes...........................................6
1. General cost terms..........................................................................6
2. Direct vs indirect costs....................................................................6
3. Variable vs fixed cost.......................................................................7
4. Product vs period cost.....................................................................8
5. Costs per functiom...........................................................................9
6. Total vs unit cost.............................................................................9
Hoofdstuk 3: Cost-volume-profit analysis (CVP)............................10
1. Contribution margin.......................................................................10
2. Breakeven point............................................................................11
2.1. Breakeven quantity (BEQ).......................................................................................11
2.2. Breakeven sales (BE sales).....................................................................................11
3. Profit planning...............................................................................11
4. CVP and income taxes....................................................................12
5. Sensitivity analysis........................................................................12
6. Margin of safety............................................................................12
7. Operating leverage........................................................................13
8. CVP analysis is simplistic................................................................13
8.1. Effects of sales-mix on CVP.....................................................................................14
Hoofdstuk 4: job costing.............................................................14
1. Job vs process costing....................................................................15
2. Job costing: cost assignment..........................................................16
2.1. Choice of cost allocation base.................................................................................16
3. Costing approaches in general........................................................17
4. Seven-step job costing (Horngren)..................................................17
5. Journal entries...............................................................................17
6. Accounting for overhead................................................................18
6.1. End of accounting year adjustment........................................................................18
Hoofdstuk 5: process costing......................................................19
1. Process costing..............................................................................19
, 2. Process-costing Assumptions.........................................................20
3. equivalent units.............................................................................20
4. Five-step process costing...............................................................20
5. Weighted average process costing method.....................................20
6. First in First out process-costing method........................................21
7. Standard costing and process costing.............................................21
8. Transferred-in costs.......................................................................22
Hoofdstuk 6: Activity Based Costing (ABC)...................................22
1. Traditional vs refined costing systems.............................................23
1.1. Rationale for selecting a more refined costing system............................................23
1.2. Guidelines for refining costing systems..................................................................24
2. Activity Based costing systems (ABC)..............................................24
2.1. Cost Hierarchies...................................................................................................... 25
2.2. ABC in practice....................................................................................................... 25
2.3. Design of ABC system............................................................................................. 26
3. Selecting activity cost drivers.........................................................26
4. Advantages and disadvantages of ABC system................................27
5. Problems implementing ABC...........................................................27
6. ABC vs Simple costing schemes......................................................28
7. ABC and service/ merchandising firms.............................................28
8. Activity based management (ABM).................................................28
Hoofdstuk 6: The master budget.................................................29
1. The master budget.........................................................................29
1.1. The ongoing budget process...................................................................................30
1.2. Voor en nadelen van budgets.................................................................................30
1.3. Components of the masterbudget..........................................................................30
1.4. Other budgeting issues........................................................................................... 31
2. Responsibility accounting: budgeting and the organization..............31
2.1. Types of responsibility centers................................................................................32
2.2. Budgets and feedback............................................................................................32
3. Budgeting and human behavior......................................................32
Hoofdstuk 7 en 8? Variance analyse.............................................33
1. Basic concepts of variance analysis................................................33
2. Level 0, 1, 2, 3, analysis.................................................................34
3. Static budget vs Flexible budget analysis........................................34
3.1. Flexible budget....................................................................................................... 34
4. Level 2 analysis.............................................................................35
5. Level 3 analysis.............................................................................35
6. Indirect cost level 3 analysis...........................................................36
, 6.1. Planning overhead.................................................................................................. 37
6.2. Variable overhead (OVH) cost variances.................................................................37
6.3. Fixed Overhead cost variances...............................................................................38
7. Standard costing...........................................................................40
7.1. Standard costing approaches..................................................................................41
7.2. Standard costing implementation...........................................................................41
7.3. Standard costing evaluation...................................................................................41
8. Management uses of variances.......................................................42
8.1. Interpreting interaction among variances...............................................................42
8.2. financial – nonfinancial performance measures......................................................42
8.3. Operational control measures.................................................................................43
8.4. Production and delivery performance.....................................................................43
8.5. Balanced Scorecard................................................................................................43
8.6. Behavioral impact of variance analysis...................................................................44
8.7. Benchmarking and variances..................................................................................44
9. Activity based costing and variances..............................................44
Hoofdstuk 9: Inventory costing....................................................45
1. Product vs period costs..................................................................45
2. For absorption costing...................................................................45
3. For variable costing.......................................................................46
4. Comparative variable vs comparative costing..................................46
4.1. Operating income effect.........................................................................................46
4.2. Income effects........................................................................................................ 47
5. Arguments in support of Variable costing........................................47
6. Arguments in support of Absorption costing....................................47
7. Explaining the existence of absorption costing................................48
7.1. Performance issues and absorption costing............................................................48
8. Extreme variable costing: throughput costing.................................49
9. Comparison of alternative inventory costing systems......................49
10. Capacity analysis.........................................................................50
11. Denominator level capacity choice when calculating the rate/ tariff 51
12. Denominator level capacity choice................................................51
13. Production volume variance..........................................................52
, Management accounting
Hoofdstuk 1: The manager & management
accounting
We zullen eerst uitleggen wat “accountancy” is
the collection, summarization and reporting of financial information
1. Management vs financial accounting
It’s important to know the differences between these 2.
They also differ in accounting activities as shown below:
Management accounting Financial accounting
Cost accounting Bookkeeping
Cost management Consolidation
Strategic long-term planning Financial statement analysis
Budgeting External auditing
Management control
Management accounting includes Value Chain analysis
Which functions can be identified in the value chain
Which dependencies can be made
What are the consequences for the management accounting system
Hoofdstuk 1: The manager & management accounting...................4
1. Management vs financial accounting................................................4
Hoofdstuk 2: Cost terms and purposes...........................................6
1. General cost terms..........................................................................6
2. Direct vs indirect costs....................................................................6
3. Variable vs fixed cost.......................................................................7
4. Product vs period cost.....................................................................8
5. Costs per functiom...........................................................................9
6. Total vs unit cost.............................................................................9
Hoofdstuk 3: Cost-volume-profit analysis (CVP)............................10
1. Contribution margin.......................................................................10
2. Breakeven point............................................................................11
2.1. Breakeven quantity (BEQ).......................................................................................11
2.2. Breakeven sales (BE sales).....................................................................................11
3. Profit planning...............................................................................11
4. CVP and income taxes....................................................................12
5. Sensitivity analysis........................................................................12
6. Margin of safety............................................................................12
7. Operating leverage........................................................................13
8. CVP analysis is simplistic................................................................13
8.1. Effects of sales-mix on CVP.....................................................................................14
Hoofdstuk 4: job costing.............................................................14
1. Job vs process costing....................................................................15
2. Job costing: cost assignment..........................................................16
2.1. Choice of cost allocation base.................................................................................16
3. Costing approaches in general........................................................17
4. Seven-step job costing (Horngren)..................................................17
5. Journal entries...............................................................................17
6. Accounting for overhead................................................................18
6.1. End of accounting year adjustment........................................................................18
Hoofdstuk 5: process costing......................................................19
1. Process costing..............................................................................19
, 2. Process-costing Assumptions.........................................................20
3. equivalent units.............................................................................20
4. Five-step process costing...............................................................20
5. Weighted average process costing method.....................................20
6. First in First out process-costing method........................................21
7. Standard costing and process costing.............................................21
8. Transferred-in costs.......................................................................22
Hoofdstuk 6: Activity Based Costing (ABC)...................................22
1. Traditional vs refined costing systems.............................................23
1.1. Rationale for selecting a more refined costing system............................................23
1.2. Guidelines for refining costing systems..................................................................24
2. Activity Based costing systems (ABC)..............................................24
2.1. Cost Hierarchies...................................................................................................... 25
2.2. ABC in practice....................................................................................................... 25
2.3. Design of ABC system............................................................................................. 26
3. Selecting activity cost drivers.........................................................26
4. Advantages and disadvantages of ABC system................................27
5. Problems implementing ABC...........................................................27
6. ABC vs Simple costing schemes......................................................28
7. ABC and service/ merchandising firms.............................................28
8. Activity based management (ABM).................................................28
Hoofdstuk 6: The master budget.................................................29
1. The master budget.........................................................................29
1.1. The ongoing budget process...................................................................................30
1.2. Voor en nadelen van budgets.................................................................................30
1.3. Components of the masterbudget..........................................................................30
1.4. Other budgeting issues........................................................................................... 31
2. Responsibility accounting: budgeting and the organization..............31
2.1. Types of responsibility centers................................................................................32
2.2. Budgets and feedback............................................................................................32
3. Budgeting and human behavior......................................................32
Hoofdstuk 7 en 8? Variance analyse.............................................33
1. Basic concepts of variance analysis................................................33
2. Level 0, 1, 2, 3, analysis.................................................................34
3. Static budget vs Flexible budget analysis........................................34
3.1. Flexible budget....................................................................................................... 34
4. Level 2 analysis.............................................................................35
5. Level 3 analysis.............................................................................35
6. Indirect cost level 3 analysis...........................................................36
, 6.1. Planning overhead.................................................................................................. 37
6.2. Variable overhead (OVH) cost variances.................................................................37
6.3. Fixed Overhead cost variances...............................................................................38
7. Standard costing...........................................................................40
7.1. Standard costing approaches..................................................................................41
7.2. Standard costing implementation...........................................................................41
7.3. Standard costing evaluation...................................................................................41
8. Management uses of variances.......................................................42
8.1. Interpreting interaction among variances...............................................................42
8.2. financial – nonfinancial performance measures......................................................42
8.3. Operational control measures.................................................................................43
8.4. Production and delivery performance.....................................................................43
8.5. Balanced Scorecard................................................................................................43
8.6. Behavioral impact of variance analysis...................................................................44
8.7. Benchmarking and variances..................................................................................44
9. Activity based costing and variances..............................................44
Hoofdstuk 9: Inventory costing....................................................45
1. Product vs period costs..................................................................45
2. For absorption costing...................................................................45
3. For variable costing.......................................................................46
4. Comparative variable vs comparative costing..................................46
4.1. Operating income effect.........................................................................................46
4.2. Income effects........................................................................................................ 47
5. Arguments in support of Variable costing........................................47
6. Arguments in support of Absorption costing....................................47
7. Explaining the existence of absorption costing................................48
7.1. Performance issues and absorption costing............................................................48
8. Extreme variable costing: throughput costing.................................49
9. Comparison of alternative inventory costing systems......................49
10. Capacity analysis.........................................................................50
11. Denominator level capacity choice when calculating the rate/ tariff 51
12. Denominator level capacity choice................................................51
13. Production volume variance..........................................................52
, Management accounting
Hoofdstuk 1: The manager & management
accounting
We zullen eerst uitleggen wat “accountancy” is
the collection, summarization and reporting of financial information
1. Management vs financial accounting
It’s important to know the differences between these 2.
They also differ in accounting activities as shown below:
Management accounting Financial accounting
Cost accounting Bookkeeping
Cost management Consolidation
Strategic long-term planning Financial statement analysis
Budgeting External auditing
Management control
Management accounting includes Value Chain analysis
Which functions can be identified in the value chain
Which dependencies can be made
What are the consequences for the management accounting system
