📘 Title: Managerial Accounting – Cost & Budgeting Compiled by Rickie
Page 1 – Introduction & Overview
Managerial Accounting focuses on providing information to managers to aid in planning, controlling,
and decision-making. It emphasizes costs, budgeting, and performance evaluation.
Importance:
• Helps in cost control and efficient resource allocation
• Supports budgeting and financial planning
• Assists managers in decision-making and performance evaluation
Page 2 – Types of Costs
Key Cost Classifications: - Fixed Costs: Remain constant regardless of production volume (e.g., rent,
salaries) - Variable Costs: Change with production levels (e.g., raw materials) - Direct Costs: Directly
traceable to a product or service (e.g., labor, materials) - Indirect Costs: Not directly traceable (e.g.,
utilities, administrative expenses)
Table Example – Cost Types: | Cost Type | Example | Behavior | |-----------|---------|----------| | Fixed |
Rent | Constant regardless of output | | Variable | Raw Materials | Increases with production | | Direct
| Labor | Directly associated with product | | Indirect | Electricity | Shared overhead |
Page 3 – Budgeting Basics
Definition: Budgeting is the process of planning future business activities in monetary terms.
Types of Budgets:
• Operating Budget: Forecasts revenues and expenses
• Cash Budget: Projects cash inflows and outflows
• Capital Budget: Plans for long-term investments
Diagram Placeholder: [Budgeting Process Flowchart]
Page 4 – Break-Even Analysis
Definition: Determines the level of sales needed to cover costs.
Formula:
F ixedCosts
Break − EvenP oint(U nits) =
SellingP riceperU nit − VariableCostperU nit
1
Page 1 – Introduction & Overview
Managerial Accounting focuses on providing information to managers to aid in planning, controlling,
and decision-making. It emphasizes costs, budgeting, and performance evaluation.
Importance:
• Helps in cost control and efficient resource allocation
• Supports budgeting and financial planning
• Assists managers in decision-making and performance evaluation
Page 2 – Types of Costs
Key Cost Classifications: - Fixed Costs: Remain constant regardless of production volume (e.g., rent,
salaries) - Variable Costs: Change with production levels (e.g., raw materials) - Direct Costs: Directly
traceable to a product or service (e.g., labor, materials) - Indirect Costs: Not directly traceable (e.g.,
utilities, administrative expenses)
Table Example – Cost Types: | Cost Type | Example | Behavior | |-----------|---------|----------| | Fixed |
Rent | Constant regardless of output | | Variable | Raw Materials | Increases with production | | Direct
| Labor | Directly associated with product | | Indirect | Electricity | Shared overhead |
Page 3 – Budgeting Basics
Definition: Budgeting is the process of planning future business activities in monetary terms.
Types of Budgets:
• Operating Budget: Forecasts revenues and expenses
• Cash Budget: Projects cash inflows and outflows
• Capital Budget: Plans for long-term investments
Diagram Placeholder: [Budgeting Process Flowchart]
Page 4 – Break-Even Analysis
Definition: Determines the level of sales needed to cover costs.
Formula:
F ixedCosts
Break − EvenP oint(U nits) =
SellingP riceperU nit − VariableCostperU nit
1
