Samenvatting management accounting: Cost Accounting
0
,CH1 – managerial accounting
1. The features of management accounting
Management Accounting Financial Accounting
Internal users (officers, managers, External users (shareholders,
…) creditors, regulators, …)
Internal rapports (as frequently as Financial statements
needed) (quarterly/annually)
Special purpose for specific General purposes
decisions
Very detailed Highly aggregated
No independent audits Audits by accountants
Managerial accounting = provides economic and financial information for
managers and other internal users
2. Functions of management
- Planning: look ahead and establish objectives
- Directing: coordinating a company’s diverse activities and HR to
produce a smooth-running operation
- Controlling: keeping the company’s activities on track
3. Classes of manufacturing costs
Manufacturing = activities and processes that convert raw materials into
finished goods
- Product costs
Direct materials (DM) = raw materials that can directly be
associated with the product
Direct labor (DL) = work of factory employees that can directly
be associated with the product
Manufacturing overhead (MO) = costs that are indirectly
associated with the manufacture of the finished product
2 characteristics:
1. Don’t physically become part of the finished product
2. Impractical to link to the finished product
1
, - Period costs
Costs that are matched with the revenue of a specific period
rather than included as part of the cost of a produced product
Example: selling expenses, administrative expense
4. Compute the cost of goods manufactured
Work in progress (1 January)
+ Direct materials = Raw materials (1 January)
+ Direct labor + raw materials purchases
+ manufacturing overhead - raw materials (31
December)
- work in progress (31 December)
5. Trends in managerial accounting
- Service industries
Global economy shifts from manufacturing to service companies
Services are consumed immediately (airlines, meal at a
restaurant)
- Focus on the value chain
Lean manufacturing: increase productivity and eliminate waste
Just-In-Time (JIT): decrease inventory by getting raw materials
delivered when they’re needed
Total Quality Management (TQM): continue the process of
searching for and decreasing errors
Theory of constraints: eliminating the biggest problem which
stands in the way of achieving the goals
ERP: a course in semester 2
Activity-based costing: a method for assigning overhead &
indirect costs to products and services
- Balanced scorecard
Way to prevent a limited perspective of the manager
- Business ethics
Social responsibility gets even more important every day
2
, 6. Exercises
E1.3
E1.4
3
0
,CH1 – managerial accounting
1. The features of management accounting
Management Accounting Financial Accounting
Internal users (officers, managers, External users (shareholders,
…) creditors, regulators, …)
Internal rapports (as frequently as Financial statements
needed) (quarterly/annually)
Special purpose for specific General purposes
decisions
Very detailed Highly aggregated
No independent audits Audits by accountants
Managerial accounting = provides economic and financial information for
managers and other internal users
2. Functions of management
- Planning: look ahead and establish objectives
- Directing: coordinating a company’s diverse activities and HR to
produce a smooth-running operation
- Controlling: keeping the company’s activities on track
3. Classes of manufacturing costs
Manufacturing = activities and processes that convert raw materials into
finished goods
- Product costs
Direct materials (DM) = raw materials that can directly be
associated with the product
Direct labor (DL) = work of factory employees that can directly
be associated with the product
Manufacturing overhead (MO) = costs that are indirectly
associated with the manufacture of the finished product
2 characteristics:
1. Don’t physically become part of the finished product
2. Impractical to link to the finished product
1
, - Period costs
Costs that are matched with the revenue of a specific period
rather than included as part of the cost of a produced product
Example: selling expenses, administrative expense
4. Compute the cost of goods manufactured
Work in progress (1 January)
+ Direct materials = Raw materials (1 January)
+ Direct labor + raw materials purchases
+ manufacturing overhead - raw materials (31
December)
- work in progress (31 December)
5. Trends in managerial accounting
- Service industries
Global economy shifts from manufacturing to service companies
Services are consumed immediately (airlines, meal at a
restaurant)
- Focus on the value chain
Lean manufacturing: increase productivity and eliminate waste
Just-In-Time (JIT): decrease inventory by getting raw materials
delivered when they’re needed
Total Quality Management (TQM): continue the process of
searching for and decreasing errors
Theory of constraints: eliminating the biggest problem which
stands in the way of achieving the goals
ERP: a course in semester 2
Activity-based costing: a method for assigning overhead &
indirect costs to products and services
- Balanced scorecard
Way to prevent a limited perspective of the manager
- Business ethics
Social responsibility gets even more important every day
2
, 6. Exercises
E1.3
E1.4
3
