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Semester of notes ACCTG 225 (spring 2010)

by: Shogo Okuda

Semester of notes ACCTG 225 (spring 2010) ACCTG 225

Marketplace > University of Washington > Accounting > ACCTG 225 > Semester of notes ACCTG 225 spring 2010
Shogo Okuda
GPA 3.97
Fundamentals of Managerial Accounting
Helen Adams

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Fundamentals of Managerial Accounting
Helen Adams
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This 5 page Bundle was uploaded by Shogo Okuda on Tuesday October 28, 2014. The Bundle belongs to ACCTG 225 at University of Washington taught by Helen Adams in Spring2010. Since its upload, it has received 177 views. For similar materials see Fundamentals of Managerial Accounting in Accounting at University of Washington.

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Date Created: 10/28/14
ACCTG 225 Notes 428 Pro t Planning Lilo amp Stitch Pro t planning accompolished by preparing a number of budgets that together form an integrated business plan known as the master budget Budget quantitative plan for acquiring and using resources over a speci ed time period Planning developing goals and preparing various budgets to achieve those goals Control involves the steps taken by management to increase the likelihood that all parts of the organization are Working together to achieve the goals set down at the planning stage Responsibility accounting manager should be held responsible for those items and only those items that the manager can actually control to a signi cant extent Continuous or perpetual budget 12 month budget that rolls forward one month as the current month is completed Selfimposed budget or participative budget budget that is prepared With the full cooperation and participation of managers at all levels Budget committee usually responsible for overall policy relating to the budget program and for coordinating the preparation of the budget itself ACCTG 225 Notes 412 Cost Behavior Analysis and Use Contribution format costs are organized by their behavior rather than by the traditional functions of production sales and administration Cost structure relative proportion of variable fixed and mixed costs Activity base measure of whatever causes the incurrence of variable cost cost driver True variable vs proportionately variable pattern Step variable cost cost of resource that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity Committed fixed costs can t be significantly reduced even for short periods of time without making fundamental changes Discretionary fixed costs usually arise from annual decisions by management to spend on certain fixed cost items Ex advertising research public relations management development programs internships Mixed costs contains both variable and fixed cost elements Account analysis an account is classified as either variable or fixed based on the analyst s prior knowledge on how the cost in the account behaves Engineering approach detailed analysis of what cost behavior should be based on an industrial engineer39s evaluation of the production methods to be used the materials specifications labor requirements equipment usage production efficiency power consumption and so on Multiple regression analytical method that is used when the dependent variable is caused by more than one factor Contribution approach provides managers with an income statement that clearly distinguishes between fixed and variable costs and therefore facilitates planning control and decision making Contribution margin amount remaining from sales revenue after variable expenses have been deducted ACCTG 225 Notes 331 Planning involves establishing a basic strategy selecting a course of action and specifying how the action will be implemented Directing and motivating involves mobilizing people to carry out plans and run routine operations Controlling involves ensuring that the plan is actually carried out and is appropriately modi ed as circumstances change Budget expresses the plans of a management Controller manager in charge of the Accounting Department Feedback signals Whether operations are on track key to effective control Performance report compares budgeted to actual results Planning and control cycle involves the smooth ow of management activities from planning through directing and motivating controlling and then back to planning again Managerial accounting concerned With providing information to managers Financial accounting concerned With providing information to stockholders creditors and others Who are outside the organization Emphasis on future Relevance of data Less emphasis on precision Segmenting report Don t have to follow GAAP Not Mandatory Raw materials materials that go into the nal product Direct materials integral part of nished product Indirect material relatively insigni cant material glue Direct labor labor costs that can be easily traced to individual units of product touch labor Indirect labor janitors supervisors materials handlers security guards Manufacturing overhead includes all manufacturing costs except direct materials and direct labor only associated With operating the factory Nonmanufacturing costs Selling cost include all costs that are incurred to secure customer orders and get the nished product to the customer Administrative costs include all costs associated With the general management of an organization rather than With manufacturing or selling Product cost all costs involved in acquiring or making a product Once inventory is sold product cost becomes expense Also known as inventoriable costs Period costs all the costs that are not product costs sales commissions rental costs of administrative of ces All SGampA expenses are considered to be period costs Prime cost sum of direct materials cost and direct labor cost Conversion cost sum of direct labor and manufacturing overhead cost Balance sheet Raw materials materials that are used to make a product Work in process consists of unit of product that are only partially complete and Will require further Work before they are ready for sale to a customer Finished goods consist of completed units of product that have not yet been sold to customers Cost of goods manufactured consists of the manufacturing costs associated With goods that Were nished during the period Schedule of cost of goods manufactured contains direct materials direct labor and manufacturing overhead Cost behavior refers to how a cost reacts to changes in the level of activity Variable cost cost that varies in total in direct proportion to changes in the level of activity Fixed cost cost that remains constant in total regardless of changes in the level of activity Relevant range range of activity within which the assumptions about variable and xed costs are valid Cost object anything for which cost data are desired including products customers jobs and organizational subunits Direct cost can be easily and conveniently traced to a speci ed cost object Indirect cost cost that cannot be easily and conveniently traced to a speci ed cost object Common cost cost that is incurred to support a number of cost type of indirect cost Differential cost a difference in costs between any two alternatives Differential revenue a difference in revenues between any two alternatives Incremental cost differential cost Opportunity cost potential bene t that is given up when one alternative is selected over another Sunk cost cost that has already been incurred and that cannot be changed by any decision made now or in the future Absorption costing all manufacturing costs both xed and variable are assigned to units of product units are said to fully absorb manufacturing costs Process costing used I companies that produce many units of a single product for long periods Unit product cost Total manufacturing cost total units produced Joborder costing used in situations Where many different products are produced each period Bill of materials document that lists the type and quantity of each type of direct material needed to complete a unit of product Materials requisition form document that speci es the type and quantity of materials to be drawn from the storeroom and identi es the job that will be charged for the cost of the materials Job cost sheet form prepared for a job that records the materials labor and manufacturing overhead costs charged to that job Time ticket an hour by hour summary of the employee s activities throughout the day Allocation base measure such as direct labor hours or machine hours that is used to assign overhead costs to products and services Predetermined overhead rate estimated total manufacturing overhead cost estimated total amount of the allocation base Overhead application process of assigning overhead cost to jobs Overhead applied to a particular job 2 predetermined overhead rate Amount of the allocation base incurred by the job Normal cost system applies overhead to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs Cost driver factor such as machine hours beds occupied computer time or ight hours that causes overhead costs Actual overhead costs are not charged to jobs actual overhead costs do not appear 0 the job cost sheet nor do they appear in the Work in process account


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