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Mang. Acct. 1st Exam Study Guide

by: Michaela Zerbo

Mang. Acct. 1st Exam Study Guide NACC 206-01

Marketplace > Rochester Institute of Technology > Accounting > NACC 206-01 > Mang Acct 1st Exam Study Guide
Michaela Zerbo
GPA 3.1

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About this Document

This covers all information that is said to be on the 1st exam!
Managerial Accounting
Professor Ann Hager
Study Guide
managerial accounting
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This 9 page Study Guide was uploaded by Michaela Zerbo on Monday September 12, 2016. The Study Guide belongs to NACC 206-01 at Rochester Institute of Technology taught by Professor Ann Hager in Fall 2016. Since its upload, it has received 42 views. For similar materials see Managerial Accounting in Accounting at Rochester Institute of Technology.

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Date Created: 09/12/16
1  NACC 206  Managerial Accounting   Exam 1  Terms    ​ ormulas    Exam Materials  ★ Terms  ○ Managerial Accounting vs Financial Accounting ­ ​pg 2  ○ The 4 W’s ­ ​pg 2  ○ 4 Standards of Ethical Conduct ­ ​pg 2  ○ Job order costing system (importance and purpose) ­ ​pg 3  ★ 4 Cost Classifications ­ ​ g 3­4  ○ Traceability  ○ Cost Behavior  ○ Value Attractions  ○ Financial Reporting  ★ 3 Elements of Products Costs ​­ pg 6  ○ Direct Materials  ○ Direct Labor  ○ Manufacturing Overhead  ★ Procedures   ○ Calculating Product Costs ​­ pg 6  ○ Calculating Prime Costs and Conversion Costs ­ ​  pg 6  ○ Cost of Goods Manufactured ​­ pg 6  ○ Cost of Goods Sold (Income Statement Prep) ​­ pg 6  ○ Calculating Predetermined Overhead Rate ​­ pg 6  ○ Journal Entries  ​­ pg 7  ○ Checklist Sheet Example ­ ​  pg 8  ○ Recommended Way of Doing for Statements ​­ pg 9            2  Managerial vs Financial  ★ Managerial  ○ The process of identification, measurement, accumulation, analysis,  preparation, interpretation, and communication of financial  information used by management plan, evaluate, and control within  the organization  ★ Financial  ○ Takes the actual results of management's decisions about operating,  investing, and financing activities and prepares financial statements  for parties outside organizations      The Four W’s  ★ What  ○ What info is needed  ★ When  ○ Due date/deadline  ★ Why  ○ Know the purpose and focuses  ★ Who  ○ Identify audience/readers    The 4 Standards of Ethical Conduct  ★ Competence  ○ Maintain an appropriate level of professional  expertise regarding skills and experience  ★ Confidentiality  ○ Refraining from using confidential  information for personal gain or outside legal  rights  ★ Integrity  ○ Refraining from participating in any activity  that would prejudice carrying out duties  ethically  ★ Credibility  3  ○ Giving information honestly and within a  timely manner      Job Order Costing System  ​ (Preferred)  ❖ Direct materials, labor, overhead  ➢ Uses a s ​ ingle​ WIP   ➢ Costs are traced using a subsidiary ledger  ❖ Cost Card   ➢ A document on which all costs incurred   ➢ Used to measure cost of each completed unit      The 4 Cost Classifications    Cost Traceability   ★ Goal is to develop a fairly accurate measurement of costs  ■ Product/Service  ■ Sales territories  ■ Departments  ❖ Direct Costs  ➢ Costs can be conveniently and  economically traced  ■ EX. Type of metal in a car can be  traced.    ❖ Indirect Costs  ➢ Costs that cannot be conveniently or economically traced  ■ EX. Items with small value or lack of easy visibility      4    Cost Behavior  ★ The way costs responds to changes in volume of activity   ■ Analyze patterns of cost behavior to gain information  ❖ Variable Cost  ➢ A cost that changes in direct proportion to a change in productive  output  ■ Sugar  ■ Oil  ❖ Fixed Cost  ➢ A cost that remains constant within a defined range of activity  ■ Supervisor’s salary  ■ Depreciation on machinery  ■   Value­Adding Attributes  ★ Managers examine value­adding attributes of operations  ■ This information influences the design of future products  ❖ Costs of Administrative Activities   ➢ Non­value adding cost  ➢ Necessary for operation businesses     Financial Reports  ★ Cost Classifications  ❖ Product Costs  ➢ “Inventoriable” costs  ■ Includes Direct Materials, Direct Labor, and Overhead  (Indirect)  ➢ Financial Reporting of Product Costs  ■ Appears as COGS on income statements  ■ Appears on Finished Goods on balance sheets  ❖ Period Costs  ➢ Cost of resources used during accounting  period  ■ Selling and administrative expense  ■ Non Inventoriable cost  ➢ Financial Reporting of Period Costs  ■ Appears as operating expenses on  income statements      5            Additional Terms  ​ (Believed to be on exam)    ★ Administrative Costs  ○ All executive, organizational, and clerical  costs associated with the general management of an organization  rather than manufacturing, or selling.  ★ Controller  ○ The member of the top management team who is responsible for  providing relevant and timely data to managers and for preparing  financial statements for external users. The controller reports to the  CFO.  ★ Define the following: (a) direct materials, (b) indirect materials, (c) direct  labor, (d) indirect labor, and (e) manufacturing overhead.  ○ A. Direct materials are an integral part of a finished product and their  costs can be conveniently traced to it.  ○ B. Indirect materials are generally small items of material such as glue  and nails. They may be an integral part of a finished product but their  costs can be traced to the product only at great cost or inconvenience.   ○ C. Direct labor consists of labor costs that can be easily traced to  particular products. Direct labor is also called "touch labor."   ○ D. Indirect labor consists of the labor costs of janitors, supervisors,  materials handlers, and other factory workers that cannot be  conveniently traced to particular products. These labor costs are  incurred to support production, but the workers involved do not directly  work on the product.  ○ E. Manufacturing overhead includes all manufacturing costs except  direct materials and direct labor. Consequently, manufacturing overhead  6  includes indirect materials and indirect labor as well as other  manufacturing costs.      The 3 Elements of Product Costs  ★ Direct Materials  ○ Materials that become an integral part of a finished product and whose  costs can be conveniently traced to it.  ★ Direct Labor  ○ Factory labor costs that can be easily traced to individual units of product.  Also called touch labor.  ★ Manufacturing Overhead  ○ All manufacturing costs except direct materials and direct labor.  Procedures  ★ Total Product Cost  ○ Direct materials + Direct labor + Manufacturing overhead  ★ Prime Cost  ○ Direct materials + Direct labor  ★ Conversion Cost  ○ Direct labor + Manufacturing overhead  ★ Cost of Goods Manufactured  ○ Direct materials used in production   ○ + Direct labor used in production  ○ + Manufacturing overhead costs used in production  ○ + Beginning WIP inventory  ○ ­ Ending WIP inventory  ★ Cost of Goods Sold  ○ Beginning finished goods inventory   ○ + Cost of goods manufactured   ○ ­ Ending finished goods inventory  ★ Calculating Predetermined Overhead  ○ Divide the estimated total manufacturing ​overhead​ costs by the estimated  total amount of cost driver  7    8  Checklist Sheet Example    Cost  Direct  Indirect  Variable  Fixed  Cream  X    X    Cocoa  X    X    Vanilla  X    X    Sugar  X    X    Choc. Chips  X    X    Wafer  X    X    Cookies  Depreciation    X    X  on  Machinery  Sales    X    X  Person’s  Salary  Ice Cream  X    X    Maker’s  Salary  Factory Rent    X    X  Factory    X    X  Utilities  Delivery    X    X  Truck Lease  Gas, Oil,    X  X    Truck  Maintenance  Packaging    X  X    and  Wrapper  Janitor    X    X  Wages  9  Recommended Way of Doing for Statements    Materials     Beg. Balance  + Purchased Materials        =   Materials Available  ­ Ending balance   COST OF DIRECT MATERIALS          Labor        &  + MOH (5 costs!)  1. Depreciation  2. Insurance  3. Utilities  4. Indirect Labor  5. Other costs  TOTAL MANUFACTURING COST        WIP    ​+ WIP Beg. Balance   = Cost of Wip   ­ Ending Balance    = COST OF GOODS MANUFACTURED              


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