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ACC212 Week One Notes

by: Rachel Grunert

ACC212 Week One Notes ACC212

Marketplace > University of Miami > Accounting > ACC212 > ACC212 Week One Notes
Rachel Grunert
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Notes for chapters 1 and 2 -differences between managerial and financial accounting -direct and indirect costs -product and period costs -breakdown of product cost
Managerial Accounting
Mario Perez
Class Notes
Accounting, Managerial, managerial accounting, costs




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This 4 page Class Notes was uploaded by Rachel Grunert on Tuesday January 19, 2016. The Class Notes belongs to ACC212 at University of Miami taught by Mario Perez in Spring 2016. Since its upload, it has received 43 views. For similar materials see Managerial Accounting in Accounting at University of Miami.

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Date Created: 01/19/16
January 13 , 2016 Chapter 1 5 Differences between Financial and Managerial Accounting Financial Managerial 1. Users ­external (shareholders and  ­internal  creditors) ­used to accumulate, prepare,  ­used to analyze: and analyze info to help      1) profitability (i.e. EPS ratio)management make decisions      2) liquidity (i.e. current ratio)     3) solvency (i.e. debt to    assets, debt to equity)  2. Orientation of ­historical information (past)  ­future projections in addition to  Information historical information  3. Rules  ­US GAAP (generally accepted  ­NO RULES accounting principles)  ­you have complete control over ­IFRS (international financial  the format of the documents  reporting standards)  4. Timeliness ­quarterly (10­Q) ­as needed  ­annually (10­K)  5. Level of  ­less detailed  looks at a  ­more detailed Detail  company as a whole  ­divided into business segments i.e. Pepsi Co. is segmented into: beverages, frito lay, &  restaurants ­can be segmented by category, region, product, etc.  3 Main Functions of Management 1. Planning  Creates goals and objects  Budgets= monetary goals  2. Controlling   Compare budget vs. results   Difference between budget and results is known as a variance 3. Decision Making  Management makes adjustments in order to achieve their objectives  January 15 , 2016 Chapter 2 Direct Costs: costs that are easily traceable  Indirect Costs: costs that are NOT easily traceable; also known as “shared” costs  [shared costs are allocated and then split] Example Walmart has 25+ different departments.  Salary of grocery manager= direct cost  Rent for the entire store= indirect cost  Product Costs Cost of inventory Cost of buying or cost of making the inventory  Inventory= asset on balance sheet  Once inventory is sold it becomes cost of goods sold (which is an expense) on  the income statement  Period Costs  Selling and administrative expenses  Reported on the income statement  Retailer Product Cost (buying the inventory):   Purchase price + freight in  + insurance while in transit + taxes________________ = cost of product    Manufacturer Product Cost (making the inventory) 1. Direct materials­ raw materials that become part of the finished product (i.e. for a  car: the engine, glass, screws, seats, etc.)  2. Direct Labor­ cost of workers on the assembly line 3. Manufacturing overhead (key words= AT THE FACTORY) 1. indirect materials­ materials used at the factory that do not become part of  the final product. 2. indirect labor­ managers, supervisors, engineers, janitors, etc. at the factory  3. other= rent, insurance, utilities, depreciation at the factory  Prime costs= direct materials and direct labor Conversion costs= direct labor and manufacturing overhead ***direct labor is BOTH a prime and conversion cost  CLASS EXAMPLE: Product Cost vs. Period Costs Sunset Inc. had the following costs for July 2015:  Advertising expense $40,000 Period Raw materials used in  $175,000 Product (direct materials) production Supplies used at the  $5,750 Product (manufacturing overhead/indirect  factory  materials) Sales commissions $38,500 Period  Depreciation of equip. at  $19,750 Product (manufacturing overhead/other) the factory  Assembly line workers  $150,000 Product (direct labor) Depreciation of sales office $14,500 Period  equip.  Factory janitors  $25,000 Product (manufacturing overhead/indirect  labor) Required: 1. What is the total amount of manufacturing overhead? $50,500 (5750 + 19,750 + 25,000)= supplies + depreciation of factory equip. + janitors 2. What is the total amount of product costs? $375,500 (175,000 + 150,000 + 50,500)= direct materials + direct labor + manufacturing  overhead 3. What is the total amount of prime costs? $325,000 (175,000 + 150,000)= direct materials + direct labor  4. What is the total amount of conversion costs? $200,500 (50,500 + 150,000)= manufacturing overhead + direct labor 5. What is the total amount of period costs? $93,000 (40,000 + 38,500 + 14,500)= advertising expense + commissions + depreciation  of sales office equipment 


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