Module 4 Notes
Module 4 Notes ACG 3074
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This 3 page Class Notes was uploaded by Julianna Smith on Saturday February 27, 2016. The Class Notes belongs to ACG 3074 at University of South Florida taught by Christine Andrews in Spring 2016. Since its upload, it has received 11 views. For similar materials see Managerial Accounting for Non-majors in Accounting at University of South Florida.
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Date Created: 02/27/16
Managerial Accounting for Non-Majors Chapter 16 – Introduction to Managerial Accounting -financial accounting – focuses on preparing financial accountants, follows GAAP -managerial accounting – focuses on accounting tools managers use to run a business -Company & Inventory Types: -ServiceNo Inventory -MerchandisingMerchandise Inventory -ManufacturingRaw Materials, Work-in-Process, and Finished Goods Inventory -Period Cost – expensed when incurred -Product Cost – part of inventory (balance sheet), or expensed when sold (cost of goods sold) -Service Company – company that sells service (time, skills, and/or knowledge) Period Cost -Merchandising Company – company that results products previously bought from suppliers Product Cost Beginning Merchandise Inventory +Purchases and Freight In Cost of Goods Available for Sale -Ending Merchandise Inventory Cost of Goods Sold -Manufacturing Company – company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products Raw Materials Inventory (RM) – materials used to manufacture a product Work-in-Process Inventory (WIP) – goods that have been started in the manufacturing process but are not yet complete Finished Goods Inventory (FG) – completed goods that have not yet been sold Beginning Finished Goods Inventory +Cost of Goods Manufactured Cost of Goods Available for Sale -Ending Finished Goods Inventory Cost of Goods Sold -Management Accountability to Stakeholders -Suppliers (Operating) provide products and servicesmaking timely payments to suppliers -Employees (Operating) provide time and expertiseproviding safe and productive work environment and paying wages and salaries -Customers (Operating) provide cashproviding products and services that are safe and defect free; backing up products and services provided -Asset vendors (Investing) provide long-term assetsmaking timely payments to vendors -Investors (Financing) provide cash and other assetsproviding a return on investment -Creditors (Financing) provide cashrepaying principal and interest -Governments (Affect Society) provide permission to operateobeying laws and paying taxes -Communities (Affect Society) provide human and physical resourcesoperating in an ethical manner to support community; ensuring company’s environmental impact does not harm the community -Costs Classification -Direct Cost – cost that can be easily and cost-effectively traced to a cost object -Cost Object – anything for which managers want a separate measurement of cost -Indirect Cost – cost that cannot be easily or cost-effectively traced to a cost object -Direct Materials (DM) – materials that become a physical part of a finished product and whose costs are easily traced to the finished product -Direct Labor (DL) – labor cost of employees who convert raw materials into finished products -Manufacturing Overhead (MOH) – manufacturing costs that cannot be easily and cost-effectively traced to a cost objectincludes all manufacturing costs except direct materials and direct labor -Indirect Materials – materials used in making a product but whose costs either cannot be conveniently traced directly to specific finished products or are not large enough to justify tracing to specific product -Indirect Labor – labor costs for activities that support production process but either cannot be conveniently traced directly to specific finished products or are not large enough to justify tracing to specific product -Prime Costs – direct materials plus direct labor -Conversion Costs – cost to convert raw materials into finished goodsDirect Labor plus Manufacturing Overhead -Raw Material Inventory Beginning Inventory of Raw Materials + Purchases of Raw Materials + Freight In = Direct Materials Available for Use - Ending Inventory of Raw Materials = Direct Materials Used -Work-in-Process Inventory Beginning Inventory + Direct Materials Used + Direct Labor + Manufacturing Overhead = Total Manufacturing Costs to Account For - Ending Inventory = Cost of Goods Manufactured -Finished Goods Inventory Beginning Inventory + Cost of Goods Manufactured = Cost of Goods Available for Sale - Ending Inventory = Cost of Goods Sold -Calculating Unit Product Cost Cost of goods manufactured / Total units produced = Units product cost Equations: Accounting Equation Assets = Liabilities + Equity Expanded Accounting Equation Assets = Liabilities + Common Stock – Dividends + Revenues - Expenses Stockholders’ Equity Equation Beginning Equity + Common Stock + Net Income (or – Net Loss) – Dividends = Ending Equity Ending Equity – Beginning Equity - Common Stock + Dividends = Net Income (Loss) Net Income Formula Revenues – Expenses = Net Income (Loss) Merchandise Inventory Sales Revenue – Cost of Goods Sold = Gross Profit Gross Profit – Operating Expenses = Net Income Gross Profit Percentage Gross Profit Percentage = Gross Profit / Net Sales Revenue Calculating Unit Product Cost Units Product Cost = Cost of goods manufactured / Total units produced
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