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This 3 page Class Notes was uploaded by Alessandra Grillo on Sunday February 1, 2015. The Class Notes belongs to ACC212 at University of Miami taught by Mario Perez in Fall. Since its upload, it has received 45 views. For similar materials see Managieral Accounting in Accounting at University of Miami.
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Date Created: 02/01/15
Alessandra Grillo ACC212 Managerial Accounting Purpose to provide management with information in order to make decisions 1 Collect prepare and analyze useful information 2 Three Functions of Management 3 4 5 6 7 a Planning creating goals and objectives strategy budget goals in terms of money b Controlling compare budget vs the actual results there are always going to be differences have to make adjustments when necessary c Decision making allocate resources money resources assets in order to achieve our goals 5 Main differences between nancial and managerial a Users i Financial main external users creditors banks and shareholders pro tability dividends stock price Rules i US GAAP for publicly traded companies ii Outside US international nancial reporting standards IFRS for publicly traded companies iii The SEC requires quarterly nancials 100 and also the annual report 10K c Timeliness of information i Managerial can request income statement daily d Level of detail managerial is more detailed e Orientation of information i Financial accounting historical information ii Managerial budgets future predictions and information both historical and future information Difference between direct costs and indirect costs a Direct costs costs that are easily traceable b Indirect costs costs that are not easily traceable Rent utilities insurance moneyshared costs a Allocate it by department b Split it by department Product costs vs Period costs a Product costs costs of our inventory cost of buying the inventory or making the inventory i Reported on balance sheet until sold once sold it becomes cost of good sold expense b Period costs selling and admin expenses directly on income statement i Selling Rent at sales of ce marketing advertising commissions ii Admin expenses legal fees salary CEO accountants Product costs retailer vs manufacturer a Retailer merchandiser i Purchase pricewhat they pay the vendor 1Plus freightin 2Plus taxes customdutiestariffs 3Plus insurance while in transit aCOST b b Manufacturer i Direct materiasraw materials that become part of nished product ii Direct laborassemby line workers humans that are making the product iii Manufacturing overhead 1ndirect materials materials and supplies used at the factory that do not become part of nished product 2lndirect labor supervisors managers janitors at the factory 30ther rent utilities insurance iv If it is not at the factory then it is selling and product cost v Direct materials and direct labor vi Manufacturing overhead indirect costs vii Direct materials and direct labor prime costs viii Direct labor and manufacturing overhead conversion cost 8 3 Types of Cost Behavior a Variable costs remain the same per unit regardless of activity as activity goes up total variable cost go up i ie Hourly employees commissions b Fixed Costs remain the same in total within a relevant range regardless of activity as activity goes up xed cost per unit goes down i ie Rent salary employees c Mixed Costs cost that is both xed and variable 9 For any business total costs total xed costs total variable costs 10 Y a bx Y total cost A total xed Bx total variable cost Additional Vocab 1 Budget detailed plan for the future that is usually expressed in formal quantitative terms 2 Segment part or activity of an organization about which managers would like cost revenue or pro t data 3 Planning involves establishing goals and specifying how to achieve them 4 Controlling involves gathering feedback to ensure the plan is being properly executed or modi ed as circumstances change 5 Committed xed costs represent organizational investments with a multiyear planning horizon that cant be signi cantly reduced even for short periods of time without making fundamental changes Job Order Costing Manufacturing companies two methods that can be used to calculate the cost per unit 0 The item that you make or produce determines which method you use 0 Product cost direct materials direct labor manufacturing overhead 0 Job order costing under this method we keep track of the costs for each individual item job 0 Every item or job has its own spreadsheet 0 Lamborghini Maybach etc use this methoddon t build many carshave a spreadsheet for each one that they manufacturing 0 Boeing airlinesarge quantities but not millions 0 Process costing under this method we don t keep track of each individual item 0 At the end of the period we are going to calculate the average cost per item unit 0 Companies like Toyota average cost by type of caron average a Camry costs x amount of moneycannot do item by item because volume is too high 1 Job order costing a Each job item i Cost sheet spreadsheet 1Direct materials used 2Direct labor costs aDirect materials and direct labor are easily traceable b Manufacturing overhead i Rent depreciation insurance indirect labor indirect materials 1Need to gure out a way to allocate or split money aJob 1 bJob 2 cJob 3 c At end of the period we need to make an adlustment i The adjustment will be recorded as part of cost of goods sold expense ii Actual overhead gt applied allocated 1Cost of goods sold increases pro t decreases 2Actual overhead lt applied allocated aCost of goods sold decreases pro t increases iii Do not know actual overhead until December 31 but every time you nish a job you need to gure out what was the cost of that job iv At the beginning of the period we will calculate an estimated overhead rate 1Estimated manufacturing overhead alocation rate application Estimated activity 0 Activity machine hours labor hours 100000 20000 machine hours So 5 of manufacturing overhead per machine hour Manufacturing Company 3 types of inventory 0 Raw materials inventory rst Workinprocess inventory second 0 Finished goods inventory third 0 Then becomes cost of goods sold
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