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Managerial and Cost Accounting.Indd Managerial and Cost Accounting © 2009 Larry M. Walther, under nonexclusive license to Christopher J. Skousen & Ventus Publishing ApS. All material in this publication is copyrighted, and the exclusive property of Larry M. Walther or his licensors (all rights reserved). ISBN 978-87-7681-491-5 2 Download free eBooks at bookboon.com Managerial and Cost Accounting Contents Contents Part 1. Introduction to Managerial Accounting 9 1. Managerial Accounting 10 1.1 Professional Certifi cations in Management Accounting 10 2. Planning, Directing, and Controlling 11 2.1 Decision Making 11 2.2 Planning 12 2.3 Strategy 13 2.4 Positioning 14 2.5 Budgets 16 2.6 Directing 16 2.6.1 Costing 17 2.6.2 Production 19 360° 2.6.3 Analysis 21 2.7 Controlling 22 2.7.1 Monitor 22 2.7.2 Scorecard 360° 23 thinking. 3. Cost Components 26 4. Product Versus Period Costs thinking 28 4.1 Period Costs . 28 360° thinking . 360° thinking. Discover the truth at www.deloitte.ca/careers Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. © Deloitte & Touche LLP and affiliated entities. 3 Discover the truth at www.deloitte.ca/careersClick on the ad to read more Download free eBooks at bookboon.com © Deloitte & Touche LLP and affiliated entities. Managerial and Cost Accounting Contents 5. Financial Statement Issues that are Unique to Manufacturers 29 5.1 Schedule of Raw Materials 29 5.2 Schedule of Work in Process 30 5.3 Schedule of Cost of Goods Manufactured 31 5.4 Schedule of Cost of Goods Sold 31 5.5 The Income Statement 32 5.6 Reviewing Cost of Flow Concepts for a Manufacturer 32 5.7 Critical Thinking About Cost Flow 34 Part 2. Cost-Volume-Profi t and Business Scalability 36 6. Cost Behavior 37 6.1 The Nature of Costs 37 6.2 Variable Costs 37 6.3 Fixed Costs 38 6.4 Business Implications of the Fixed Cost Structure 40 6.5 Economies of Scale 40 6.6TMP PRODUCTIONDialing in Your Business Model NY026057B 4 12/13/201342 6 x7. 4 Cost Behavior Analysis PSTANKIE 44 ACCCTR0005 gl/rv/rv/baf7.1 Mixed Costs Bookboon44 Ad Creative 7.2 High-Low Method 45 7.3 Method of Least Squares 46 7.4 Recap 49 © All rights reserved. 2013 Accenture. Accenture. 2013 Bring your talent and passion to a global organization at the forefront of business, technology and innovation. Discover how great you can be. Visit accenture.com/bookboon 4 Click on the ad to read more Download free eBooks at bookboon.com Managerial and Cost Accounting Contents 8. Break-Even and Target Income 50 8.1 Contribution Margin 50 8.2 Contribution Margin: Aggregated, per Unit, or Ratio? 50 8.3 Graphic Presentation 51 8.4 Break-Even Calculations 52 8.5 Target Income Calculations 53 8.6 Critical Thinking About CVP 54 9. Sensitivity Analysis 55 9.1 Changing Fixed Costs 55 9.2 Changing Variable Costs 56 9.3 Blended Cost Shifts 57 9.4 Per Unit Revenue Shifts 57 9.5 Margin Beware 58 9.6 Margin Mathematics 59 10. CVP for Multiple Products 60 10.1 Multiple Products, Selling Costs, and Margin Management 61 11. Assumptions of CVP 62 Part 3. Job Costing and Modern Cost Management Systems 63 12. Basic Job Costing Concepts 64 12.1 Cost Data Determination 64 12.2 Conceptualizing Job Costing 64 12.3 Tracking Direct Labor 66 12.4 Tracking Direct Materials 66 Unlock your potential eLibrary solutions from bookboon is the key eLibrary Interested in how we can help you? email [email protected] 5 Click on the ad to read more Download free eBooks at bookboon.com Managerial and Cost Accounting Contents 12.5 Tracking Overhead 67 12.6 Job Cost Sheets 69 12.7 Expanding the Illustration 69 12.8 Another Expansion of the Illustration 71 12.9 Database Versus Spreadsheets 71 12.10 Moving Beyond the Conceptual Level 72 13. Information Systems for the Job Costing Environment 73 13.1 Direct Material 73 13.2 Direct Labor 73 13.3 Overhead and Cost Drivers 74 14. Tracking Job Cost Within the Corporate Ledger 76 14.1 Direct Material 76 14.2 Direct Labor 79 14.3 Applied Factory Overhead 79 14.4 Overview 80 14.5 Financial Statement Impact Scenarios 81 14.6 Cost Flows to the Financial Statements 83 14.7 Subsidiary Accounts 83 14.8 Global Trade and Transfers 84 15. Accounting for Actual and Applied Overhead 85 15.1 The Factory Overhead Account 85 15.2 Actual Overhead 86 15.3 The Balance of Factory Overhead 86 15.4 Underapplied Overhead 87 15.5 Overapplied Overhead 88 15.6 Infl uence of Gaap 89 . 6 Click on the ad to read more Download free eBooks at bookboon.com Managerial and Cost Accounting Contents 16. Job Costing in Service, Not For-Profi t, and Governmental Environments 91 16.1 The Service Sector 92 16.2 Capacity Utilization 92 17. Modern Management of Costs and Quality 93 17.1 Global Competition 93 17.2 Kaizen 93 17.3 Lean Manufacturing 95 17.4 Just in Time Inventory 96 17.5 Total Quality Management 96 17.6 Six Sigma 97 17.7 Refl ection on Modern Cost Management 98 Part 4. Process Costing and Activity-Based Costing 99 18. Process Costing 100 18.1 Process Costing 100 18.2 Comparing Job and Process Costing 101 18.3 Introduction to the Cost of Production Report 101 18.4 Job Costing Flows 102 18.5 Process Costing Flows 103 18.6 Job Costing Flows on Job Cost Sheets 103 18.7 Process Costing Flows on Cost of Production Reports 103 19. Equivalent Units 104 19.1 Factors of Production 104 19.2 An Illustration of Equivalent Units Calculations 104 19.3 Cost per Equivalent Unit 107 The Wake the only emission we want to leave behind " #$% &'())%*+ , - . 7 Click on the ad to read more Download free eBooks at bookboon.com Managerial and Cost Accounting Contents 20. Cost Allocation to Completed Units and Units in Process 108 20.1 Cost of Production Report 109 20.2 Journal Entries 110 20.3 Subsequent Departments 112 20.4 The Big Picture 114 20.5 FIFO Process Costing 115 21. Activity-Based Costing 115 21.1 Pros of ABC 115 21.2 Cons of ABC 116 21.3 The Reality of ABC 116 21.4 A Closer Look at ABC Concepts 117 21.5 The Steps to Implement ABC 122 21.6 A Simple Analogy 123 21.7 A Case Study in ABC 124 21.8 Study Process and Costs 125 21.9 Identify Activities 126 21.10 Determine Traceable Costs and Allocation Rates 127 21.11 Assign Costs to Activities 127 21.12 Determine Per-Activity Allocation Rates 129 21.13 Apply Costs to Cost Objects 129 21.14 What Just Happened? 129 21.15 A Great Tool, But not a Panacea AXA Global Graduate Program Find out more and apply 8 Click on the ad to read more Download free eBooks at bookboon.com Managerial and Cost Accounting Introduction to Managerial Accounting Introduction to Managerial Accounting Part 1 Your goals for this “managerial accounting introduction” chapter are to learn about: x The distinguishing characteristics of managerial accounting. x The role of managerial accounting in support of planning, directing, and controlling. x Key production cost components: direct materials, direct labor, and factory overhead. x Product costs versus period costs. x Categories of inventory for manufacturers and related financial statement implications. 9 Download free eBooks at bookboon.com Managerial and Cost Accounting Introduction to Managerial Accounting 1. Managerial Accounting Early portions of this textbook dealt mostly with financial accounting. Financial accounting is concerned with reporting to external parties such as owners, analysts, and creditors. These external users rarely have access to the information that is internal to the organization, nor do they specify the exact information that will be presented. Instead, they must rely on the general reports presented by the company. Therefore, the reporting structure is well defined and standardized. The methods of preparation and the reports presented are governed by rules of various standard-setting organizations. Furthermore, the external users generally see only the summarized or aggregated data for an entity. In contrast, managers of a specific business oftentimes need or desire far more detailed information. This information must be tailored to specific decision-making tasks of managers, and its structure becomes more “free formed.” Such managerial accounting information tends to be focused on products, departments, and activities. In this context, the management process is intended to be a broad reference to encompass marketing, finance, and other disciplines. Simply stated: managerial accounting is about providing information in support of the internal management processes. Many organizations refer to their internal accounting units as departments of strategic finance. This title is more reflective of their wide range and scope of duties. Managerial accounting is quite different from financial accounting. External reporting rules are replaced by internal specifications as to how data are to be accumulated and presented. Hopefully, these internal specifications are sufficiently logical that they enable good economic decision making. For example, specific reporting periods may be replaced with access to real-time data that enable quick responses to changing conditions. And, forecasted outcomes become more critical for planning purposes. Likewise, cost information should be disseminated in a way that managers can focus on (and be held accountable for!) those business components (“segments”) under their locus of control.
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