Lectures & Tutorials
Lecture notes on Wattle prior to lecture – please print and review before class.
90-100 minutes (One go, No Break)
Lecture problem solutions will be posted on Wattle after lecture.
Tutorial solutions will be posted on Wattle after the last tutorial.
2
Introduction
1. Financial Accounting
External
Reporting
reporting to external users: investors, creditors and governmental agencies. must be based on GAAP
2. Management Accounting reporting to managers need not be GAAP compliant
Internal
Reporting
3
Purpose of Managerial Accounting
4
5
Management Accounting
Managerial Accounting
R&D
Design
Production Marketing Distribution
& Sales
Customer
Service
BUSN7031
6
Cost Classifications Classification by Traceability
Direct costs
Costs traceable to a single cost object.
Examples: material and labor cost for a product.
Indirect costs
Costs that cannot be traced to a single cost object.
Example: A maintenance expenditure benefiting two or more departments.
7
Direct Materials
Direct material costs are the expenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods.
Example:
Steel used in the frame of a mountain bike.
8
Direct Labor
Direct labor costs are the wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods.
Example:
Wages paid to a mountain bike assembly worker.
9
Factory Overhead
Factory overhead consists of all manufacturing costs that are not direct materials or direct labor and the costs cannot be separately or readily traced to finished goods.
Examples:
Indirect labor – maintenance
Indirect material – cleaning supplies
Factory utility costs
Supervisory costs
10
Flow of Physical Goods in Production
Direct
Materials
Purchased
Direct
Materials
Used
Finished
Goods
Direct
Labor
Manufacturing
Overhead
Goods
Sold
MegaLoMart
11
Identifications of Cost Classifications
* Although an assembly worker’s wages are classified as variable costs, their actual behavior depends on how workers are paid and whether their wages are based on a union contract (such as piece rate or monthly wages).
Buy raw materials.
Produce and sell finished goods.
Sell finished goods.
SaleMart
14
Manufacturer’s Balance Sheet
Merchandiser
Manufacturer
Current Assets
Current Assets
Cash
Receivables
Merchandise
Inventory
Cash
Receivables
Inventories
Raw Materials
Goods in Process
Finished Goods
The primary difference is inventory.
15
Financial Statements of a Manufacturing Company
Income Statement
Balance Sheet
16
CONQUEST, INC.
Income Statement
For the Year Ended December 31, 2011
Sales
Cost of goods sold
Gross profit on sales
Operating expenses
Income from operations
Less: Interest expense
Income before income taxes Income tax expense
Net income
The income statement is prepared using established
17
financial accounting procedures.
Financial Statements of a Manufacturing Company
CONQUEST, INC.
Partial Balance Sheet
December 31, 2011
Current Assets:
Cash and Cash Equivalents
Accounts Receivable, net
Inventories
Materials
Work in Process
Finished Goods
Total Inventories
Total current Assets
$ 60,000
190,000
$
20,000
40,000
168,000
228,000
$ 478,000
Manufacturers have three inventory accounts.
18
Inventories of a Manufacturing Business
Raw materials - inventory on hand
and
Related Documents: Essay on Inventory and Direct Labor
Job-order 6. Process 7. Job-order (contracts or projects) 8. Process 9. Job-order EXERCISE 3-24 1. Raw-material inventory, January 1 $174,200 Add: Raw-material purchases 248,300 Raw material available for use $422,500 Deduct: Raw-material inventory, January 31 161,200 Raw material used in January $261,300 Direct labor 390,000 Total prime costs incurred in January $651,300 2. Total prime cost incurred in January $651,300 Applied manufacturing overhead…
Answer: E LO: 2, 5 Type: N Chapter 3 50 15. Which of the following statements about manufacturing cost flows is false? A. Direct materials, direct labor, and manufacturing overhead are entered in the Work-inProcess Inventory account. B. The Finished-Goods Inventory account will contain entries that reflect the cost of goods sold during the period. C. The cost of units sold during the period will typically appear on the income statement. D. When…
CHAPTER 3 Product Costing and Cost Accumulation in a Batch Production Environment ANSWERS TO REVIEW QUESTIONS 3-1 (a) Use in financial accounting: In financial accounting, product costs are needed to determine the value of inventory on the balance sheet and to compute the cost-of-goods-sold expense on the income statement. b) Use in managerial accounting: In managerial accounting, product costs are needed for planning, for cost control, and for decision making. c) Use in cost…
AND CRITICAL THINKING CASES Brief Exercises B. Ex. 16.1 B. Ex. 16.2 B. Ex. 16.3 B. Ex. 16.4 B. Ex. 16.5 B. Ex. 16.6 B. Ex. 16.7 B. Ex. 16.8 B. Ex. 16.9 Topic Product vs. period costs Direct material used Cost of goods sold Materials inventory Direct labor journal entries Manufacturing overhead assigned Inventory balances Work in process balances Prime vs. conversion costs B. Ex. 16.10 Partial balance sheet Exercises 16.1 16.2 16.3 16.4 16.5 16.6 Topic Accounting terminology Basic types of manufacturing…
costing: we don’t track of each individual job or item We calculate the overage of the jobs or items Most cars in here Honda bmw benze Pepsi: Product cost: direct materials, direct labor, and manufacture overhead. Prime cost: direct material, direct labor Conversion costs: direct labor, manufacture overhead Documents used by manufacturing company 1. Job cost sheet: only used in job order costing, this document will keep track of cost each item or job.…
determined. 2. A cost accounting system consists of accounts for the various manufacturing costs. These accounts are fully integrated into the general ledger of a company. An important feature of a cost accounting system is the use of a perpetual inventory system. Such a system provides information immediately on the cost of a product. The two basic types of cost accounting systems are (a) a job order cost system and (b) a process cost system. 3. Under a job order cost system, costs are assigned…
Schedule of Cost of Goods Manufactured For the Year Ended December 31, 20x2 Direct material: Raw-material inventory, January 1 $ 20,000 Add: Purchases of raw material 90,000 Raw material available for use $110,000 Deduct: Raw-material inventory, December 31 12,500 Raw material used $97,500 Direct labor 100,000 Manufacturing overhead: Indirect material $ 5,000 Indirect labor 7,500 Utilities: plant 20,000 Depreciation: plant and equipment 30,000…
CH 1 | 1 CORRECT | | Managerial accounting is concerned with: | | | A) | reporting financial information to stockholders. | | | B) | reporting financial information to regulators. | | | C) | providing information for use within the organization. | | | D) | the financial consequences of past activities. | | | | | | Feedback:The correct answer is C: Managerial accounting is concerned with providing information to managers for use within the organization. | | 2…
One additional worker needs to be hired to operate this machine. Therefore, the regular shirts labor content = 2.5 / 5 = 0.5 minutes. The time taken per shirt = 0.5 minutes Since this is the same as the maximum time taken for a single sewing process causing the bottleneck (make cuffs), the cycle time / shirt will remain equal to 0.5 minutes Here the time taken is 2.5 min / labor / batch, which forms the bottleneck and represents the cycle time. The cycle time / shirt = 2.5 / 5 = 0…
customer feedback and objective data gathering and analysis techniques to drive process improvement? a. Theory of constraints b. Value chain c. Supply chain management d. Six sigma e. Lean thinking model Which of the following is a production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand? a. Just-in-time b. Value chain c. Supply chain management d. Work in process e. Lean thinking model Which of the following is a…