Professional Documents
Culture Documents
14-1
CHAPTER 14
MANAGERIAL
ACCOUNTING
Chapter
14-2
Study
Study Objectives
Objectives
Chapter
14-3
Study
Study Objectives
Objectives
Chapter
14-4
Managerial
Managerial Accounting
Accounting
Manufacturing
Manufacturing
Managerial
Managerial Managerial
Managerial Managerial
Managerial
Costs
Costs in
in
Accounting
Accounting Cost
Cost Accounting
Accounting
Financial
Financial
Basics
Basics Concepts
Concepts Today
Today
Statements
Statements
Chapter
14-6
Managerial
Managerial Accounting
Accounting Basics
Basics
Distinguishing Features
Chapter
14-7 SO 1 Explain the distinguishing features of managerial accounting.
Managerial
Managerial Accounting
Accounting Basics
Basics
Chapter
14-8 SO 1 Explain the distinguishing features of managerial accounting.
Comparing
Comparing Managerial
Managerial and
and Financial
Financial Accounting
Accounting
Similarities
Chapter
14-9 SO 1 Explain the distinguishing features of managerial accounting.
Comparing
Comparing Managerial
Managerial and
and Financial
Financial Accounting
Accounting
Differences
Illustration 14-1
Chapter
14-10 SO 1 Explain the distinguishing features of managerial accounting .
Managerial
Managerial Accounting
Accounting Basics
Basics
Review Question
Managerial accounting:
Chapter
14-11 SO 1 Explain the distinguishing features of managerial accounting.
Managerial
Managerial Accounting
Accounting Basics
Basics
Management Functions
Planning,
Directing, and
Controlling.
Chapter
14-12 SO 2 Identify the 3 broad functions of management.
Management
Management Functions
Functions
Planning
Chapter
14-13 SO 2 Identify the 3 broad functions of management.
Management
Management Functions
Functions
Directing
Chapter
14-14 SO 2 Identify the 3 broad functions of management.
Management
Management Functions
Functions
Controlling
Chapter
14-15 SO 2 Identify the 3 broad functions of management.
Organizational
Organizational Structure
Structure
Within a company, an organization chart shows:
The interrelationships of activities and
The delegation of authority and responsibility.
Chapter
14-16 Illustration 14-2
Good
Good Ethics
Ethics Good
Good Business
Business
Business Ethics:
All employees are expected to act ethically.
An increasing number of organizations have codes
of business ethics.
Despite organizational efforts:
Business scandals have caused massive investment
losses and employee layoffs.
Corporate fraud has increased 13% in last 5 years.
Employee fraud 60% of all fraud.
Financial reporting fraud (intentional misstatement
of financial reports) is most costly.
Chapter
14-17
Good
Good Ethics
Ethics Good
Good Business
Business
Creating Proper Incentives:
Companies like Motorola, IBM, and Nike expend
substantial resources to monitor and evaluate
the actions of employees and managers.
Review Question
The management of an organization performs several
broad functions. They are:
a. Planning, directing, and selling.
selling
b. Directing, manufacturing, and controlling.
c. Planning, manufacturing, and controlling.
d. Planning, directing, and controlling.
Chapter
14-20 SO 2 Identify the 3 broad functions of management.
Managerial
Managerial Cost
Cost Concepts
Concepts
Manufacturing Costs
Manufacturing consists of activities and processes
to convert raw materials into finished goods.
In contrast, a merchandising firm sells goods in the
form in which they were purchased.
Manufacturing costs are typically classified as:
Illustration 14-3
Chapter
14-21 SO 3 Define the 3 classes of manufacturing costs.
Manufacturing
Manufacturing Costs
Costs
Materials
Raw Materials:
Basic materials and parts used
in the manufacturing process.
Materials
Direct Materials :
Raw materials that can be
physically and directly associated with the
finished product during the manufacturing
process.
Chapter
14-22 SO 3 Define the 3 classes of manufacturing costs.
Manufacturing
Manufacturing Costs
Costs
Materials
Indirect Materials:
Raw materials that cannot be easily associated
with the finished product.
Chapter
14-23 SO 3 Define the 3 classes of manufacturing costs.
Manufacturing
Manufacturing Costs
Costs
Labor
Direct Labor:
Work of factory employees
that can be physically and directly
associated with converting raw
materials into finished goods.
Indirect Labor:
Work of factory employees that has no
physical association with the finished product
or for which it is impractical to trace costs to
the goods produced.
Chapter
14-24 SO 3 Define the 3 classes of manufacturing costs.
Manufacturing
Manufacturing Costs
Costs
Manufacturing Overhead
Chapter
14-25 SO 3 Define the 3 classes of manufacturing costs.
Manufacturing
Manufacturing Costs
Costs
Review Question
Which of the following is not an element of
manufacturing overhead?
Chapter
14-26 SO 3 Define the 3 classes of manufacturing costs.
Product
Product Versus
Versus Period
Period Costs
Costs
Product Costs
Components: Direct material cost, direct
labor cost, and manufacturing overhead.
Costs that are a necessary and integral
part of producing the product.
Chapter
14-28 SO 4 Distinguish between product and period costs.
Product
Product Versus
Versus Period
Period Costs
Costs
Illustration 14-4
Chapter
14-29 SO 4 Distinguish between product costs and period costs .
Manufacturing
Manufacturing Costs
Costs in
in Financial
Financial Statements
Statements
Income Statement
Chapter
SO 5 Explain the difference between a merchandising
14-30 and a manufacturing income statement.
Manufacturing
Manufacturing Costs
Costs in
in Financial
Financial Statements
Statements
Cost of Goods Sold Components
Merchandiser versus Manufacturer
Illustration 14-5
SO 5 Explain the difference between a merchandising
Chapter
14-31
and a manufacturing income statement.
Manufacturing
Manufacturing Costs
Costs in
in Financial
Financial Statements
Statements
Illustration 14-6
Review Question
For the year, Red Company has cost of goods
manufactured of $600,000, beginning balance of
finished goods inventory of $200,000, and ending
balance of finished goods inventory of $250,000.
The cost of goods sold is:
a. $450,000.
b. $500,000. Beginning Inventory $200,000
Cost of Goods Manufactured 600,000
c. $550,000. $800,000
Minus Ending Finished Goods 250,000
d. $600,000. Cost of Goods Sold $550,000
Illustration 14-7
Work in Process partially completed units of product.
Illustration 14-8
Chapter
Chapter
SO 7 Explain the difference between a merchandising and a
14-36 manufacturing balance sheet.
Manufacturing
Manufacturing Costs
Costs in
in Financial
Financial Statements
Statements
Balance Sheet - Inventories
Illustration 14-10
Chapter
SO 7 Explain the difference between a merchandising and a
14-37 manufacturing balance sheet
Manufacturing
Manufacturing Costs
Costs in
in Financial
Financial Statements
Statements
Review Question
A cost of goods manufactured schedule shows
beginning and ending inventories for:
Chapter
14-38
Managerial
Managerial Accounting
Accounting Today
Today
Chapter
14-39 SO 8 Identify trends in management accounting.
Managerial
Managerial Accounting
Accounting Today
Today
Value Chain
Refers to all activities associated with providing a product or
service.
Illustration 14-13
Chapter
14-40 SO 8 Identify trends in management accounting.
Managerial
Managerial Accounting
Accounting Today
Today
Managerial Accounting Practices
Technological Change
Quality
Increased emphasis on product quality because
goods are produced only as needed.
Total Quality Management (TQM)
- a philosophy of zero defects.
Activity-Based-Costing (ABC)
Allocates overhead based on use of activities.
Theory of Constraints
Constraints (bottlenecks ) limit the companys
potential profitability.
A specific approach to identify and manage these
constraints in order to achieve company goals.
Balanced Scorecard
Evaluates operations in an integrated fashion.
Uses both financial and non-financial measures.
Links performance measures to overall company
Chapter
objectives.
14-43 SO 8 Identify trends in management accounting.
Managerial
Managerial Accounting
Accounting Today
Today
Review Question
Which of the following managerial accounting techniques
attempts to allocate manufacturing overhead in way that
leads to more accurate product costs?
a. Just-in-time inventory.
b. Total-quality management.
c. Balanced scorecard.
d. Activity-based costing.
Chapter
14-44 SO 8 Identify trends in management accounting.
Chapter
Chapter Review
Review -- Brief
Brief Exercise
Exercise 14-5
14-5
Indicate whether each of the following costs of an
automobile manufacturer would be classified as
direct materials, direct labor, or manufacturing
overhead.
______
DM a. Windshield
______
DM b. Engine
______
DL c. Wages of assembly line worker
______
MO d. Depreciation of factory machinery
______
MO e. Factory machinery lubricants
______
DM f. Tires
______
DM g. Steering wheel
______
MO h. Salary of painting supervisor
Chapter
14-45
Chapter
Chapter Review
Review -- Brief
Brief Exercise
Exercise 14-6
14-6
Identify whether each of the following costs
should be classified as product costs or period
costs.
____________
Product a. Manufacturing overhead
____________
Period b. Selling expenses
____________
Period c. Administrative expenses
____________
Period d. Advertising expense
____________
Product e. Direct labor
____________
Product f. Direct material
Chapter
14-46
Copyright
Copyright
Copyright 2011 John Wiley & Sons, Inc. All rights reserved.
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caused by the use of these programs or from the use of the
information contained herein.
Chapter
14-47