Managerial Accounting, Sept 7, 2024 session_20240914_010035_0000.pdf

MANAGERIAL ACCOUNTING September 7, 2024 session sgs,cpa, mba, lpt TOPICS FOR TODAY: COST AND COST CONCEPTS CLASSIFICATION OF COSTS ELEMENTS OF COSTS PRODUCT, PERIOD , PRIME AND CONVERSION STATEMENT OF COST OF GOODS SOLD FOR A MANUFACTURING BUSINESS WHAT IS COST?  RESOURCE S...

MANAGERIAL ACCOUNTING September 7, 2024 session sgs,cpa, mba, lpt TOPICS FOR TODAY: COST AND COST CONCEPTS CLASSIFICATION OF COSTS ELEMENTS OF COSTS PRODUCT, PERIOD , PRIME AND CONVERSION STATEMENT OF COST OF GOODS SOLD FOR A MANUFACTURING BUSINESS WHAT IS COST?  RESOURCE SACRIFICED OR FOREGONE TO ACHIEVE A PARTICULAR OBJECTIVE. IT IS THE AMOUNT PAID OR CASH EQUIVALENT VALUE EXCHANGED FOR GOODS OR SERVICES THAT WILL GIVE CURRENT OF FUTURE benefits TO THE BUSINESS ENTERPRISE COST OBJECT - anything for which cost measurement is desired. this maybe a product, service, project, brand, category or an activity a department or program. Management accounting is designed to measure and assign cost to cost objects which are chosen to help in decision-making. Accurate assignment of costs to cost objects is management accounting system’s primary objective  ACTIVITY – basic unit of work within an organization, aggregation of actions within a business entity useful to managers in planning, controlling and decision making. COST DRIVER – factor that has a direct cause-effect relationship to cost COST CLASSIFICATIONS FOR MANUFACTURING COMPANIES MANUFACTURING COSTS 1. THREE ELEMENTS OF COST – MATERIALS, LABOR AND OVERHEAD DIRECT MATERIALS – those that become an integral part of the finished product and whose costs can be conveniently traced to the finished product. INDIRECT MATERIALS – included as part of manufacturing overhead 2. DIRECT LABOR – LABOR COSTS THAT CAN BE EASILY TRACED TO INDIVIDUAL UNITS OF PRODUCT.  INDIRECT LABOR – LABOR COSTS THAT CAN NOT BE PHYSICALLY TRACED TO PARTICULAR PRODUCTS AND IS CONSIDERED MANUFACTURING OVERHEAD 3. MANUFACTURING OVERHEAD NON MANUFACTURING COSTS SELLING COSTS – ALL COSTS THAT ARE INCURRED TO SECURE CUSTOMER ORDERS AND GET THE FINISHED PRODUCT TO THE CUSTOMER ADMINISTRATIVE COSTS - COSTS ASSOCIATED WITH THE GENERAL MANAGEMENT OF AN ORGANIZATION COST CLASSIFICATIONS FOR PREPARING FINANCIAL STATEMENTS PRODUCT COSTS – ALL COSTS INVOLVED IN ACQUIRING OR MAKING A PRODUCT, ALSO KNOWN AS INVENTORIABLE COST PERIOD COSTS – ALL COSTS THAT ARE NOT PRODUCT COSTS PRIME COST – SUM OF DIRECT MATERIALS AND DIRECT LABOR CONVERSION COST – SUM OF DIRECT LABOR AND MANUFACTURING OVERHEAD COST CLASSIFICATIONS ON FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION –INVENTORY ACCOUNTS INCOME STATEMENT – STATEMENT OF COST OF GOODS SOLD VARIABLE COST – COST THAT VARIES , IN TOTAL, IN DIRECT PROPORTION TO CHANGES IN THE LEVEL OF ACTIVITY  FIXED COST – COST THAT REMAINS CONSTANT, IN TOTAL, REGARDLESS OF CHANGES IN THE LEVEL OF ACTIVITY COST CLASSIFICATIONS FOR ASSIGNING COSTS TO COST OBJECTS DIRECT AND INDIRECT COST COST CLASSIFICATIONS FOR DECISION MAKING  DIFFERENTIAL COST – A DIFFERENCE IN COSTS BETWEEN TWO ALTERNATIVES, ALSO KNOWN AS INCREMENTAL COST DIFFERENTIAL REVENUE – A DIFFERENCE IN REVENUES BETWEEN TWO ALTERNATIVES, ALSO KNOWN AS DIFFERENTIAL REVENUE  OPPORTUNITY COST – POTENTIAL BENEFIT THAT IS GIVEN UP WHEN ONE ALTERNATIVE IS SELECTED OVER ANOTHER COST OF GOODS MANUFACTURED AND COST OF GOODS SOLD SAMPLE PROBLEM PLEASE TAKE A SCREEN SHOT, THANKS... TO THE MICROSOFT EXCEL... Any questions?????...  important announcement... no seatwork no quiz, no assignment for today, for you to be able to review next meeting for the midterm summative test...BUT...on the next slide is a practice problem which you may solve.. as some sort of review.. coverage????..1. review of fin act, 2. intro to managerial accounting 3. cost and cost concepts plus statement of cost of goods manufactured and sold...  duration of the exam??? class time, 730-10:30 am face to face type of exam -- multiple choice and fill in the blanks, 30 items , 40% theory, (12 items), 60% computations (18 items) GOOD LUCK!!!... here is the practice exercise...  References: https://www.managementstudyguide.com/planning_ function.html Managerial Accounting by Garrison, et. al.  thank you for watching/listening...