Ksiegowosc prezentacja, Prezentacje z Matematyka finansowa

Pobierz Ksiegowosc prezentacja i więcej Prezentacje w PDF z Matematyka finansowa tylko na Docsity! Course material: Chapter 1 of Garrison 17e BCOR 2120: Managerial Accounting Chapter 1 Cost Concepts 1 Needs of Management 2  Financial accounting is concerned with reporting financial information to external parties, such as stockholders, creditors, and regulators. Managerial accounting is concerned with providing information to managers within an organization so that they can formulate plans, control operations, and make decisions. Classifications of Manufacturing Costs 2. Accounting for costs in manufacturing companies The Product Direct Materials irect aterials Direct Labor ir t r Manufacturing Overhead f t ri r 5 Manufacturing Costs  Manufacturing costs • 1. Direct materials o Raw materials that become an integral part of the product (aka. finished good) and that can be __________ directly to it. o E.g., Seats or radio installed in a car made by Ford. 6  Manufacturing costs • 1. Direct materials • 2. Direct labor o Those labor costs that can be __________ to individual units of product. o E.g.,Wages paid to Ford assembly workers. Manufacturing Costs 7 Nonmanufacturing Costs  Nonmanufacturing costs • Selling costs o Costs necessary to secure customer orders and get the finished product into the hands of the customer. o e.g., advertising, shipping, sales commissions, sales travel • Administrative costs o All executive, organizational, and clerical costs associated with the general management of an organization. o e.g., executive compensation, general accounting, etc. • Aka. Selling, general, and administrative costs, or SG&A 10 In Class Exercise Your Boat, Inc., is a small company that assembles custom sailboats from components supplied by various manufacturers. Its assembly shop and retail sales store are housed in a small boathouse. 11 Cost Classification (DM, DL, MO, Selling, Administrative) 1. Wages of employees who build sailboats.   2. Advertising in newspaper.   3. Aluminum mast installed in sailboat.   4. Wages of company’s bookkeeper.   5. Depreciation on power tools.   3. Preparing External Financial Reports Product costs (aka. Inventoriable costs) include all costs involved in acquiring or making a product. Such costs include direct materials, direct labor, and manufacturing overhead in the case of manufactured goods. Period costs (aka. Expensed costs) include all selling and administrative expenses. Inventory Cost of Good Sold Balance Sheet Income Statement Costs “attached” to product Expense Income Statement  Matching principle: expenses are matched with the revenue they helped generate. 12 Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions. 15 In Class Exercise 4. Predicting cost behavior in response to changes in activity Cost behavior refers to how a cost will react to changes in the level of activity. The most common classifications are:  Variable costs  Fixed costs  Mixed costs 16 Variable Costs  A variable cost varies, in total, in direct proportion to changes in the level of activity. • Your total texting bill is based on how many texts you send.  Eg. Direct materials, direct labor, COGS for a manufacturing company, variable elements of manufacturing overhead, such as indirect materials, supplies, and power, and variable elements of selling and administrative expenses, such as commissions and shipping costs. Number of Texts Sent To ta l T ex ti n g B ill 17 Fixed Costs  A fixed cost is __________ within the __________. In other words, fixed costs do not change for changes in activity that fall within the “relevant range.” • Your monthly contract fee for your cell phone is fixed for the number of monthly minutes in your contract (for calls). The monthly contract fee does not change based on the number of calls you make.  Eg. straight-line depreciation, insurance, property taxes, rent, supervisory salaries, administrative salaries, and advertising. Number of Minutes Used Within Monthly Plan M o n th ly C e ll P h o n e C o n tr ac t Fe e 20 Fixed Cost Per Unit  when expressed on a per unit basis, a fixed cost is inversely related to activity—the per unit cost decreases when activity rises and increases when activity falls. • Within the monthly contract allotment, the average fixed cost per cell phone call made decreases as more calls are made. Number of Minutes Used Within Monthly Plan M o n th ly C e ll P h o n e C o n tr ac t Fe e 21 Relevant Range A straight line closely approximates a curvilinear variable cost line within the relevant range. tr i t li l l r i t r ili r ri l t li it i t r l t r . Activity To ta l C o st Economist’s Curvilinear Cost Function The Linearity Assumption and the Relevant Range Accountant’s Straight-Line Approximation (constant unit variable cost) Cost Classifications for Predicting Cost Behavior 25 Cost In Total Per Unit Variable Fixed In Class Exercise Which of the following costs would be variable with respect to the number of ice cream cones sold at a Baskin & Robbins? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers. Fixed Monthly Utility Charge Variable Cost per KW Activity (Kilowatt Hours) To ta l U ti lit y C o st X Y A mixed cost contains both variable and fixed elements. Consider the example of utility cost. Mixed Costs – Part 1 Total m ixed cost In Class Exercise A coffee stand pays $1,100 per week to operate in a suburban mall and each cup of coffee costs $0.26 to make. Fill in the following table: 30   1,800 cups per week 1,900 cups per week 2,000 cups per week Fixed cost       Variable cost       Total cost       Average cost per cup       In Class Exercise Electric vehicle manufacturers view the cost of their batteries as a: A. Direct material cost B. Product cost C. Variable cost D. All of above 31 5. Making decisions  Differential costs/revenues are those costs/revenues that differ among alternatives. • A subset of alternatives may have common costs or revenues • Only differential costs/revenues are relevant when selecting among alternatives.  Example • Disneyland could pay employees $10 per hour or $12 per hour to sell churros. Annually, Churro materials are projected to cost $500K and they project $1M in churro sales in both scenarios. Assume employees work 2,000 hours per year. o Differential revenues: $0 per employee o Differential costs: $4,000 ($2 x 2,000 hours) per employee Oh boy! Way to line my pockets! 32 In Class Exercise The Sorrento Hotel’s VP of operations would like to replace the hotel’s computer terminals at the registration desk with attractive state-of-the-art flat-panel displays. However, the hotel's chef believes the funds would be better spent on a new bulk freezer. Classify each item below. Leave blank if none apply. 35 Item   Differential Cost Opportunity Cost Sunk Cost Cost of the new flat-panel displays       Cost of the old computer terminals       Rent on the space occupied by registration desk       Wages of registration desk personnel       Benefits from a new freezer       Costs of maintaining the old computer terminals       Cost of removing the old computer terminals       Cost of existing registration desk wiring       Traditional vs. Contribution Format Income Statements Used primarily for external reporting. Used primarily by management. 36 Contribution Margin  Contribution Margin • Sales – Variable Costs (sometimes expressed as % of sales). • Capacity to “cover” fixed costs from operating the firm. • Useful for planning and decision-making (will revisit later). o Cost-volume-profit analysis (Chapter 5). o Segmented reporting of profit data (Chapter 6). o Budgeting (Chapter 8). o Special decisions such as pricing and make-or-buy analysis (Chapter 13). 37 Summary of Cost Classifications Purpose of Cost Classification Assigning costs to cost objects Accounting for costs in manufacturing companies Preparing financial statements Predicting cost behavior in response to changes in activity Making decisions Cost Classifications Direct costs (can be easily traced) * Indirect costs (cannot be easily traced) Manufacturing costs + Direct materials + Direct labor + Manufacturing overhead + Nonmanufacturing costs » Selling costs + Administrative costs + Product costs (inventoriable) Period costs (expensed) * Variable costs (proportional to activity) + Fixed costs (constant in total) * Mixed costs (has variable and fixed elements) * Relevant costs (differs between alternatives) Irrelevant costs (should be ignored) LMU|LA a Marymount 40 In Class Exercise A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product. Ture False 41 In Class Exercise Wages paid to production supervisors would be classified as manufacturing overhead. Ture False 42