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PRINCIPLES OF ACCOUNTING ii ACC 2033.01S INSTRUCTOR: SHARAD ASTHANA. COST ACCOUNTING : DETERMINING , MEASURING, RECORDING, AND ANALYZING COSTS MANAGERIAL ACCOUNTING : USE OF COST ACCOUNTING INFORMATION FOR PRODUCT COSTING, DECISION MAKING, PLANNING, CONTROL, AND EVALUATION. - PowerPoint PPT Presentation
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PRINCIPLES OF ACCOUNTING IIACC 2033.01S
INSTRUCTOR: SHARAD ASTHANA
COST ACCOUNTING:DETERMINING, MEASURING, RECORDING, AND ANALYZING COSTS
MANAGERIAL ACCOUNTING:USE OF COST ACCOUNTING INFORMATION FOR PRODUCT COSTING, DECISION MAKING, PLANNING, CONTROL, AND EVALUATION
OBJECTIVES OF MANAGERIAL ACCOUNTING PRODUCT COSTING DECISION MAKING PRICING PROFITABILITY ANALYSIS RESOURCE ALLOCATION PLANNING AND BUDGETING INTERNAL CONTROL PERFORMANCE EVALUATION
4
ACCOUNTING DIFFERENCESFinancial External focus Whole
organization Historical Quantitative Monetary Verifiable GAAP Formal
recordkeeping
5
Accounting DifferencesFinancial• External focus• Whole
organization• Historical• Quantitative• Monetary• Verifiable• GAAP• Formal
recordkeeping
Managerial• Internal focus• Segments or divisions• Current/projected• Quantitative/qualitative• Monetary and
nonmonetary• Timely/reasonable
estimate• Benefits exceed costs• Formal and informal
recordkeeping
DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING
FINANCIAL MORE RULES EMPHASIS ON EXPENSES FOR EXTERNAL USE USES HISTORICAL DATA MANY REGULATIONS (SUCH AS “GAAP”) SUMMARY DATA MANAGERIAL FEWER RULES EMPHASIS ON COSTS FOR INTERNAL USE USES HISTORICAL & ESTIMATED DATA FEWER REGULATIONS (NO “GAAP”) DETAILED DATA
Relationship of Financial, Management, and Cost Accounting
FINANCIALACCOUNTING
MANAGEMENTACCOUNTING
COSTACCOUNTING
Product Costs
8
Accounting BodiesFinancial• Public Company
Accounting Oversight Board (PCAOB)
• Securities and Exchange Commission (SEC)
• Financial Accounting Standards Board (FASB)
Management• Institute of
Management Accountants (IMA)
• Society of Management Accountants of Canada
• Cost Accounting Standards Board (CASB)
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TYPES OF FIRMS MANUFACTURING FIRMS: FORD,
TOYOTA, PEPSI, ETC. MERCHANDISING FIRMS: GROCERY
STORES, DRUG STORES SERVICE FIRMS: BANKS, LAW
FIRMS, CPA FIRMS, ETC.
TYPES OF INVENTORY RAW MATERIAL INVENTORY WORK-IN-PROCESS INVENTORY
FINISHED GOODS INVENTORY
IF PRODUCING 100 CHAIRS COSTS $500, HOW MUCH WILL IT COST TO PRODUCE 200 CHAIRS?
DO YOU HAVE ENOUGH INFORMATION? WHAT OTHER INFORMATION WILL YOU
NEED? HOW MUCH SHOULD WE PRICE EACH
CHAIR? WILL OUR PROFIT DOUBLE IF WE
DOUBLE PRODUCTION?
TOM SODA HAS PERMISSION TO SELL PEPSI CANS AT HIS HIGH SCHOOL FUNCTION. HE IS INTERESTED IN THE PROFITABILITY OF HIS VENTURE. A CHARGE OF $125 WILL BE LEVIED BY THE SCHOOL FOR USE OF A CONCESSION STAND. THE COST PER CAN IS 30 CENTS AND THE SELLING PRICE IS 80 CENTS (FIXED BY THE SCHOOL). TOM WANTS TO EARN A PROFIT OF $50. HOW MANY CANS MUST HE SELL?
WE HAVE 100 TONS OF WOOD. WE CAN USE THIS MATERIAL TO PRODUCE CHAIRS AND TABLES. HOW MANY OF EACH SHOULD WE PRODUCE IN AUGUST IN ORDER TO MAXIMIZE OUR PROFIT?
A PRODUCT USES THREE INPUTS A1, A2, AND A3. THE COST OF A1 GOES UP BY 10% AND THE COST OF A2 GOES DOWN BY 10%. WHAT CHANGES DO WE MAKE TO THE SELLING PRICE TO MAKE THE SAME PROFIT AS BEFORE?
WE HAVE 100 GALLONS OF A PERISHABLE ITEM (SAY, MILK) IN STOCK. THE EXPIRATION DATE IS TOMORROW. IT HAS COST US $2 PER GALLON TO PRODUCE THIS PRODUCT. WHAT IS THE MINIMUM PRICE WE SHOULD CHARGE TODAY FROM A CUSTOMER?
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