Managerial Accounting by Nathan Guannan Zhang
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Transcript of Managerial Accounting by Nathan Guannan Zhang
Mgr Acc
Managerial AccountingAllChapters
Chapter 01Nathan Zhang
I: Nature of Managerial Acc:Users/Decision Makers
Purpose of Info
Flexibility of Practice
Timeliness of Info
Time Dimension
Focus of Info
Nature of Info
I: Users/Decision MakersUsers: Managers, Employees, Purchasing, Marketing, Senior management
NOT: investors, the SEC, the IRS, creditors, analysts
I: Purpose of InfoUsed for:
planning
controlling
I: Flexibility of PracticeGAAP not required
Nonmonetary items permitted
Standardizing is difficult, if not impossible.
I: Timeliness of InfoPast, present, and future all included
Historical data as well as predictions
Used to check accuracy of predictions.
I: Time DimensionBudgets predict the future
Past, present, as well as future.
I: Focus of Info Top, middle and low-level managers.
Managerial data.
I: Nature of InfoMonetary
Nonmonetary
I: Lean ManagementLean Business Model
Lean Practices
I: Lean Business ModelCustomer Orientation
expect company to offer right product or service at right time and right price
all business is worked around the customer
I: Lean PracticesContinuous Improvement (CI)
Total Quality Management (TQM)
Just-In-Time Manufacturing (JIT)
I: Classification by BehaviorFixed Cost
Doesn't change per unit based on volume
Doesn't change overall based on volume
Variable Cost
Doesn't change per unit based on volume
Changes overall based on volume
I: Classification by TracingCost object
Thing to trace
Direct Cost
Traceable to single cost object
Indirect cost
Can't be traced to single cost object
May be traced to all cost objects
May be traced to severall cost objects.
I: Classification by ControlControllable
Not Controllable
I: Classification by RelevanceSunk Cost
Always irrelevant
Out-of-pocket cost
Sometimes relevant
Opportunity Cost
What you lose (one thing) for taking another thing - sometimes relevant
I: Classification by functionProduct
Period
I: Necessary DocumentsRaw Materials Inventory
Works in Process (WIP) Inventory
Finished Goods (FG) Inventory
I: Cost EffectsDirect Materials (DM)
Direct Labor (DL)
Factory Overhead (FOH)
Prime & Conversion Costs
Reporting Performace
(End of Ch 01)
Chapter 02NathanZhang
II: Job Order CostingDM+DL+FOH=Total Mfg Cost (TMC)
Raw Materials = RM; B/E=Begin/End
ERM+TMC-BRM=Cost of Goods Mfg (COGM)
EFG+COGM-BFG=Cost of Goods Sold (COGS)
Sales - COGS - Sellling Exp. - Adm. Exp. = Net Income (NI)
II: Predetermined OverheadPOHR = Predetermined Overhead Rate
POHR = Est. OH Costs / Est. Activity Base
Activity Base usually is DL
(End of Ch 02)(End of Ch 02)
Chapter 03NathanZhang
III: Process Order CostingEUP = Equivalent Units of Production
Solving EUP: some % DM + some % DL = Process 01. Then some % DM + some % DL = Process 02. Then take "some %" and add all "some %"'s together to get EUP.
III: EUP, Cont'dIf there are no BWIP and no EWIP, then take "Total cost assigned to Process (DM, DL, OH)" and divide that by "Total number of units started and ended this period" to get EUP
(End of Ch 03)
Chapter 04NathanZhang
IV: Activity Based CostingUnit Level Activities
Batch Level Activities
Product Level Activities
Facility Level Activities
IV: ABC MethodIdentify (ID) activities and cost pools (see previous slide)
Trace OH costs to cost pools
Determine activity rate
Assign OH costs to cost objects
IV: Disadvantages of ABCCost to implement and maintain ABC systems is extremely high for most industries other than computer and auto mfg.
Uncertainty with decision making remains even after full-scale implementation of ABC systems
IV: Advantages of ABCMore accurate OH cost allocation
More effective OH cost control
Focus on relevant factors
Better mgt of activities
(End of Ch 04)
Chapter 05NathanZhang
V: Cost-Volume-Profit (CVP)Cost-Volume-Profit (CVP) Analysis
fixed costs (FC)
fixed overhead (FOH)
variable costs (VC)
DM
DL
variable overhead (VOH)
mixed costs
V: CVP, Cont'dCVP analysis
step-wise costs
curvilinear costs
V: Cost Chartsscatter diagrams
high-low method
least-squares regression
V: Contribution Margin (CM)CM per unit = Sales price per unit - Total VC per unit
CM Ratio (CMR) = CM per unit / Sales price per unit
V: Breaking EvenBreakeven Point (BEP) in units = FC / CM per unit
BEP in $$ = FC / CMR
V: Target Aftertax IncomeDollar sales at target aftertax income = (FC + target pretax income) / CMR
Unit sales at target aftertax income = (FC + target pretax income) / CM per unit
Margin of safety (MoS :: %) = (expected sales - BEP in $$) / expected sales
Revised BEP in $$ = Revised FC / Revised CMR
V: Composite UnitsComposite Unit = EG Basic + Home Premium + Business + Ultimate (Win Vista here...) = EG some composite value
Do same for sales & VC
take sales - VC = CM per composite unit
BEP in composite units = FC / CM per composite unit
(End of Ch 05)
Chapter 06NathanZhang
VI: Absorption VS Variable CostingAbsorption (ABS): Fixed overhead included (IE DM + DL + VOH + FOH) in Product Cost
Variable (VAR): Fixed overhead not included (IE DM + DL + VOH) in Product Cost
VI: Comparison, Inc. St.'sABS Inc StRevenues SalesExpenses COGS Selling Exp. Adm Exp.Net Income (Loss)VAR Inc StSalesVariable ExpensesCMFixed ExpensesNet Income (Loss)
(End of Ch 06)
Chapter 07NathanZhang
VII: BudgetingMaster Budget
ops budgets
sales budget
merchandise purchasing budget
production budget
mfg budget
selling expense budget
gen. & adm. exp. budget
VII: More BudgetingCapital expenditures budget
Financial Budgets
cash budgets
budgeted income statement
budgeted balance sheet
(End of Ch 07)
Chapter 08NathanZhang
VIII: Cost VariancesCost variance = actual cost - standard cost
actual cost = actual price/rate * actual qty/hrs
standard cost = standard "/" * standard "/"
VIII: Cost Var Cont'dPrice variance = [actual price - std price] x actual qty
Quantity variance = [actual qty - std qty] x std price
Rate var (labor) = [actual rate - std rate] x actual hrs
Efficiency var (labor) = [actual hrs - std hrs] x std rate
VIII: Cost Var Cont'd Spending var (OH) = actual overhead -/+ budgeted overhead
Efficiency var (OH) = applied overhead -/+ budgeted overhead
(End of Ch 08)
Chapter 11NathanZhang
XI: Payback PeriodPayback period = Cost of Investment / Annual Cash Flows
XI: Net Present ValueTake the annual cash flows and multiply with a total "value of I" factor
first, add up all the "value of I" factors into a total "value of I" factor
XI: Simple Rate of ReturnSRR = Annual aftertax NI(L) / Annual Avg. Investment
Annual avg. investment = (Beg. book value + End. book value) / 2
XI: Internal Rate of ReturnTake amt. invested / net cash flows = factor of an annuity of I
take factor and look up in "PV of an annuity of I" table to find IRR
(End of Ch 11)
Chapter 12Final ChapterNathanZhang
XII: Purpose of Cash Flow StatementTo report all cash and noncash inflows and outflows
(End of Ch 12)
(End of Presentation) Have a nice day!
12/21/08
12/21/08
12/21/08