ACCG101 Lecture Notes - Lecture 10: Financial Accounting, Financial Statement, Direct Labor Cost

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scarletsquirrel639

19 Jun 2018

School

Macquarie University

Department

Accounting and Corporate Governance

Course

ACCG101

Professor

Rajni MALA

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Management Accounting (Ch. 8)

ACCG101 –Week 10

2015 Session 1 –Stanley & Rajni

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Learning Objectives

1. What is management accounting and how it is different to

financial accounting?

2. explain three ways in which costs are used by management

for decision making (p. 344)

3. define and identify the three manufacturing cost elements —

direct materials, direct labour and factory overhead (pp. 348–

50)

4. explain the basic nature of absorption costing and a cost

allocation based on cost behaviour (pp. 350–1)

5. identify the essential differences in the financial statements

for retail and manufacturing entities

6. prepare a cost of goods manufactured statement (pp. 351–

3), including the completion of a worksheet (pp. 353–62)

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WHAT IS MANAGEMENT

ACCOUNTING?

“Management accounting refers to the processes and

techniques that focus on the effective and efficient

use of organisational resources* to support

managers in their tasks of enhancing both customer

value and shareholder value.”

*Resources –can be financial or non-financial, including: information,

work processes, employees, loyal customers and committed suppliers

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Document Summary

50: explain the basic nature of absorption costing and a cost allocation based on cost behaviour (pp. 350 1) identify the essential differences in the financial statements for retail and manufacturing entities. 5: prepare a cost of goods manufactured statement (pp. 3), including the completion of a worksheet (pp. Management accounting refers to the processes and techniques that focus on the effective and efficient use of organisational resources* to support managers in their tasks of enhancing both customer value and shareholder value. *resources can be financial or non-financial, including: information, work processes, employees, loyal customers and committed suppliers. Produced as needed in whatever form is required. Produced at standardised intervals as determined by regulation. Cost information is crucial for the planning, control and evaluating functions performed by management. Direct costs: can be traced to a product (e. g. machine hours used to produce ipads)

Related Questions

1. Pet Energy Therapy Association (PETA) treats peoplesâ pets,and has the following cost structure:

Charge per therapy session $100

Variable cost per therapy session $ 20

Fixed costs $100,000

They expect to perform 2,000 two hour session each year (8/day,5 days/week, 50 weeks/year).

A. Construct PETAâs profit and loss statement.Profit/Loss $

B. How many sessions must PETAâs perform tobreakeven?

C. To earn a profit of $80,000, how many sessions mustthey provide this year?

D. If there is one fulltime employee, fully booked, who spendsone hour on each session (8 sessions per day, 40 per week,2,000/year), what would we need to assume about the additionalsessions needed to earn $100,000?

St. Payne Med Center is using the step-down method to allocatecosts. They have two support departments (Record Keeping andCleaning), and two patient service departments (Eye Care and DentalCare). Some of the Record Keeping costs are allocated to Cleaningbefore the support department costs are allocated to patientservice departments. Record Keeping costs are allocated based onthe number of employees, while Cleaning costs are allocated by thenumber or rooms. The following data has been collected:

Support Departments Patient Revenue Departments

Record Keeping Cleaning Eye Care Dental Care

Department Costs $ 13,000 $10,000 $32,000 $60,000

Number of Employees 2 4 3 6

Number of Rooms 1 1 2 3

a. What amount of the Record Keeping is allocated toCleaning?

b. What amount of the Record Keeping is allocated to Eye Care?$

c. What amount of the Record Keeping is allocated to DentalCare? $

d. What amount of the Cleaning is allocated to Eye Care?$

e. What amount of the Cleaning is allocated to Dental Care?$

f. After Allocation, What are Eye Careâs total costs?$

g. After Allocation, What are Dental Careâs total costs?

lemonbuffalo358

Paul Stanley specializes in manufacturing motorcycle helmets.During the current period, the following costs were incurred.

For each cost, indicate whether the cost would be considered tobe DM--direct material; DL--direct labor; OH--factory overhead; orPC-period cost.

1. Maintenance costs on factory building _______

2. Factory manager's salary ________

3. Advertising for helmets ________

4. Sales commissions ________

5. Depreciation on factory building ________

6. Rent on factory equipment ________

7. Insurance on factory building ________

8. Plastic used to make helmet ________

9. Utility costs for factory ________

10. Supplies for general office ________

11. Wages for assembly line workers ________

12. Depreciation of office equipment ________

13. Glue and thread used to make the helmet ________

14. Wages of factory janitor ________

limeyak572

Chapter 20 is about various methods of inventory management andsimplified costing methods. Regarding goods for sale,what are the six categories of costs? What is EOQ and leadtime--define and explain their significance relative to inventorycost management in three sentences. Explain in two sentences howJust-in-time may lead to a different outcome than EOQ and whenwould each be appropriate. Distinguish between MRP systems and JITsystems for manufacturing. What is lean accounting (define withintwo sentences? How does backflush costing simplify traditionalinventory costing systems (one sentence)?

Book: Horngren, Datar & Rajan, 2015 Cost Accounting15 edition. ISBN-10: 0133803813 ,ISBN-13: 9780133803815

ACCG101 Lecture Notes - Lecture 10: Financial Accounting, Financial Statement, Direct Labor Cost

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