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MGT223H5 (24)
Minlei Ye (21)

MGT223: ch1,2,3

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University of Toronto Mississauga
Minlei Ye

MGT223H5S Chapter 1: Managerial Accounting and the Business Environment Objectives: 1. Identify the major differences btwn financial & managerial accounting Financial Accounting Managerial Accounting 1. Users External persons who Managers who plan for make financial decisions and control an organization 2. Time focus Historical perspective Future oriented 3. Emphasis Objectivity and Relevance for verifiability planning and control 4. Importance Precision of Timeliness of information information 5. Subject focus Summarized data for Detailed segment reports the whole organization of an organization 6. GAAP Must follow GAAP Need not follow GAAP and prescribed formats or any prescribed format 7. Requirement Mandatory for Not external reports Mandatory 2. List the function of managers Planning  Directing& motivation  controlling Customer intimacy: understand and respond to you better than our competitors (Dell, Keg, Cisco) Operational excellence: We deliver products/ services faster, more conveniently and at a lower price (Walmart, WestJet etc) Product Leadership: offer high quality products (BMW, Benz) 3. Understand the role of management accountants in an organization Decentralization: all the decision making power is not centralized but spread out Line Position: Directly involved with achieving basic objectives of organization (Managers, President, Board of Directors) Staff Position: Indirectly involved with achieving basic objectives of organization (CFO, treasurer etc) The controller: manager in charge of accounting department 4. Explain the nature of importance of ethics for accountants Corporate Governance: A company that is directed and controlled (to ensure will act in interest of company Corporate Social responsibility: taking into accouting all the stakeholders when making decisions, extends beyond the legal compliance. Might include giving back to the community (Eg. Tim Hortons and the summer camps) Lean thinking model, Just in Time Production (JIT), “Push”, “pull” Chapter 2: Cost Terms, Classifications, And Cost Flow COST TERMS Direct Materials (DM): those materials that become an integral part of a finished product and can be easily/directly traced into it - Eg. Hershey Kisses: coco beans, milk, sugar Direct Labor (DL): the portion of labor that can be easily traced to a product Manufacturing overhead (MOH): all manufacturing costs other than DM& DL. These costs cannot be easily or conveniently traced to products Indirect Materials: Raw materials that become an integral part of a finished product and cannot be easily traced into it - Eg. Janitorial supplies, oil and lubricants for machines Indirect Labor: the portion of labor cost that cannot be easily traced to the product - Eg. Production manager’s salary, security guards Other MOH: - Depreciation of factory equipment - Machine maintenance cost - Factory utilities - Rent on factory Prime Cost: primary cost of making a product (DM+DL) Conversion Cost: the cost used to convert the di
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