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Lecture 5

BUS 202 Lecture Notes - Lecture 5: Accrual, Finished Good, Activity-Based Costing

Course Code
BUS 202
Joseph D' Adamo

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University of Rhode Island
BUS 202 Managerial Accounting 2016 - 2017
Joseph M. D’Adamo
Course Outline #5: Product Cost Systems
Page 1 of 33
I. Internal Reporting
A. Internal Reporting to Support Different Levels of Management and Employees
1. Upper-Level Managers
Need information about the whole entity
Information to support strategic decision-making
Aggregate information about the business with access to details
Executive Information Systems
2. Middle-Level Managers
Need information about segments of the entity
Information to support planning, evaluation and control
Aggregate information about business segments with access to details
Decision Support Systems and Transaction Processing Systems
3. Lower Level Managers and Employees
Need detailed information about specific activities
Information to support current functions
Real-time information
Transaction Processing Systems

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Course Outline #5: Product Cost Systems
Page 2 of 33
B. Internal Reporting to Support Different Management Functions
1. Basic Management Functions
a. Planning
Information about past and present conditions and estimates of the
Information to evaluate alternative courses of actions and their likely
b. Directing and Motivating
Information to implement plans and observe their effects
Encourage desirable behaviors and discourage undesirable behavior
c. Evaluating and Controlling
Authority = granted right to make certain decisions and carry out certain functions within
Responsibility = exercising granted rights within limits/constraints of grantors
Accountability = evaluate and hold responsible for the actual exercising of the granted rights
2. Types of Managerial Accounting Information
a. Profits: Past (actual) and Future (expected amounts)
Measured using GAAP concepts (accrual basis) but not required
Reported using GAAP and non-GAAP formats

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Course Outline #5: Product Cost Systems
Page 3 of 33
b. Cash Flows: Past (actual) and Future (expected amounts)
GAAP classifications not required
Cash budget more important than historical cash flow statement
c. Activities
Measurements in dollars AND units, hours, pounds, gallons, etc.
Reported by responsibilities i.e. by products, departments, etc.
d. Costs
Measured and classified in a variety of ways
II. External Financial Reporting vs. Internal Reporting
PRIMARILY GAAP F/S from Financial Managerial Accounting Reports and Analyses
Internal Reporting
o More forward-looking information with many
o Various report formats with highly-flexible
content and measurements
o Measurements in $’s, units, hours, etc.
o Information about a single business and its
relationships with other businesses,
customers, etc.
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