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Management and Organizational Studies 3370A/B Study Guide - Midterm Guide: Dependent And Independent Variables, Finished Good, Opportunity Cost


Department
Management and Organizational Studies
Course Code
MOS 3370A/B
Professor
Laura Timusk
Study Guide
Midterm

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MOS 3370 Review 1
Work of Management
Every organization has managers who perform several major activities, such as:
o Planning
o Controlling
o Directing/motivating
o Decision making
Planning
o Identify alternatives
o “elet alteratie that does the est jo of furtherig orgaizatio’s ojeties
o Develop budgets to guide progress toward selected alternative
Directing and motivating
o Managing day-to-day activities to keep organization running smoothly
Controlling ensures plans are being followed
Decision making intelligent, data driven decisions
o Decision making cycle make plan, implement plan, measure performance, compare
actual to planned performance
Comparison of Financial and Managerial Accounting
Managerial accounting internal users, information used to make decisions to run business
better
o Importance is based on timeliness is it relevant, usable right now
o Looking at a more specific level, looking at segments
o No rules for aagerial aoutig – data a e aipulated sie it is’t puli
reporting, used for internal purposes
Financial accounting external users, looking at past performance, etc.
o Accuracy of statements is most important
o Looking at company at entire level wide scope of view
o Must follow certain practices
Classifications of Manufacturing Costs What goes into the final product?
Direct materials
o Raw materials that become an integral part of the product that can be conveniently
traced back to it
Direct labour
o Labour costs that can be easily traced to individual units of production
Manufacturing overhead
o Manufacturing costs that cannot be easily traced directly to specific units produced
o i.e. indirect materials to support production process (i.e. lubricants, cleaning supplies in
plant)
o indirect labour wages paid to employees who are not directly involved in production
work i.e. maintenance workers, janitors, security
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Classification of Costs manufacturing costs often classified as following:
direct material and direct material = prime cost
direct labour and manufacturing overhead = conversion cost
Overtime premiums usually considered part of manufacturing overhead; product specific
overtime premiums are part of direct labour
Non-manufacturing costs
Marketing/ selling costs costs necessary to get the order and deliver the product
Administrative costs all executive, organization, clerical costs
Product Costs vs. Period Costs
Product costs include direct materials, labour, and manufacturing overhead
o All costs involved in acquiring or making product attached to product
o Inventory transferred to COGS expense account
Period costs include all selling and administrative costs
o Directly expensed in period they are occurred
Balance Sheet
Merchandiser
Current assets
o Cash
o Receivables
o Prepaids
o Merchandise inventory
Manufacturers
Current assets
o Cash
o Receivables
o Prepaid expenses
o Inventories
Raw materials material waiting to be processed
WIP partially completed products some material, labour, MOH has been
added
Finished goods awaiting sale
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The Income Statement - COGS for manufacturers differs only slightly from COGS for merchandisers
Basic Equation for Inventory Accounts
Beginning balance + additions to inventory = Ending Balance + Withdrawals from Inventory
o O/B + Additions = Total available Withdrawals = Ending Balance
Schedule of Cost of Goods Manufactured (COGM)
Calculates the cost of RM, DL, and MOH used in production
Calculates the manufacturing costs associated with goods that were finished during the period
o Conversion costs are costs incurred to convers the DM into a finished product
o All manufacturing costs incurred during the period are added to the beginning balance
of WIP
DM + DL + MOH = Total Manufacturing Cost
Total manufacturing cost costs that represent the DM, DL, MOH used to perform the
production work for finished or unfinished products for the period
Total Manufacturing Cost + WIP = COGM
Schedule:
- COGM
o OB Raw Material
o Add purchased RM
o = RM Available
o Less EB Rm
o = RM Used
- COGS
o OB Finished Goods
o Add COGM
o Less EB Finished Goods
o = COGS
Merchandising Company
Cost of goods sold:
Beg. merchandise
inventory 14,200$
+ Purchases 234,150
Goods available
for sale 248,350$
- Ending
merchandise
inventory (12,100)
= Cost of goods
sold 236,250$
Manufacturing Company
Cost of goods sold:
Beg. finished
goods inv. 14,200$
+ Cost of goods
manufactured 234,150
Goods available
for sale 248,350$
- Ending
finished goods
inventory (12,100)
= Cost of goods
sold 236,250$
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