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Click to edit Master you should title style After studying this chapter,
be able to: 1. Describe managerial accounting, and the role of managerial accounting in a business. 2. Define and illustrate the following costs: direct and indirect, direct materials, direct labor, factory overhead, and product and period costs.
Click to edit Master you should title style After studying this chapter,
be able to: 3. Describe and illustrate the financial statement elements and cost relationships for a manufacturing business. 4. Describe the various uses of managerial accounting information.
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Financial accounting information is reported in statements that are useful for persons or institutions who are outside or external to the organization. Management also uses these financial statements in directing current operations and planning future operations.
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Example of Users
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Financial Accounting
Management
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Planning
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Directing
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Controlling
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Improving
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Three aspects of the management process are listed below. Match each phase to the appropriate description.
Aspect of management process Description ___Planning a. Monitoring the operating ___Controlling results of implemented plans ___Continuous and comparing the actual Improvement results with expected results. (continued)
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Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a baseball glove manufacturer. 1. _______________ Leather used to make a baseball (a) Direct materials glove (c) Factory overhead 2. _______________ Coolants for machines that sew baseball gloves (b) Direct labor 3. _______________ Wages of assembly line employees 4. _______________ Ink used to print a players autograph (c) Factory overhead on the baseball glove Left click mouse for answers. 28 For Practice: PE 1-2A, PE 1-2B
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Conversion Costs
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Identify the following costs as a (a) prime cost, (b) conversion cost, or (c) both for a baseball glove manufacturer. 1. _______________ Leather used to make a baseball (a) Prime cost glove (b) Conversion cost 2. _______________ Coolants for machines that sew baseball gloves 3. _______________ Wages of assembly line employees (c) Both 4. _______________ Ink used to print a players autograph (b) Conversion cost on the baseball glove Left click mouse for answers. 32 For Practice: PE 1-3A, PE 1-3B
Product Costs
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Product Costs
The cost of labor directly involved in converting material into the product.
Manufacturing costs other than direct materials and direct labor.
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Period Costs
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(Continued)
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(Concluded)
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Identify the following costs as a (a) product cost, or (b) period cost for a baseball glove manufacturer.
1. _______________ Leather used to make a baseball glove 2. _______________ Cost of endorsement from a professional baseball player 3. _______________ Office supplies used at the company headquarters 4. _______________ Ink used to print a players autograph on the baseball glove 39
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Identify the following costs as a (a) product cost, or (b) period cost for a baseball glove manufacturer.
1. _______________ Leather used to make a baseball (a) Product cost glove (b) Period cost 2. _______________ Cost of endorsement from a professional baseball player (b) Period cost 3. _______________ Office supplies used at the company headquarters 4. _______________ Ink used to print a players autograph (a) Product cost on the baseball glove 40
Left click the mouse to reveal answers.
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STEP 1:
Materials inventory, December 1, 2008 $ 65,000 Add: materials purchased during December 100,000 Cost of materials available for use $165,000 Less: materials inventory, Dec. 31, 2008 35,000 Cost of materials placed in production $130,000
to total manufacturing cost
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STEP 2:
from Step 1
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STEP 2:
Cost of materials placed in production Direct labor Factory overhead Total manufacturing costs added
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STEP 3:
Work in process inventory, Dec. 1, 2008 Add: total manufacturing costs added
from Step 2
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STEP 3:
Work in process inventory, Dec. 1, 2008 Add: total manufacturing costs added Total manufacturing costs Less: work in process inv, Dec 31, 2008 Cost of goods manufactured
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Manufacturing Company Income Statement with Statement of Cost of Goods Manufactured (contd)
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to income statement
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Gauntlet Company has the following information for January: Cost of materials placed in production $25,000 Direct labor 35,000 Factory overhead 20,000 Work in process inventory, January 1 30,000 Work in process inventory, January 31 25,000 Finished goods inventory, January 1 15,000 Finished goods inventory, January 31 12,000 For January, determine the (a) cost of goods manufactured, and (b) cost of goods sold.
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(a) Work in process inventory, January 1 $ 30,000 Cost of materials placed in production $25,000 Direct labor 35,000 Factory overhead 20,000 Total manufacturing costs added 80,000 Total manufacturing costs 110,000 Less: Work in process inventory, Jan. 31 25,000 Cost of goods manufactured $ 85,000
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(Continued)
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(b) Finished goods inventory, January 1 Cost of goods manufactured Cost of finished goods available for sale Less: Finished goods inventory, January 31 Cost of goods sold
(Concluded)
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