Welcome to
Principle of Accounting II,
Managerial Accounting
ACCT 2302 Course
# 93212
Atef Abuelaish
1
Instructor
Name : Atef Abuelaish
• Married with 3 kids, Born in Cairo/Egypt.
• Like traveling, Reading, and Sports activities.
• Master of Science in Accounting, Kaplan
University.
• Master Tax Advisor, Enrolled Agent.
• Accreditation council for accountancy & Taxation
[ATP # 1101038551].
Abuelaish for 10 years.
• Working with HRAtef
Block
2
Instructor
Name : Atef Abuelaish
• Accountant with long experiences with domestic
and international companies.
• Master of Science in Accounting, Kaplan
University [3.92 GPA; Highest honor].
• Bachelor degree in accounting and diploma in
accounting applied science [3.85 GPA - highest
honor].
Atef Abuelaish
3
Contact Me
Email address:
[email protected]
Cell # 832-474-1118
Online
McGraw – Hill’s Connect
All Course materials under the course name and number.
Atef Abuelaish
4
Meet
NO.
Dates
Chapter
Topic
Homework Assignment
1
01/19
1
Managerial Accounting Concepts
and Principles.
Using Connect – 7
Questions for 60 Points.
2
01/26
2
Job Order Costing and Analysis.
Using Connect – 6
Questions for 60 Points.
3
02/02
3
Process Costing and Analysis.
Using Connect – 7
Questions for 60 Points.
4
02/09
REV.
EX 01
Chapters 1, 2, and 3
Using Connect - EXAM
# 1; 3 PARTS FOR 60
POINTS. in class
5
02/16
4
Activity-Based Costing and
Analysis.
Using Connect – 7
Questions for 60 Points.
6
02/23
5
Cost Behavior and Cost-VolumeProfit Analysis.
Using Connect – 7
Questions for 60 Points.
7
03/01
6
Variable Costing and Analysis.
Using Connect – 7
Questions for 60 Points.
Atef Abuelaish
5
Meet
NO.
Dates
Chapter
Topic
8
03/08
REV.
EX 02
9
03/15
10
03/22
7
Master Budgets and
Performance Planning.
Using Connect – 7
Questions for 60
Points.
11
03/29
8
Flexible Budgets and Standard
Costs.
Using Connect – 6
Questions for 60
Points.
12
04/05
9
Performance Measurement and
Responsibility Accounting.
13
04/12
REV.
EX 03
Using Connect – 8
Questions for 60
Points.
Using Connect - EXAM
# 3; 3 PARTS FOR 60
POINTS.
6
in class
Chapters 4, 5, and 6
Homework Assignment
Using Connect EXAM # 2; 3 PARTS
FOR 60 POINTS.
in class
NO
SPRING BREAK
CLASS
Atef Abuelaish
Chapters 7, 8, and 9
Meet
NO.
Dates
Chapter
Topic
14
04/19
10
Relevant Costing for Managerial
Decisions.
Using Connect – 8
Questions for 60
Points.
15
04/26
11
Capital Budgeting and Investment
Analysis.
Using Connect – 7
Questions for 60
Points.
16
05/03
13
Analysis of Financial Statement.
Using Connect – 6
Questions for 60
Points.
17
05/10
FINAL
COURSE FINAL EXAM
Chapters 10, 11, AND 13
Atef Abuelaish
Homework Assignment
Using Connect EXAM of 3 PARTS
FOR 60 POINTS.
in class
7
Evaluation Requirements
•
•
•
•
•
Homework – At Home
4 Quizzes
3 Exams – In Class
Final Exam – In Class
Grand Total
Atef Abuelaish
720 points
40 points
180 points
60 Points
1000 points
8
HCC Grading Scale
•
•
•
•
•
90 – 100%
80 – 89%
70 – 79%
60 – 69%
BELOW 60%
Atef Abuelaish
=
=
=
=
=
A
B
C
D
F
900 –1000 points
800 – 899 points
700 – 799 points
600 – 699 points
0 – 599 points
9
COURSE PLAN
• Syllabus: Service to direct the activities
that all of us must undertake to move
everyone from where he/she is, to where
he/she wants to be.
•
Atef Abuelaish
10
Managerial Accounting
Concepts and Principles
Chapter 1
PowerPoint Editor:
Beth Kane, MBA, CPA
Wild and Shaw
Managerial Accounting
5th Edition
Copyright © 2016 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Purpose of
Managerial Accounting
12
Managerial Accounting
Basics
Managerial accounting
provides financial and
nonfinancial information
for managers of an
organization and other
decision makers.
C1
13
Purpose of Managerial
Accounting
C1
14
Nature of Managerial
Accounting
C1
15
Fraud and Ethics in
Managerial Accounting
Fraud affects all business and it is costly: A 2014 Report to
the Nation from the Association of Certified Fraud
Examiners (ACFE) estimates the average U.S. business
loses 5% of its annual revenues to fraud.
The Institute of Management Accountants has issued a code of
ethics to help accountants involved in solving ethical dilemmas.
C1
16
Cost Classifications
17
Types of Cost Classifications
Classification by Behavior
Cost
Cost behavior refers to how
a cost will react to changes
in the level of business
activity.
• Total fixed costs do
not change when activity
changes.
Cost
Activity
Activity
C2
• Total variable costs
change in proportion
to activity changes.
18
Types of Cost Classifications
Classification by Traceability
Direct costs

Costs traceable to a
single cost object.

Examples: material
and labor cost for a
product.
C2
Indirect costs

Costs that cannot
be traced to a
single cost object.

Example: A
maintenance
expenditure
benefiting two or
more departments.
19
Comparing Product
and Period Costs
20
Types of Cost Classifications
Classification by Function
Direct
Labor
Direct
Material
Manufacturing
Overhead
Product
Period costs are expenses not attached to the product.
Selling costs are incurred to
obtain orders and to deliver
finished goods to customers.
C3
Administrative costs are
non-manufacturing costs
of staff support and
administrative functions.
21
Period and Product Costs
in Financial Statements
C3
22
Identifications of
Cost Classifications
C3
23
Cost Concepts for
Service Companies
The cost concepts described are generally
applicable to service organizations.
For example, the cost of
beverages for
passengers of Southwest
Airlines is a variable cost
based on number of
passengers.
C3
24
Following are the costs of a company that manufactures computer chips. Classify each as either a product
cost or a period cost. Then classify each of the product costs as direct material, direct labor, or factory
overhead.
1. Plastic board used to mount the chip
2. Advertising costs
3. Factory maintenance workers’ salaries
4. Real estate taxes paid on the sales office
1. Plastic board used to mount the chip
2. Advertising costs
3. Factory maintenance workers’ salaries
4. Real estate taxes paid on the sales office
5. Real estate taxes paid on the factory
6. Factory supervisor salary
7. Depreciation on factory equipment
8. Assembly worker hourly pay to make chips
Product Costs
All Factory Costs
Assets on Balance Sheet
C2/C 3
5. Real estate taxes paid on the factory
6. Factory supervisor salary
7. Depreciation on factory equipment
8. Assembly worker hourly pay to make chips
Product Costs
Direct
Direct
Factory
Material Labor Overhead
X
Period
Cost
X
X
X
X
X
X
X
Period Costs
Non-Factory Costs
Expensed on Income Statement as
Selling, General and Administrative
25
Manufacturer’s Costs
C3
26
Direct Materials
Direct material costs are the expenditures for
direct materials that are separately and readily
traced through the manufacturing process to
finished goods.
Example:
Steel used in the
frame of a
mountain bike.
C3
27
Direct Labor
Direct labor costs are the wages and salaries for
direct labor that are separately and readily
traced through the manufacturing process to
finished goods.
Example:
Wages paid to a
mountain bike
assembly worker.
C3
28
Factory Overhead
Factory overhead consists of all manufacturing
costs that are not direct materials or direct labor
and the costs cannot be separately or readily
traced to finished goods.
Examples:
Indirect labor – maintenance.
Indirect material – cleaning supplies.
Factory utility costs.
Supervisory costs.
C3
29
Prime and Conversion Costs
Manufacturing costs are often
combined as follows:
Direct
Material
Direct
Labor
Prime
Cost
C3
Manufacturing
Overhead
Conversion
Cost
30
10 Minutes
Break
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31
Balance Sheet
32
Reporting Manufacturing
Activities
Merchandisers . . .
 Buy
finished
goods.
 Sell
finished goods.
Manufacturers . . .
 Buy
raw materials.
 Produce
and sell
finished goods.
SaleMart
C4
33
Manufacturer’s Balance Sheet
MERCHANDISER
Current Assets



Cash
Receivables
Merchandise
Inventory
MANUFACTURER
Current Assets



Cash
Receivables
Inventories
Raw Materials
Goods in Process
Finished Goods
The primary difference is inventory.
C4
34
Manufacturer’s Balance Sheet
Raw
Materials
Goods in
Process
Finished
Goods
Materials
waiting to be
processed.
Partially complete
products.
Completed
products
for sale.
Can be direct
or indirect.
Material to which
some labor and/or
overhead have
been added.
C4
35
Income Statement
36
Manufacturer’s Income Statement
P1
37
Cost of Goods Sold for a
Merchandiser and Manufacturer
Cost of goods sold for
manufacturers differs
only slightly from cost
of goods sold for
merchandisers.
P1
38
NEED-TO-KNOW
Indicate whether the following financial statement items apply to a manufacturer, a merchandiser, or a
service provider. Some items apply to more than one type of organization.
1. Merchandise inventory
2. Finished goods inventory
3. Cost of goods sold
Manufacturer
4. Operating expenses
5. Cost of goods manufactured
6. Supplies inventory
Merchandiser
Produces units for sale
Purchases units for resale
Balance Sheet includes:
Raw Materials Inventory
Work in Process Inventory
Finished Goods Inventory
Balance Sheet includes:
Merchandise Inventory
Manufacturer
1. Merchandise inventory
2. Finished goods inventory
3. Cost of goods sold
4. Operating expenses
5. Cost of goods manufactured
6. Supplies inventory
P1
X
X
X
X
X
Service Provider
Does not provide a product to
its customers; no inventories.
Merchandiser
X
Service Provider
X
X
X
X
X
39
Flow of
Manufacturing
Activities
40
Activities and Cost Flows
in Manufacturing
C5
41
Schedule of Cost of
Goods Manufactured
42
Schedule of Cost of Good
Manufactured
Summarizes the types and amounts of costs
incurred in a company’s manufacturing process.
P2
+
+
=
+
–
=
Direct Materials Used
Direct Labor
Factory Overhead
Total Manufacturing Costs
Beginning Work in Process
Ending Work in Process
Cost of Goods Manufactured
43
Manufacturing Statement
P2
44
Manufacturing Statement
P2
45
Manufacturing Statement
Include all direct labor costs
incurred during the current period.
P2
46
Manufacturing Statement
P2
47
Manufacturing Statement
P2
48
Overhead Cost Flows Across
Accounting Reports
P2
49
NEED-TO-KNOW
Compute the following three measures using the information below.
1. Cost of materials used
$70,900 Cost of Direct Materials transferred from Raw Materials Inventory to Work in
Process Inventory.
2. Cost of goods manufactured
$173,900 Cost of goods completed in the current period and transferred from Work in
Process Inventory to Finished Goods Inventory.
3. Cost of goods sold
$160,500 Cost of goods leaving Finished Goods Inventory and going to the customer.
Expensed on the income statement.
Beginning raw materials inventory
Beginning work in process inventory
Beginning finished goods inventory
Raw materials purchased
Total factory overhead used
Raw Materials Inventory
Beg. Inv.
Purchases
15,500
66,000
Avail for Use
81,500
P1/P 2
10,600
Ending raw materials inventory
$10,600
Ending work in process inventory 44,000
Ending finished goods inventory
37,400
Direct labor used
38,000
Work in Process Inventory
Beg. Inv.
Matls. Used
Direct Labor
Fact. OH
Avail for Mfg.
Matls. Used
End. Inv.
$15,500
29,000
24,000
66,000
80,000
29,000
70,900
38,000
80,000
217,900
70,900
44,000
24,000
173,900
Avail for Sale 197,900
Cost of GM
End. Inv.
Finished Goods Inventory
Beg. Inv.
Cost of GM
173,900
Cost of GS
End. Inv.
160,500
37,400
50
NEED-TO-KNOW
Raw Materials Inventory
Beg. Inv.
Purchases
15,500
66,000
Avail for Use
81,500
Matls. Used
End. Inv.
10,600
Work in Process Inventory
Beg. Inv.
Matls. Used
Direct Labor
Fact. OH
Avail for Mfg.
70,900
44,000
Balance Sheet
Current assets:
Raw Materials Inventory
Work in Process Inventory
Finished Goods Inventory
Income Statement
Sales
Cost of Goods Sold
P1/P 2
Beg. Inv.
Cost of GM
24,000
173,900
Avail for Sale 197,900
Cost of GM
End. Inv.
Finished Goods Inventory
29,000
70,900
38,000
80,000
217,900
173,900
Cost of GS
End. Inv.
160,500
37,400
$10,600
44,000
37,400
$XXXXX
(160,500)
51
Trends in Managerial
Accounting
52
Trends in Managerial Accounting
Customer
Orientation
E-Commerce
Lean Practices
C6
Global
Economy
Service
Economy
Value Chain
53
Customer Orientation
C6
54
Total Quality Management
Quality improvement
applied to all aspects of
business activities.
Seek and uncover
waste.
Constant Focus on
Higher Standards
Employees encouraged
to try new methods
to improve quality.
C6
Company emphasizes
value of quality through
quality awards.
55
Just-In-Time (JIT) Manufacturing
Receive
customer
orders
Complete products
just-in-time to
ship to customers
Schedule
Production
Receive materials
just-in-time for
production
C6
Complete parts
just-in-time for
assembly into products
56
Value Chain
The value chain refers to the series of activities that add
value to a company’s products or services. Companies
can use lean practices to increase efficiency and
profits.
C6
57
Global View
58
Raw Materials
Inventory Turnover
and Days’ Sales
59
1) Raw Materials Inventory
Turnover
Raw materials
Inventory turnover =
A1
Raw materials used
Average materials
inventory
60
Important Stuff
 Raw materials Inventory turnover = Raw materials used / Average
materials inventory
 Manufacturers cost of Goods Sold (COGS) = Beg. Inventory + Purchases
Costs – End. Inventory = COGS
 Merchandisers Cost of Goods Sold = Beg. Inventory + Cost of Goods
Manufactured – End. Inventory = COGS
 Cost of Goods Manufactured = Direct Materials + Direct Labors + Factory
Overhead = Total Manufacturing Costs + Beg. Work in Progress - End.
Work in Progress = Cost of Goods Manufactured
Atef Abuelaish
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Homework assignment
 Using Connect – 7 Questions for 60 Points.
 Complete the “Connect Orientation” at Connect web site
for 10 points, before 2/15/2016.
Job Order Costing and
 Prepare chapter 2 “
Analysis.”
Happiness is having all
homework up to date
Atef Abuelaish
62
Thank you and See
You Next Week at the
Same Time, Take Care
Atef Abuelaish
63