管理会计chapter-2.ppt

Costs Terms,Concepts and Classifications ChapterTwo2-2Whycosts?wAnimportantpartofinformationsystemwAstrategywAnexample-Airlinecompany2-3Differentcostsfordifferentpurposes-costsusedinfinancialandmanagerialaccountingwWholeorsegment?wCostcomposition2-4Learning Objective 1Identifyandgiveexamplesofeachofthethreebasicmanufacturingcostcategories.2-5The ProductThe ProductDirectMaterialsDirectLaborManufacturingOverheadManufacturing Costs2-6Direct MaterialsRawmaterialsthatbecomeanintegralpartoftheproductandthatcanbeconveniently and directlytracedtoit.Example:A radio installed in an automobile2-7Direct LaborThoselaborcoststhatcanbeeasilytracedtoindividualunitsofproduct.Example:Wages paid to automobile assembly workers2-8Manufacturing costs that cannot be traced conveniently and directly to specific units produced.Manufacturing OverheadIndirect materials,indirect labor,and other manufacturing overheadWages paid to employees who are not directly involved in production work.Examples:maintenance workers,janitors and security guards.Materials used to support the production process.Examples:lubricants and cleaning supplies used in the automobile assembly plant.2-9Non-manufacturing CostsSelling CostsCosts necessary to get the order and deliver the product.Administrative CostsAll executive,organizational,and clerical costs.2-10CostClassifications2-11Learning Objective 2Distinguishbetweenproductcostsandperiodcostsandgiveexamplesofeach.2-12 Matching Principle-based on Accrual accountingCostsincurredtogenerateaparticularrevenueshouldberecognizedasexpensesinthesameperiodthattherevenueisrecognized.Economiceventsarerecognizedbymatchingrevenuestoexpenses(thematchingprinciple)atthetimeinwhichthetransactionoccursratherthanwhenpaymentismade(orreceived).2-13Product Costs Versus Period CostsProduct costs include direct materials,direct labor,and manufacturing overhead.Period costs include all selling costs and administrative costs.InventoryCost of Good SoldBalanceSheetIncomeStatementSaleExpenseIncomeStatement2-14Quick Check Whichofthefollowingcostswouldbeconsideredaperiodratherthanaproductcostinamanufacturingcompany?A.Manufacturingequipmentdepreciation.B.Propertytaxesoncorporateheadquarters.C.Directmaterialscosts.D.Electricalcoststolighttheproductionfacility.E.Salescommissions.2-15Quick Check Whichofthefollowingcostswouldbeconsideredaperiodratherthanaproductcostinamanufacturingcompany?A.Manufacturingequipmentdepreciation.B.Propertytaxesoncorporateheadquarters.C.Directmaterialscosts.D.Electricalcoststolighttheproductionfacility.E.Salescommissions.2-16Classifications of CostsDirectMaterialDirectLaborManufacturingOverheadPrimeCostConversionCostManufacturingcostsareoftenclassifiedasfollows:2-17Comparing Merchandising and Manufacturing ActivitiesMerchandisers.wBuy finished goods.wSell finished goods.Manufacturers.wBuy raw materials.wProduce and sell finished goods.MegaLoMart2-18Balance Sheet Merchandiser Current assetsuCashuReceivablesuPrepaid ExpensesuMerchandise Inventory Manufacturer Current AssetsuCashuReceivablesuPrepaid ExpensesuInventoriesRaw MaterialsWork in ProcessFinished Goods2-19 Merchandiser Current assetsuCashuReceivablesuPrepaid ExpensesuMerchandise Inventory Manufacturer Current AssetsuCashuReceivablesuPrepaid ExpensesuInventoriesRaw MaterialsWork in ProcessFinished GoodsBalance SheetPartially complete products some material,labor,or overhead has been added.Completed products awaiting sale.Materials waiting to be processed.2-20Learning Objective 3Prepareanincomestatementincludingcalculationofthecostofgoodssold.2-21The Income StatementCostofgoodssoldformanufacturersdiffersonlyslightlyfromcostofgoodssoldformerchandisers.2-22Basic Equation for Inventory AccountsBeginningbalanceAdditionsto inventory+=EndingbalanceWithdrawalsfrominventory+2-23Quick Check Ifyourinventorybalanceatthebeginningofthemonthwas$1,000,youbought$100duringthemonth,andsold$300duringthemonth,whatwouldbethebalanceattheendofthemonth?A.$1,000.B.$800.C.$1,200.D.$200.2-24Quick Check Ifyourinventorybalanceatthebeginningofthemonthwas$1,000,youbought$100duringthemonth,andsold$300duringthemonth,whatwouldbethebalanceattheendofthemonth?A.$1,000.B.$800.C.$1,200.D.$200.$1,000+$100=$1,100$1100-$300=$8002-25Learning Objective 4Prepareascheduleofcostofgoodsmanufactured.2-26Schedule of Cost of Goods ManufacturedCalculates the cost of raw material,direct labor and manufacturing overhead used in production.Calculates the manufacturing costs associated with goods that were finished during the period.2-27As items are removed from raw materials inventory and placed into the production process,they arecalled direct materials.Product Cost Flows2-28Conversion costs are costs incurred to convert the direct material into a finished product.Product Cost Flows2-29Product Cost FlowsAll manufacturing costs incurred during the period are added to the beginning balance of work in process.2-30Product Cost FlowsCosts associated with the goods that are completed during the period are transferred to finished goods inventory.2-31Product Cost Flows2-32Manufacturing Cost FlowsFinishedGoodsCost of GoodsSoldSelling andAdministrativePeriodCostsSelling andAdministrativeManufacturingOverhead Work in ProcessDirect LaborBalanceSheetCostsInventoriesIncomeStatementExpensesMaterial PurchasesRaw Materials2-33CostThe$100 listed on the balance sheet as an inventoryExpenseThe$100 expensed until the finished goods are sold that are made of the raw material PayoutPay$100 for Raw Material2-34Quick Check Beginningrawmaterialsinventorywas$32,000.Duringthemonth,$276,000ofrawmaterialwaspurchased.Acountattheendofthemonthrevealedthat$28,000ofrawmaterialwasstillpresent.Whatisthecostofdirectmaterialused?A.$276000B.$272,000C.$280,000D.$2,0002-35Quick Check Directmaterialsusedinproductiontotaled$280,000.Directlaborwas$375,000andfactoryoverheadwas$180,000.Whatweretotalmanufacturingcostsincurredforthemonth?A.$555,000B.$835,000C.$655,000D.Cannotbedetermined.2-36Quick Check Beginningworkinprocesswas$125,000.Manufacturingcostsincurredforthemonthwere$835,000.Therewere$200,000ofpartiallyfinishedgoodsremaininginworkinprocessinventoryattheendofthemonth.Whatwasthecostofgoodsmanufacturedduringthemonth?A.$1,160,000B.$910,000C.$760,000D.Cannotbedetermined.2-37Quick Check Beginningfinishedgoodsinventorywas$130,000.Thecostofgoodsmanufacturedforthemonthwas$760,000.Andtheendingfinishedgoodsinventorywas$150,000.Whatwasthecostofgoodssoldforthemonth?A.$20,000.B.$740,000.C.$780,000.D.$760,000.2-38Learning Objective 5Understandthedifferencesbetweenvariablecostsandfixedcosts.2-39Cost Classifications for Predicting Cost BehaviorHowacostwillreacttochangesinthelevelofactivitywithintherelevantrange.wTotalvariable costschangewhenactivitychanges.wTotalfixed costsremainunchangedwhenactivitychanges.2-40Variable CostYourtotal long distancetelephonebillisbasedonhowmanyminutesyoutalk.MinutesTalkedTotalLongDistanceTelephoneBill2-41Variable Cost Per UnitMinutesTalkedPerMinuteTelephoneChargeThecost per long distance minutetalkedisconstant.2-42Fixed CostYourmonthlybasic telephone billprobablydoesnotchangewhenyoumakemorelocalcalls.NumberofLocalCallsMonthlyBasicTelephoneBill2-43Fixed Cost Per UnitNumberofLocalCallsMonthlyBasicTelephoneBillperLocalCallTheaveragefixedcostper local calldecreasesasmorelocalcallsaremade.2-44Cost Classifications for Predicting Cost Behavior2-45ImportanceofunderstandingcostbehaviorwFoodcostsatahotelwAhammercosts$1,0002-46Quick Check WhichofthefollowingcostswouldbevariablewithrespecttothenumberofconessoldataBaskins&Robbinsshop?(Theremaybemorethanonecorrectanswer.)A.Thecostoflightingthestore.B.Thewagesofthestoremanager.C.Thecostoficecream.D.Thecostofnapkinsforcustomers.2-47Quick Check WhichofthefollowingcostswouldbevariablewithrespecttothenumberofconessoldataBaskins&Robbinsshop?(Theremaybemorethanonecorrectanswer.)A.Thecostoflightingthestore.B.Thewagesofthestoremanager.C.Thecostoficecream.D.Thecostofnapkinsforcustomers.2-48Learning Objective 6Understandthedifferencesbetweendirectandindirectcosts.2-49CostObjectAnythingforwhichcostdataaredesired.Examples:products,customers,jobs,organizationalsubunits,etc.2-50Assigning Costs to Cost ObjectsDirect costsCosts that can beeasily and conveniently traced to a unit of product or other cost object.Examples:direct material and direct laborIndirect costsCosts that cannot be easily and conveniently traced to a unit of product or other cost object.Example:manufacturing overhead2-51Common costwA cost that is incurred to support a number of cost objects but cannot be traced to them individually.An Example-A trade with DOD 2-52Learning Objective 7Defineandgiveexamplesofcostclassificationsusedinmakingdecisions:differentialcosts,opportunitycosts,andsunkcosts.2-53Everydecisioninvolvesachoicebetweenatleasttwoalternatives.Onlythosecostsandbenefitsthatdifferbetweenalternativesarerelevantinadecision.Allothercostsandbenefitscanandshouldbeignored.Cost Classifications for Decision Making2-54Differential Cost and RevenueCostsandrevenuesthatdifferamongalternatives.Example:You have a job paying$1,500 per month in your hometown.You have a job offer in a neighboring city that pays$2,000 per month.The commuting cost to the city is$300 per month.Differential revenue is:$2,000$1,500=$500Differential cost is:$3002-55Opportunity Cost The potential benefit that is given up when one alternative is selected over another.Example:Ifyouwerenotattendingcollege,youcouldbeearningRMB100,000peryear.YouropportunitycostofattendingcollegeforoneyearisRMB100,000.2-56Sunk Costs Sunk costs have already been incurred and cannot be changed now or in the future.They should be ignored when making decisions.Example:Youboughtanautomobilethatcost$10,000twoyearsago.The$10,000costissunkbecausewhetheryoudriveit,parkit,tradeit,orsellit,youcannotchangethe$10,000cost.2-57Quick Check SupposeyouaretryingtodecidewhethertodriveortakethetraintoPortlandtoattendaconcert.Youhaveamplecashtodoeither,butyoudontwanttowastemoneyneedlessly.Isthecostofthetrainticketrelevantinthisdecision?Inotherwords,shouldthecostofthetrainticketaffectthedecisionofwhetheryoudriveortakethetraintoPortland?A.Yes,thecostofthetrainticketisrelevant.B.No,thecostofthetrainticketisnotrelevant.2-58Quick Check SupposeyouaretryingtodecidewhethertodriveortakethetraintoPortlandtoattendaconcert.Youhaveamplecashtodoeither,butyoudontwanttowastemoneyneedlessly.Isthecostofthetrainticketrelevantinthisdecision?Inotherwords,shouldthecostofthetrainticketaffectthedecisionofwhetheryoudriveortakethetraintoPortland?A.Yes,thecostofthetrainticketisrelevant.B.No,thecostofthetrainticketisnotrelevant.2-59Quick Check SupposeyouaretryingtodecidewhethertodriveortakethetraintoPortlandtoattendaconcert.Youhaveamplecashtodoeither,butyoudontwanttowastemoneyneedlessly.Istheannualcostoflicensingyourcarrelevantinthisdecision?A.Yes,thelicensingcostisrelevant.B.No,thelicensingcostisnotrelevant.2-60Quick Check SupposeyouaretryingtodecidewhethertodriveortakethetraintoPortlandtoattendaconcert.Youhaveamplecashtodoeither,butyoudontwanttowastemoneyneedlessly.Istheannualcostoflicensingyourcarrelevantinthisdecision?A.Yesthelicensingcostisrelevant.B.No,thelicensingcostisnotrelevant.2-61Quick Check Supposethatyourcarcouldbesoldnowfor$5,000.Isthisasunkcost?A.Yes,itisasunkcost.B.No,itisnotasunkcost.2-62Quick Check Supposethatyourcarcouldbesoldnowfor$5,000.Isthisasunkcost?A.Yes,itisasunkcost.B.No,itisnotasunkcost.2-63Summary of the Types of Cost ClassificationsFinancialreportingPredictingcostbehaviorAssigningcoststocostobjectsDecisionmaking2-64End of Chapter 2