Acct1511 Summer 2012

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School of Accounting ACCT 1511: Accounting and Financial Management 1B Summer Session, 2012

Lecture Materials for Classes 10 -12 Management Accounting 10. Management Accounting: Review 11. Costing Systems 12. Budgeting for Planning and Control

Student Handout
Lecturer: Nicole Ang Website: http://lms-blackboard.telt.unsw.edu.au/webapps/portal/frameset.jsp

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School of Accounting ACCT 1511: Accounting and Financial Management 1B Summer Session, 2012

Class 10 Review of Introduction to Management Accounting and Cost Concepts Student Handout
Contents: 1. Learning Objectives (LO) 2. Tutorial Questions 3. Lecture Materials 4. Additional Reading Lecturer: Nicole Ang

Website: http://lms-blackboard.telt.unsw.edu.au/webapps/portal/frameset.jsp

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Introduction and Learning Objectives

In this class you will be given a brief review of some of the basic cost concepts you were introduced to in ACCT1501. At the end of this class, you should be able to: • • Understand ways in which costs may be classified Identify and provide examples of the 3 cost types – direct materials (DM), direct labour (DL), and manufacturing overheads (OH) – involved in the product manufacturing process Prepare a simple schedule of cost of goods manufactured



Tutorial Questions for Class 11
None

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Class 10

Management Accounting Class 10 Review Class 11 Costing systems Class 12 Budgeting

ACCT1511: AFM1B Management Accounting:
Review of Intro and Cost Concepts

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Lecture Outline for Class 9

1. What is Management Accounting?
 Area of accounting concerned with the provision

 Cost concepts and classification
– Cost concepts – Classification

of information to all levels of management
 So that management is able to carry out g y

planning, directing and motivating, and controlling responsibilities.  Key focus: Adding value!

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Introduction to Cost Concepts and Classification

Cost Classification
Cost Classification Function Manufacturing M f t i Non-manufacturing N f t i Selling & Admin Fixed Fi d Behaviour Mixed Mi d Variable V i bl

 “Cost is ... value sacrificed for goods and services that are expected to bring a current or future benefit to the organisation.” T&G Supplement p.3 – Not necessarily the same as expenses  Recall from 1A that there are many ways of classifying

Direct Materials Labour

Indirect Overhead

cost
– Function or Behaviour – Function: Manufacturing or not, Direct & Indirect costs – Behaviour: Fixed, Variable, Mixed

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L1
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5.1 Cost classification - Functional
Function Manufacturing Direct Materials Labour Indirect Overhead Non-manufacturing Selling & Admin

Manufacturing Costs
 Costs incurred in the process of converting raw

materials into finished goods
 These can be further classified as direct and

indirect i di t

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Direct manufacturing costs
 Direct costs – Those costs that can be traced to a cost object, in a convenient and cost-effective way e.g.,

Indirect Manufacturing Costs: Overhead
 Includes costs that cannot be economically &

conveniently associated with a particular cost object
• Indirect materials • Indirect labour • Other costs

– Allocated to cost object

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Cost classification
Direct materials Manufacturing overhead Direct labour
 Examples of each?

5.2.1 Cost flow – Manufacturing Organisation Materials acquisition Cash Raw materials inventory

Production
Work-in-process inventory

Sale
Finished goods inventory COGS

Other asset and liability accounts

DL -Wages

Overhead

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L2
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5.2.1 Cost flow – What if more than one WIP account? Materials acquisition Cash Raw materials inventory

What if more than one WIP account?
Raw materials inventory Work-in-process Inventory 1 Work-in-process Inventory 2

Production
Work-in-process Inventory 1 Work-in-process Inventory 2

Y
Other asset and liability accounts

Y

Wages

Dr WIP1...
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