Managerial Acct

Only available on StudyMode
  • Download(s) : 16
  • Published : February 28, 2013
Open Document
Text Preview
CHAPTER 16 (fin man); chapter 1 (man)
MANAGERIAL ACCOUNTING CONCEPTS
AND PRINCIPLES

discussion questions

1.Financial accounting and managerial accounting are different in several ways. Financial accounting information is reported in statements that are useful to persons or groups outside of a company. These statements objectively report the results of past operations at fixed periods and the financial condition of the business under generally accepted accounting principles. Managerial accounting information uses both subjective and objective information to meet the specific needs of management. The information can be reported periodically or as needed by management and can be reported for the entire entity or for segments of the organization. 2.a.A line department is directly involved in the basic objectives of the organization, while a staff department provides service, assistance, or advice to line departments or other staff departments. b.(1)Sales Department

(2)Personnel Department
3.Direct materials cost
4.Prime costs are the combination of direct materials and direct labor costs, while conversion costs are the combination of direct labor costs and factory overhead costs. 5.Product costs are composed of three

elements of manufacturing costs: direct materials cost, direct labor cost, and factory overhead cost. These costs are treated as assets until the product is sold. Product costs are sometimes referred to as inventoriable costs. Period costs are costs that are used in generating revenue during the current period. They are recognized as expenses on the current period’s income statement. 6.The three inventory accounts for a manufacturing business are as follows: a.Finished goods, representing goods in the state in which they are to be sold. b.Work in process, representing goods in the process of manufacture. c.Materials, representing goods in the state in which they were acquired. 7.Finished goods, work in process, and materials

8.The cost of finished goods and the cost of work in process included the following: a.Direct materials—the costs of materials that enter directly into the finished product. b.Direct labor—the wages of factory workers who convert materials into a finished product. c.Factory overhead—the remaining costs, other than direct materials and direct labor, of operating a factory. 9.Cost of goods sold

10.A merchandising business purchases mer-
chandise (products) in a finished state for resale to customers. The cost of product sold is called cost of merchandise sold. A manufacturer makes the product it sells using direct materials, direct labor, and factory overhead. The cost of the product sold is generally called cost of goods sold.

practice exercises

PE 16–1A (FIN MAN); PE 1–1A (MAN)

Controlling (c)
Decision making (b)
Planning (a)

PE 16–1B (FIN MAN); PE 1–1B (MAN)

Directing (c)
Controlling (a)
Planning (b)

PE 16–2A (FIN MAN); PE 1–2A (MAN)

a.DM
b.DL
c.FO
d.FO

PE 16–2B (FIN MAN); PE 1–2B (MAN)

a.DM
b.FO
c.DL
d.DM (or FO if the cost is immaterially small)

PE 16–3A (FIN MAN); PE 1–3A (MAN)

a.P
b.B
c.C
d.C
PE 16–3B (FIN MAN); PE 1–3B (MAN)

a.C
b.C (or P if significant)
c.B
d.P

PE 16–4A (FIN MAN); PE 1–4A (MAN)

a.Period cost
b.Period cost
c.Product cost
d.Product cost

PE 16–4B (FIN MAN); PE 1–4B (MAN)

a.Product cost
b.Period cost
c.Period cost
d.Product cost

PE 16–5A (FIN MAN); PE 1–5A (MAN)

a.Work in process inventory, January 1$50,000
Cost of direct materials used in production$12,000
Direct labor31,000
Factory overhead 20,000
Total manufacturing costs incurred during
January63,000
Total manufacturing costs$113,000
Less work in process inventory, January 3153,000
Cost of goods manufactured$60,000

b.Finished goods inventory, January 1$21,000...
tracking img