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Intro to Management Accounting

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Intro to Management Accounting
Managerial Accounting Overview
BA 115

Management Accounting

Measures, analyzes, and reports financial and non financial information non-financial that helps managers make decisions to fulfill the goals of an organization organization.

Activity

IFRS/IAS-based Financial Reports

Generally, cannot be used for the day-to-day d t d goals of the managers.

Financial vs Managerial Acctg
MANAGERIAL
Primary users Focus and emphasis Rules of measurement and reporting Level of detail Managers (Internal) Future-oriented Need not follow GAAP Emphasizes detailed segment reports about departments, products, and customers. Emphasizes relevance. Emphasizes timeliness.

FINANCIAL
External users Past-oriented Must follow GAAP Emphasizes summary data concerning the entire organization Emphasizes objectivity and verifiability. d ifi bilit Emphasizes precision.

Other points of emphasis

What is Cost?

Cost is a resource sacrificed or forgone to achieve a specific objective (i.e., not necessarily for profit).

General Cost Classifications
Classification on the financial statements
UNEXPIRED
Balance Sheet

EXPIRED
Income statement

PRODUCT
Inventoriable

PERIOD
Expensed

General Cost Classifications
Classification on the financial statements
PRODUCT
Inventoriable

DIRECT MATERIALS
Prime Cost

DIRECT LABOR MFG OVERHEAD
Conversion Cost

General Cost Classifications
Classification on the financial statements
PERIOD
Outright expensed

SELLING ADMINISTRATIVE

General Cost Classifications
Classification for Assigning Costs to Cost Objects
• Costs are assigned to cost objects for a variety of purposes including pricing, preparing profitability studies, and controlling spending spending. • A cost object is anything for which cost data are desired – including products, customers, jobs, and organizational sub-units. b it

General Cost Classifications
Classification for Assigning Costs to g g Cost Objects
DIRECT
Cost that
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