Unit 1 Managerial Accounting

In: Business and Management

Submitted By marinewife
Words 499
Pages 2
Unit 1 IP
By Amber Brooker
June 14, 2013

In this essay I am a manager in an accounting department and would like to hire another managerial accountant. The CEO is not convinced, so I must convince him.

Manager Report
Accounting has two different purposes: the first is reporting for external users and other is for internal users like management. Because of this, accounting can be put into two different categories: financial accounting and managerial accounting.
Financial Accounting gives us a view of the financial position of the company. It is management’s responsibility to keep the accounting records in a way that gives us the correct view of the company; it must be free from any material misstatement, which may distort the reader. In order for it to be conveyed properly, management has to follow certain rules and regulation such as GAAP, IAS, etc. Managerial accounting helps with the planning & control, as well as the decision making activities of the company. The success of the business depends on the planning and the correct decision making in keeping the facts and figures related to the situation, this is what the managerial accounting does.
So, Financial Accounting is used for external reporting purpose and the managerial accounting is used for internal reporting purpose. Financial Accounting emphasizes on the financial aspect and the Managerial Accounting is the planning and decision making aspect.
Most of the time, reports are created or made for management purposes and don’t meet the requirement of certain standards, like inventory valuation. The absorption costing method is allowed – but only while the under cost accounting reports are created by using direct costing- because it is not allowed to report by this method. But, if the adjustment is done for the difference in direct costing and absorption costing, then…...

Similar Documents

Managerial Accounting

...CHAPTER 1 Managerial Accounting ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems *1. Explain the distinguishing features of managerial accounting. 1, 2, 3 1 1 1 *2. Identify the three broad functions of management. 4, 5, 6, 7, 8 2, 3 1 *3. Define the three classes of manufacturing costs. 11, 12 4, 5, 7 2 2, 3, 4, 5, 6 1A, 2A 1B, 2B *4. Distinguish between product and period costs. 13 6 2 3, 4, 5, 7, 13 1A, 2A 1B, 2B *5. Explain the difference between a merchandising and a manufacturing income statement. 9, 14 8, 12, 13, 14, 15, 17 3A, 4A, 5A 3B, 4B, 5B *6. Indicate how cost of goods manufactured is determined. 15, 16, 17, 18 8, 10, 11 3 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 3A, 4A, 5A 3B, 4B, 5B *7. Explain the difference between a merchandising and a manufacturing balance sheet. 10, 19, 20, 21 9 14, 15, 16, 17 3A, 4A 3B, 4B *8. Identify trends in managerial accounting. 22, 23, 24 25, 26 4 18 *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to the chapter. ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Classify manufacturing costs into different...

Words: 8161 - Pages: 33

Managerial Accounting

...|Name of Course |Managerial Accounting | |Course Code |EBF 2043 | |Credit hours |3 | |Prerequisite |Accounting | |Synopsis |The course introduces the vital role played by management accounting and the information provided by management accounting information | | |systems (MAIS) in a firm or an organisation. Management accounting is used for decision making, learning, planning and controlling | | |activities that are supporting operational and strategic needs. It also supports continuous learning and improvement activities and | | |serves as a linkage between strategy and execution of that strategy. | |Learning outcomes |At the end of this course, students are able to: | | |Compare and explain......

Words: 2279 - Pages: 10

Managerial Accounting

...and manufacturing. We will scrutinize the similarities and differences in the flow of costs in these organizations, focusing particularly on how they accumulate costs for valuing inventory and reporting income. Because cost allocations play an integral role in this process, we end our discussion of this module with a brief overview of the mechanics of cost allocations. What we are going to discuss in this module is important because we need data to estimate costs and benefits. Invariably, we get this data from the accounting system and most systems are set up to comply with GAAP. Accordingly, it behooves us to understand how such systems work. All costs incurred are eventually recognized as expense in the income statement. However, some costs are recognized as expenses immediately and some costs are recognized as expense after a lag. The timing with which the costs of acquiring assets or services are recognized as expense is an important issue in accounting. An expense is defined as the cost incurred when an asset is used up or sold for the purpose of generating revenue. The terms product cost and period cost are used to describe the timing with which various expenses are recognized. A product cost is a cost assigned to goods that were either purchased for resale or produced for sale. In the period of the sale, the product costs are recognized as an expense called cost of goods sold. GAAP requires that costs are grouped according to business function. ......

Words: 2711 - Pages: 11

Managerial Accounting Chapter 1

...CHAPTER 1 THE NATURE AND PURPOSE OF ACCOUNTING Problems Problem 1-3 The missing numbers are: Year 1 |Gross margin |$9,000 | |Tax expense |1,120 | Year 2 |Sales |$11,968 | |Profit before taxes |2,547 | Year 3 |Cost of goods sold |$2,886 | |Other expenses |6,296 | Other accounting equations such as the following are also illustrated by this problem: Gross margin = Sales - Cost of goods sold Profit before taxes = Gross margin - Other expenses Net income = Profit before taxes - Tax expense The instructor may want to point out to the students that ratios are often used by managers to construct projected financial statements. Year 4 is an example of this application. In order to estimate Year 4, the key ratios to compute are: | |Year 1 |Year 2 |Year 3 |Average | |Sales | 100.0% | 100.0% | 100.0% | 100.0% | |Gross margin | 75.0 | 75.0 | 75.0 | 75.0% | |Profit before taxes | | ...

Words: 1282 - Pages: 6

Managerial Accounting

... Principles of Managerial Accounting—Fall 2013 Competencies |Competency |Description | |1 |Know difference between managerial and financial accounting. | |(Ch. 1-2) |Managerial accounting – provision of accounting info for a company’s internal users. It is the firms internal | |Q 1-6 |accounting system and is designed to support information needs for managers. (provide planning, controlling, | | |and decision making info) Internal accounting | | |Financial accounting – producing info for external users, including investors, creditors, customers, suppliers,| | |government agencies, and labor unions. External accounting | | |Identify cost classifications—Direct Materials, Direct Labor, Manufacturing Overhead, Nonmanufacturing costs. | | |Direct materials – materials that are part of the final product and can be directly traced to the goods being | | |produced. (tires on cars, wood in dining room table, alcohol in cologne, denim in jeans) | | |Direct labor – labor that can be directly traced to the goods being......

Words: 1092 - Pages: 5

Managerial Accounting

...THE ACCOUNTING REVIEW Vol. 88, No. 2 2013 pp. 463–498 American Accounting Association DOI: 10.2308/accr-50318 Managerial Ability and Earnings Quality Peter R. Demerjian Emory University Baruch Lev New York University Melissa F. Lewis University of Utah Sarah E. McVay University of Washington ABSTRACT: We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings. Keywords: managerial ability; managerial efficiency; earnings quality; accruals quality. Data Availability: Data are publicly available from the sources identified in the text. I. INTRODUCTION W e examine the relation between managerial ability and earnings quality. We anticipate that superior managers are more knowledgeable of their business, leading to better judgments and estimates and, thus, higher quality earnings.1 Alternatively, the benefit We thank two anonymous reviewers, Asher Curtis, Patty Dechow, Ilia Dichev, Weili Ge, Marlene Plumlee, Phil Shane, Terry Shevlin, Wayne Thomas (editor), Ben Whipple, and workshop participants at the 2010 Kapnick Accounting......

Words: 18713 - Pages: 75

Managerial Accounting

...MANAGERIAL ACCOUNTING SOMNATH DAS BASICS OF MANAGERIAL ACCOUNTING Purpose of the course - familiarize you with: 1. Managerial accounting concepts. 2. Managerial accounting practices. 3. Use of managerial accounting information for decision making. 4. Pitfalls. Accounting is a branch of study concerned with the generation ( identification & measurement ) and provision (Communication) of information. Managerial accounting is in particular accounting for the internal management of organizations. A. Financial versus Managerial Accounting Financial Accounting Management Accounting Approach ! unifying concept: assets=equities ! no underlying unity-- many approaches Rules ! G.A.A.P. ! no general principles ! mandatory ! mostly optional Measurement ! almost exclusively $ ! many non-financial elements ! emphasis on precision, objectivity ! subjective estimates Past/Future ! based on past ! many future estimates and forecasts Aggregation ! overall summary of business ! very segmented ! general purpose information ! specific purpose reports Frequency ! less/mandatory frequency ! more frequent and optional Similarity ! basic data source same End result ! ends with financial statements ! integral part of other business aspects B. Cost Accounting Terminology 1. Nature of Cost Cost - A sacrifice of......

Words: 2563 - Pages: 11

Notes 1 for Introduction of Managerial Accounting

...cannot be traced … Cost-allocation base—a systematic way to link an indirect cost or group of indirect costs to cost objects Costing Systems:In a JOB COSTING SYSTEM, the cost object is a unit or multiple units of a distinct product or service which we call a job. Each job generally uses different amounts of resources. In a PROCESS COSTING SYSTEM, the cost object is masses of identical or similar units of a product or service. In this type of system, we divide the total cost of producing an identical or similar product or service by the total number of units produced to obtain a per-unit cost. Actual costing—allocates: Indirect costs based on the actual indirect-cost rates times the actual activity consumption. Normal Costing—allocates: Indirect costs based on the budgeted indirect-cost rates times the actual activity consumption. Both methods allocate direct costs to a cost object by using actual direct-cost rates times actual consumption. Seven-Step Job Costing: I.dentify the job that is the chosen cost object.2 Identify the direct costs of the job.3.Select the cost-allocation base(s) to use for allocating indirect costs to the job.4 Identify the Indirect costs associated with each cost-allocation base. (Determine the appropriate cost pools that are necessary.) 5 Compute the Rate per Unit of each cost-allocate base used to allocate indirect costs to the job (normal costing so use budgeted values) 6. Compute the indirect costs allocated to the job: Budgeted......

Words: 1522 - Pages: 7

Managerial Accounting

...H. Xue Managerial Accounting 2015 Spring Homework 1 (Individual Assignment, Due on 02/11) 1. Das Doors Inc. has recorded the following costs at various volumes of production: Production Volume Total Costs 600,000 $700,000 400,000 500,000 200,000 300,000 Determine the fixed cost and per-unit variable cost using High-Low method. 2. Adams Company sells a single product. The product sells for $100 per unit. The company’s variable expenses are 80% of sales and its fixed expenses total $150,000 per year. a: What is the company’s contribution margin ratio? b: What is the company’s break-even point? (Give answer in dollars and in units.) 3. Jefferson Company reported $4,000,000 of sales during the month and incurred variable expenses totaling $2,800,000 and fixed expenses totaling $720,000. A total of 80,000 units were produced and sold last month. The company has no beginning or ending inventories. a: What is the company’s total contribution margin and contribution margin per unit? b: How many units would the company have to sell to achieve a desired target profit of $600,000? c: What is the company’s break-even point in sales dollars? d: What is the company’s margin of safety? e: What is the company's degree of operating leverage? 4. Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular......

Words: 622 - Pages: 3

Managerial Accounting 1 Chapter 4

...Problem 5-37 (1) Machine setups 5 setups x $2,000 = $10,000 Raw materials 10,000 pounds x $2.00 = 20,000 Hazardous materials 2,000 pounds x $5.00= 10,000 Inspections 10 inspections x $75.00= 750 Machine hours 500 machine hours x $10= 5,000 Total $45,750 (2) Overhead cost per box $45,750/1,000 = $45.75 (3) Single predetermined rate $625,000/20,000 = $31.25 (4a) Raw material 10,000 pounds x $2 = $20,000 Machine hours 500 machine hours x $10 = 5,000 Budgeted overhead 500 machine hours x $31.25 = 15,625 $40,625 (b) Per box of chemicals $40,625/1,000 = $40.63 (5) These two product costing systems result in such widely differing costs because of the inaccuracy of the traditional single volume based overhead rate. The use of machine hours in the pre-determined rate does not reflect the usage of other activities during production. I would recommend the activity based costing system because of the accuracy of costs for each product, and it results in much better control over overhead costs. (6) Problem 5-38 (1) Machine setups 3 setups x $2,000 = $6,000 Raw material 900 pounds = 1,800 Hazardous material 300 pounds = 1,500 Inspections 3 inspections = 225 Machine hours 50 machine hours = 500 Total $10,025 $10,025/100 = $100.25 + $120 +$40 = $260.25 (2) Problem 5-35 (1) Type A predetermined overhead rate: Direct......

Words: 938 - Pages: 4

Managerial Accounting

...* Question 1 1 out of 1 points | | | Managerial accounting is primarily focused on | | | | | Selected Answer: | B. providing managers with relevant information to help achieve organizational goals. | Answers: | A. providing the Internal Revenue Service with information to determine the amount of taxes owed. | | B. providing creditors information on the status of their loans. | | C. providing managers with relevant information to help achieve organizational goals. | | D. providing investors with useful information for valuing securities. | Response Feedback: | Rationale: As the name implies, managerial accounting focuses on the information needs of managers internal to the business, unlike financial accounting, which addresses the information needs of investors, creditors, and other external stakeholders.LO: LO: 1Topic: Focus of Managerial Accounting | | | | | * Question 2 1 out of 1 points | | | In order to be useful to managers, management accounting reports | | | | | Selected Answer: | D. should be prepared to meet the specific needs of decision makers. | Answers: | A. should be prepared to meet the specific needs of decision makers. | | B. should be prepared according to Generally Accepted Accounting Principals. | | C. should not be prepared prior to the end of a fiscal reporting period. | | D. should be prepared according to the stated Institute of Management Accounting guidelines. | Response......

Words: 13491 - Pages: 54

Managerial Accounting

...this report is a proposal to implement managerial decisions that could enable Triton Corporation to cut costs and improve on its returns. Initially Triton Corporation went into a recession but has recently emerged as a well performing company to realize the recent $15.2 million in 2014. Having a six operating divisions, Triton Corporation management have to craft decisions that will in the future ensure better performance. Organizations in the contemporary business environment have been faced with challenges pertaining to allocation of resources that are inevitably scarce. As a rationale, any business is in place to create value for the shareholders and also be in a position to comply with the going concern principle of sustainability. This company has therefore enlisted the services of an MBA intern like me to help in formulation of strategies that could steer forward the operations ensuring the past occurrences of a recession are not a repeat. The three major tasks ahead of me is to ensure proper planning of the manufacturing processes to make sure that little waste of resources is realized and secondly, come up with processes and activities that provide high value addition. The application of managerial accounting strategies in any environment are aimed at providing proper planning in all departments to ensure that decisions are well formulated and the organizational resources are utilized to the optimal. Besides, managerial accounting techniques will be sought by......

Words: 4268 - Pages: 18

Managerial Accounting

...wiL1084x_fm_i-xxiv_1.indd Page i 1/10/11 7:53:00 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 Managerial Accounting John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia 3 rd edition wiL1084x_fm_i-xxiv_1.indd Page ii 1/10/11 9:14:31 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 To my students and family, especially Kimberly, Jonathan, Stephanie, and Trevor. To my wife Linda and children, Erin, Emily, and Jacob. MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2012, 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811084-9 MHID 0-07-811084-X Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim...

Words: 10500 - Pages: 42

Managerial Accounting

...Chapter 1 Managerial Accounting and the Business Environment Solutions to Questions 1-1 Managerial accounting is concerned with providing information to managers for use within the organization. Financial accounting is concerned with providing information to stockholders, creditors, and others outside of the organization. 1-2 Essentially, managers carry out three major activities in an organization: planning, directing and motivating, and controlling. All three activities involve decision making. 1-3 The Planning and Control Cycle involves formulating plans, implementing plans, measuring performance, and evaluating differences between planned and actual performance. 1-4 A line position is directly related to the achievement of the basic objectives of the organization. A staff position is not directly related to the achievement of those objectives; rather, it is supportive, providing services and assistance to other parts of the organization. 1-5 In contrast to financial accounting, managerial accounting: (1) focuses on the needs of the manager; (2) places more emphasis on the future; (3) emphasizes relevance and flexibility, rather than precision; (4) emphasizes the segments of an organization; (5) is not governed by GAAP; and (6) is not mandatory. 1-6 A number of benefits accrue from reduced setup time. First, reduced setup time allows a company to produce in smaller batches, which in turn reduces the level of inventories. Second, reduced setup time allows a company to......

Words: 2462 - Pages: 10

Managerial Accounting

...Unit 1 IP Managerial Accounting Sheri Ann Heil American InterContinental University To: John Smith-CEO From: Sheri Heil-Manager/accounting department Date: February 12, 2012 Re: Hiring managerial accountant to focus on internal accounting Introduction This memo will explain the objectives of having another managerial accountant that would focus on internal accounting for the company. Above all this person will help organize these systems to be even more reliable for the board of directors and management to make concise decisions. Therefore making the meetings easier to connect with the internal accounting systems for the corporation, and help to clarify government regulations and corporate policies. The Objectives and Characteristics of an Internal Accounting System With this in mind, objectives of an internal accounting system are that it will support, encourage, and protect management practices. The general purpose for internal account system is that it supports the financial decision making and also supports the general decision making. This internal accounting system will help clarify that the government regulations are followed, all organization policies are compiled with, financial information will be reliable so that the board of directors and management can make these decisions correctly. Therefore, internal accounting systems will make sure that the assets and records of the firm are not stolen, misused or destroyed (M.U.S.E.,......

Words: 520 - Pages: 3