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Summary - Managerial accounting
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A summary of the subject managerial accounting, with notes from all the classes, theory and exercises made in class with answers from the proffesor.
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Managerial AccountingChapter 1
Financial accounting= periodic, external, rules & regulations and historical
Managerial accounting= internal, continuous, specifications of users and future-oriented
3 types of inventory of production company
1. Materials inventory
2. (Work in) process inventory
3. Finished products inventory
Only costs of items you sold go to income statement
Product costs = inventoriable costs
Production costs = non-inventoriable costs
Calculation of the cost of goods sold for a organisation
- Core = manufacturing process à always 3 types of costs that are combined in the
manufacturing process (direct material, direct labour, overhead) Income statement à COGS
- Unfinished products go to the WIP (Work in process inventory) balance sheet
- Unused materials go to the balance sheet
Calculation COGS à see ppt
- Total manufacturing costs = Direct material costs + Direct labour costs + overhead costs
Exercise PPT
1. Direct material inventory = 105 + 365 – ? = 385 à 85
+ Direct material purchases
- Ending materials inventory
= direct material costs (materials used)
2. Fixed manufacturing overhead costs = 450 – 265 = 185
Total overhead costs
- variable costs
= fixed costs
3. Direct manufacturing labour costs = 385 + ? + 450 = 1610 à 775
Direct material costs
+ direct labour costs
+ manufacturing overhead costs
= Total manufacturing costs
4. Work-in-process inventory = 230 + 1610 - ? = 1660 à 180
Beginning WIP
+ total manufacturing costs
- Ending WIP
, = Cost of goods manufactured
5. Cost of finished goods available for sale =130 + 1660 = 1790
Beginning finished goods inventory
+ Cost of goods manufactured
= Cost of goods available of sale
- ending finished goods inventory
= COGS
6. Finished goods inventory = 1790 – ? = 1770 à 20
Income statement exercise
3-28 Solution
1. BEP = Break even Point
= Fixed costs/ Unit contribution Margin
= 2 250 000/ 40 – 30 (10% sales commissions) à 225 000 Units
2. A) Target sales volume = 2 250 000 + 600 – 30 = 285 000 units
, B) Operating income – income tax = net income
100% (? = 857 143) - 30% (?) = 70% (600 000)
2250000 + 857 – 30 = 310 714 Units
3. A) 2 250 000 + 857 143 2/ 11.50 = 270 186 Units
B) 2 250 000 + 857 – 30.50
C) 800 000 + 650 000 + 857 – 33 = 329 592 Units
3-30
1. Option 1
Price 1500
Unit variable costs 1275 (25% from 1500 + 900)
Fixed costs 0
No BEP
Option 2
Price 1500
Unit variable costs 900
Fixed costs 30 000
BEP = 30 – 900 = 50 Units
Option 1 is preferred because you have profit from te beginning
Profit 1 225Q Profit 2 + 600Q-30000
Q = 80
3-33
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