Managerial and Cost Accounting

Managerial and Cost Accounting

Larry M. Walther? Christopher J. Skousen

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Managerial and Cost Accounting

? 2009 Larry M. Walther, under nonexclusive license to Christopher J. Skousen &

Ventus Publishing ApS. All material in this publication is copyrighted, and the exclusive

property of Larry M. Walther or his licensors (all rights reserved).

ISBN 978-87-7681-491-5

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2

Contents

Managerial and Cost Accounting

Contents

Part 1. Introduction to Managerial Accounting

9

1.

1.1

Managerial Accounting

Professional Certifications in Management Accounting

10

10

2.

2.1

2.2

2.3

2.4

2.5

2.6

2.6.1

2.6.2

2.6.3

2.7

2.7.1

2.7.2

Planning, Directing, and Controlling

Decision Making

Planning

Strategy

Positioning

Budgets

Directing

Costing

Production

Analysis

Controlling

Monitor

Scorecard

11

11

12

13

14

16

16

17

19

21

22

22

23

3.

Cost Components

26

4.

4.1

Product Versus Period Costs

Period Costs

28

28

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5.

5.1

5.2

5.3

5.4

5.5

5.6

5.7

Financial Statement Issues that are Unique to Manufacturers

Schedule of Raw Materials

Schedule of Work in Process

Schedule of Cost of Goods Manufactured

Schedule of Cost of Goods Sold

The Income Statement

Reviewing Cost of Flow Concepts for a Manufacturer

Critical Thinking About Cost Flow

29

29

30

31

31

32

32

34

Part 2. Cost-Volume-Profit and Business Scalability

36

6.

6.1

6.2

6.3

6.4

6.5

6.6

Cost Behavior

The Nature of Costs

Variable Costs

Fixed Costs

Business Implications of the Fixed Cost Structure

Economies of Scale

Dialing in Your Business Model

37

37

37

38

40

40

42

7.

7.1

7.2

7.3

7.4

Cost Behavior Analysis

Mixed Costs

High-Low Method

Method of Least Squares

Recap

44

44

45

46

49

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? UBS 2010. All rights reserved.

Contents

Managerial and Cost Accounting

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Contents

Managerial and Cost Accounting

8.

8.1

8.2

8.3

8.4

8.5

8.6

Break-Even and Target Income

Contribution Margin

Contribution Margin: Aggregated, per Unit, or Ratio?

Graphic Presentation

Break-Even Calculations

Target Income Calculations

Critical Thinking About CVP

50

50

50

51

52

53

54

9.

9.1

9.2

9.3

9.4

9.5

9.6

Sensitivity Analysis

Changing Fixed Costs

Changing Variable Costs

Blended Cost Shifts

Per Unit Revenue Shifts

Margin Beware

Margin Mathematics

55

55

56

57

57

58

59

10.

10.1

CVP for Multiple Products

Multiple Products, Selling Costs, and Margin Management

60

61

11.

Assumptions of CVP

62

Part 3. Job Costing and Modern Cost Management Systems

63

Basic Job Costing Concepts

Cost Data Determination

Conceptualizing Job Costing

Tracking Direct Labor

Tracking Direct Materials

64

64

64

66

66

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12.

12.1

12.2

12.3

12.4

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