Managerial accounting, Dispense di Economia Manageriale

Scarica Managerial accounting e più Dispense in PDF di Economia Manageriale solo su Docsity! INTRODUCTION -clan control=Controls based on values -Organizational control= control for tasks/activities -Business model = value proposition + target of customers + key processes + key resources (human, materials...) + partnerships (with customers, suppliers, competitors...) + distribution channel (where I sell my product) ● MANAGERIAL ACCOUNTING= MANAGEMENT ACCOUNTING(practices such as budgeting or producing costing)= MANAGEMENT ACCOUNTING SYSTEM(use of MA to achieve some goals)= MANAGEMENT CONTROL SYSTEM=(MAS + other controls such as personal or clan controls)= ORGANIZATIONAL CONTROLS(control built into activities such as statistical ones). It is used for planning(establishing goals + specifying how to achieve them), controlling(gathering feedback to ensure that plans are being followed + put them in the performance reports) and decision making activities. ● DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING MANAGERIAL ACCOUNTING= used by managers(internal users) 1. Planning= establish goals and strategies on how to achieve them 2. Controlling= gather feedback(performance reports that compare actual results with the budget) to ensure plans are being followed 3. Decision making= making a selection among alternatives - what to sell - who to sell it to - how to execute —--------------------------------------------------------------------------------------------- CHAPTER 1 -COSTS CONCEPT AND CLASSIFICATION ● PURPOSES OF COST CLASSIFICATION different cost classification for different purposes= Costs are classified differently depending on the purpose of their use. There are 5 ways of classifying costs: 1. Assigning costs to cost object(anything for which cost data are desired)= calculate the cost of things a) direct costs= that can be easily and conveniently traced to a specific cost object (a unit of product)(ex. direct material)(exactly calculate the cost of something)= 1 to 1 relationship(ex. Rector to Uni) b) indirect costs= that cannot be easily and conveniently traced to a unit of product(ex. manufacturing overhead)= 1 to many relationship (ex. Rector to Uni departments) - common costs= indirect costs incurred to support a number of cost objects that can’t be traced individually(it’s not convenient) It depends on the cost object. The bigger the cost the more likely it's going to be direct. ex. a) wages of nurses(cost), pediatric department(cost object)=DIRECT incurrence of variable costs)[raw material(is a true or proportionately cost)] If expressed on a per unit basis it remains constant(ex. 10$ per minute) - Step-Variable Costs= cost behavior patterns. Resource obtained only in large chunks(ex. maintenance workers) whose costs increase or decrease only in response to fairly wide changes in activity. b) Fixed Costs= cost that remains constant regardless of changes in the level of activity(ex. basic telephone bill)= it doesn’t change when you make more calls) If expressed on a per unit basis= fixed costs decrease as the activity increases(ex. as we make more calls fixed costs decrease) - Scale Economy Effect= Types of Fixed Costs= a) Committed= long-term(multiyear), organizational investments that cannot be significantly reduced in the short term without making fundamental changes(12 months)(ex. Depreciation on Equipment) b) Discretionary= annual investments that can be altered in the short-term by current managerial decisions with minimal damage.(ex. Advertising Research and Development) The Linearity Assumption and the Relevant Range= costs are strictly linear(relation between cost and activity is a straight line). The relevant range= range of activity within which the assumption that cost behavior is strictly linear is valid. It pertains to fixed cost as well as variable costs. c) Mixed Costs\Semi Variable Costs= (contains both variable and fixed elements) - The total mixed cost line is expressed as a linear equation: y=a+bx. y=tot mixed cost, a=total fixed cost, b=variable cost per unit, x=level of activity) - The steeper the slope the higher the variable costs per unit. 5. For Making decisions= Used to choose between alternatives. Costs are divided into: - Relevant Costs and Benefits= they have to be considered when making a decision. - Irrelevant Costs and Benefits= they don’t have to be considered when making a decision. IMPORTANT CONCEPTS: - Differential\Incremental Cost and Revenue= a future cost that differs between any 2 alternatives. They are always relevant costs. They can be fixed or variable. - Sunk Cost= costs that have already been incurred and cannot be changed. They are not differential costs, so ignore them when making decisions. - Opportunity Cost= the potential benefit that is given up when one alternative is selected over another. They aren’t recorded in accounting records. They are relevant. COST TERMINOLOGY: ● Direct Materials(variable) ● Direct Labor ● Variable Manufacturing Overhead ● Fixed Manufacturing Overhead ● Total Manufacturing Overhead ● Variable Selling Expense(non-manufacturing overhead) ● Fixed Selling Expense(\\) ● Total Selling Expense(\\) ● Variable Administrative Expense ● Fixed Administrative Expense ● Total Administrative Expense CALCULATIONS: ● Product Cost= Direct materials + Direct labor + Manufacturing overhead 2. Variable Costing(V.C)= Product Costs or (Variable costs)(Direct Materials + Direct Labor + Variable Manufacturing Overhead ), Period Costs or (Fixed costs)((Fixed Manufacturing Overhead + Variable and Administrative Expenses + Fixed Selling and Administrative Expenses) How to assign costs to cost objects(direct and indirect) Traditional Costing Systems(A.C): 1. we have to allocate overhead cost accounts(indirect costs) to cost centers(departments) 2. costs allocated to call centers are now allocated to cost objects(products and services) The A.C divides into: a) Process Costing= - a company produces many units of a same product, this enables assigning the same average cost per unit - each product unit is the same - (ex. Coca-Cola mixing and bottling beverages) b) Job-Order Costing= - many different products are produced at the same time - products are manufactured to order(we need an order by the customer) - The uniqueness of each product means that we need to allocate cost to each job. - (ex. walt Disney Studios and movie production) How to use Documents within the Job-Order Costing system 1. Trace direct costs(direct materials and direct labor) to jobs 2. Trace indirect costs(manufacturing overhead) to jobs. Costs of jobs are divided in units to obtain an average cost per unit=unit product cost -Bill of Materials=document that lists the quantity of direct material used to produce a unit of product. -Materials Requisition Form= document that specifies the type and quantity of materials taken from storage for a specific job. It’s used to control the flow of materials -Job Cost Sheet= records materials, labor, manufacturing overhead costs charged to do that job. -Measuring Direct Materials Costs= do the employee time ticket Apply the POHR to each job= overhead application. Normal Cost System: Overhead applied to a particular job= POHR x Amount of the allocation base incurred by the job -The Activity Base(Cost Driver)= a measure of what causes the incurrence of a variable cost(ex. units produces, machine hours, miles driven, labor hours) Using only 1 POHR for all manufacturing overhead= using a plantwide POHR. A plantwide POHR is not always right: - It is often overly-simplistic and incorrect to assume that direct labor-hours is a company’s only manufacturing overhead cost driver. - If more than one overhead cost driver can be identified, job cost accuracy is improved by using multiple predetermined overhead rates Using a multiple POHR is better in some cases: 1. It’s more complex but more accurate because it reflects differences across departments. Inaccurately assigning manufacturing costs to jobs influences planning and decisions made by managers. - Job-order costing systems can accurately trace direct materials and direct labor costs to jobs. - Job-order costing systems often fail to accurately allocate the manufacturing overhead costs used during the production process to their respective jobs. - The allocation base in the POHR must drive the overhead cost to improve job cost accuracy -cost-plus pricing= pricing method in which a predetermined markup is applied to a cost base to determine the target selling price. Activity-Based Costing= an alternative approach to developing multiple POHR. It is based on the activity performed. It is used to more accurately measure the demands made over overhead resources. 2. Accounting for costs in manufacturing companies 3. Preparing financial statements 4. Predicting cost behavior in response to changes in activity 5. Making decisions —--------------------------------------------------------------------------------------------- CHAPTER 3 Basic of Cost-Volume-Profit(CVP) Analysis: Its purpose is to estimate how profit is affected by: a) Selling Prices b) Sales Volume c) Unit Variable Costs d) Total Fixed Costs e) Mix of Products Sold To simplify CVP calculations managers follow these assumptions: a) Selling Prices is constant b) Costs are linear and can be divided into variable(constant per unit) and fixed(constant in general) c) in multiproduct companies the mix of goods sold is constant 1. Contribution Income Statement= helpful to managers in judging the impact on profits of changes in selling price, cost or volume. The emphasis is on cost behavior. The contribution approach: Sales, variable expenses, and contribution margin can also be expressed on a per unit basis. Break-even point= point at which profit is 0. If the CM doesn’t cover sales we have a loss. Net operating income= profit EQUATIONS: 1. Profit=(Sales- Variable expenses)[tot.sales]-fixed expenses[tot. expenses] 2. Profit= Sales – (Variable expenses + Fixed expenses) 3. Profit = Sales – ( variable expense per unit [v] x quantity [Q] + Fixed expenses (F.E.) ● Target Profit Analysis= used to estimate what sales volume is needed to achieve a specific target profit. we can determine it in 2 way: 1. Equation Method: Profit= Unit CM x Q - Fixed Expenses 2. Formula Method: - Unit Sales to attain the target profit= Target Profit + Fixed Expenses\ CM per unit - Sales to attain the target profit= (Target Profit + Fixed Expenses)\ CM Ratio ● margin of safety in dollars= excess of budgeted sales over break-even volume of sales dollars. The amount by which sales can drop before having loss.The higher the safer for the company. Can be increased with differentiation(increase cost of product but don’t make customers choose competitors) ● margin of safety percentage= margin of safety in dollars\Tot. budgeted sales in dollars MARGIN OF SAFETY IN DOLLARS= TOT SALES- BREAK_EVEN POINT ● margin of safety in units= margin of safety in dollars\ units ● Sales mix=the relative proportion in which a company’s products are sold. Companies sell different products that aren’t equally profitable. Changes in sales mix can change profit. If sales mix changes the break-even point changes ● Multiproduct break-even point= for companies that sell different products at the same time.Sum of sales. - Dollar sales to break even= fixed expense\ CM ratio -sales of bicycle\carts= apply the sales mix(45%\55%) to the total sales - CMR= tot CM\Tot Sales Fixed expense changes if the percentage of each product changes - Average cost\Unit Full cost= Fixed Costs\Volume + v(variable cost per unit) —--------------------------------------------------------------------------------------------- EXERCISES EX) 32$=4$x8$ Unit Product Cost= Total Cost:Number of Units 1. Use the amounts determined on the previous slide to calculate the predetermined overhead rate (POHR) of each department. e Milling Department = e Assembly Department = Use the amounts determined on the previous slide to calculate the predetermine overhead rate (POHR) of each department. e Milling Department = $510,000 + 60,000 MHs = $8.50 per MH e Assembly Department = $800,000 + 80,000 DLHs = $10.00 per DLH d Use the POR calculated on the previous slide to determine the overhead applied from both departments to Job 407: Department Job 407 Assembly Machine-hours........... 90 4 Direct labor-hours....... 5) 20 Direct materials.......... $ 800 $ 370 Direct labor cost.......... $70 $ 280 Milling Department = 90 MHs x $8.50 per MH = $765 Assembly Department = 20 DLHs x $10 per DLH = $200  We can use the information given to calculate the amount of the total cost of Job 407. Here is the calculation: Milling Assembly Total Direct materials. $ 800 $ 370 $ 1,170 Direct labor... $70 $ 280 350 Manufacturing overhead applied....................... $ 765 $ 200 965 lotallcostoflob Ade enna $ 2,485 - A POHR in each department - cost-plus pricing + markup percentage=75% of tot manufacturing costs - fixed expense per month= tot. fixed expense 2. JOC_texts 1) C) 1)forming department overhead cost= Fixed manufacturing overhead cost + ( variable overhead cost per manufacturing-hour x total machine-hours in the department) =129,200+ (1.60$ x 19,000 machine hours)= 159,600$ 2)predetermined overhead rate (POHR)= estimated total manufacturing overhead cost\ estimated total amount of allocation base incurred =129,200\19,000 machine hours= 8.40$ per machine-hour 3)overhead applied to a particular job= predetermined overhead rate x amount of allocation base incurred by the job =8.40$ per machine-hour x 80 machine-hours= 672$ 1)Assembly department overhead cost= Fixed manufacturing overhead cost + ( variable overhead cost per direct labor x total machine-hours in the department) =77,600$ +( 3,00$ x 8000 hours)= 101,600$ 2)predetermined overhead rate (POHR)= estimated total manufacturing overhead cost\ estimated total amount of allocation base incurred =101,600\8000 direct hours= 12,70$ 3)overhead applied to a particular job= predetermined overhead rate x amount of allocation base incurred by the job =12,70$ x 40 direct labor hours= $508 forming assembly total direct materials(from initial doc) 730$ 380$ 1100$ direct labor(from initial doc) 900$ 1200$ 2100$ manufacturing overhead applied(3) 672$ 508$ 1180$ total cost of job T288(sum tots) 4390$ Total cost of job T288 4390$ Markup(4390x20%) 878$ Selling price 5268$ 2) —--------------------------------------------------------------------------------------------- CVP texts 1) a) CM= (Tot. Revenues-Variable Costs)\Tot. Revenues CM ratio= CM\Sales =(60,000$\300,000$)x 100=20% b) increased in net operating income is increased CM because fixed expenses are not affected Selling price per unit= 300,000$\5000 units=60$ Variable cost per unit= 240,000$\5000 units=48$ Unit contribution margin= Selling price per unit - Variable cost per unit= 60$-48$=12$ Unit CM= 12$ per unit Increased unit sales= 40 units Increase in net operating income= (Unit CM x Increased unit sales)= 480$ c) Selling price(60$ per unit + 4$ per unit)=64$ per unit Variable cost per unit=48 per unit Unit CM= 16$ per unit Unit sales= 4,600 units CM=Unit CM x Unit sales= 73,600$ Fixed Expense= 8800$ Net operating income= 14800$ d) Unit sales top Break-Even= Fixed Expenses\ Unit CM= 58,800$\12$ per unit= 4,900 units