Student Version

1. Student Version • Repetition is an important component, a key part of learning. In memory, the more times patterns of thought are repeated, the more likely you will be able to recall information. • These PowerPoint slides have been modified from the lecture decks by making them fill-in-the-blank. Why? So that you get an opportunity to repeat a visual cue (from the lecture or the book) via completing text here. • In addition, most text book exhibits have been removed as they are available in your text directly.

2. Managerial Accounting Concepts and Principles Chapter 18

3. Learning Objective 1 Describe managerial accounting and the role of managerial accounting in a business.

4. __________ Accounting and __________ Accounting • __________ accounting information is reported at __________ intervals in general-purpose financial statements. These financial statements are prepared according to __________.

5. __________ Accounting and __________ Accounting • __________ accounting statements are used by external users such as the following: • _________________ • _________________ • _________________ • _________________

6. Managerial Accounting • ___________ ___________ information is designed to meet the specific needs of a company’s ___________ and includes ___________ data, which provide ___________ measures of ___________ operations, and estimated data, which provide ___________ estimates about ___________ decisions.

7. Managerial Accounting • Managerial accounting reports ___________ ___________ always have to be: • Prepared according to ___________. • Prepared at ___________ intervals. • Prepared for the business as a ___________.

8. The Management Accountant • In most companies, ___________ or similar organizational units are assigned responsibilities for specific ___________ or ___________ . • The operating structure of a company can be shown in an ___________ ___________. A partial ___________ ___________ is shown in Exhibit 2.

9. Line and Staff Departments • A _______ department is directly involved in providing ___________ or ___________ to the customers of the ___________ . • ___________ department positions: • ______________________ • ______________________ • ______________________ • ______________________

10. Line and Staff Departments • A ________ department provides ________ , ________ , and ________ to the departments with ________ or other ________ responsibilities. • ________ department positions: • ______________________ • ______________________ • ______________________ • ______________________

11. Line and Staff Departments • The ________ ________ ________ (CFO) and the ________ occupy ________ positions. In most companies, the ________ is the chief management ________ .

12. Line and Staff Departments • The ________ staff consists of a variety of other accountants who are responsible for ________ accounting functions such as the following: • System and ________ • ________ accounting • ________ and ________ analysis • ________ reports and ________ • ________ • ________ accounting

13. Planning • Management uses ________ in developing the company’s ________ (goals) and ________ these ________ into courses of ________.

14. Planning • Planning may be classified as follows: • ________ ________ is developing ________ ________ to achieve the ________ ________ . ________ ________ of ________ , called ________ , often involve periods of ________ to ________ ________ . • ________ ________ develops ________ ________ for ________ the ________ ________ of the company.

15. ________ • The process by which managers run day-to-day ________ is called ________ . Examples: • A production supervisor’s efforts to keep the production line ________ without ________ • A credit manager’s development of ________ for assessing the ability of potential ________ to ________ their bills.

16. Controlling • Monitoring ________ ________ and comparing actual results with the ________ results is ________ . • This ________ allows management to isolate areas for further ________ and possible ________ action. • The philosophy of controlling by comparing actual and expected results is called ________ by ________.

17. ________ • Continuous ________ ________ is the philosophy of ________ ________ employees, business processes, and products. • The objective of ________ process ________ is to eliminate the ________ of ________ in a process.

18. ________ ________ • Inherent in each of the preceding management processes is ________ ________ . Management must ________ decide among ________ ________.

19. Learning Objective 2 Describe and illustrate the following costs: (1) direct and indirect costs, (2) direct materials, direct labor, and factory overhead costs, (3) product and period costs.

20. Direct and ________ Costs • A ________ is a payment of ________ or the commitment to pay cash in the future for the purpose of ________ ________.

21. Direct and Indirect Costs • Costs are often classified in terms of how they relate to an ________ or segment of ________, called a cost ________. • The cost ________ may be a ________ , a sales ________ , a department, or some ________.

22. Direct and Indirect Costs • ________ ________ are identified with and can be traced to a ________ ________ . Wood used to make guitars is a ________ cost.

23. Direct and Indirect Costs • ________ ________ cannot be identified with or traced to a cost object. A production supervisor’s salary is an ________ cost because it ________ be traced to any ________ guitar.

24. Manufacturing Costs • To be classified as a ________ ________ cost, the cost must be both of the following: • ___________________________________________ • ___________________________________________

25. Manufacturing Costs • The cost of employee wages that is an integral part of the ________ product is classified as ________ ________ cost. A direct labor cost must be both of the following: • ___________________________________________ • ___________________________________________

26. Manufacturing Costs • Costs other than direct materials cost and direct labor cost that are incurred in the manufacturing process are combined and classified as ________ ________ cost (sometimes called manufacturing ________ orfactory ________ ).

27. Manufacturing Costs • Some examples of ________ ________ costs include the following: • ____________________________________________ • ____________________________________________ • ____________________________________________ • ____________________________________________ • ____________________________________________

28. Manufacturing Costs • Costs that do not enter directly into the ________ product, such as oil used to lubricate the machinery and janitorial and supervisory wages, are considered ________ ________. • Some costs that are part of the product, but are considered ________, are treated as ________ ________, such as glue and string.

29. ________ Costs and ________ Costs • Prime costs consist of ________ ________ and ________ ________ costs. • Conversion costs consist of ________ ________ and ________ ________ costs. ________ costs are the costs of converting the ________ into a finished ________ .

30. Product Costs and Period Costs • ________ costs consist of the ________ elements of manufacturing costs: ________ ________, ________ ________, and ________ ________.

31. Product Costs and Period Costs • ________ costs are generally classified as: • ________________________________________ ________________________________________ ________________________________________, or • ________________________________________________________________________________________________________________________.

32. Learning Objective 3 Describe and illustrate the following statements for a manufacturing business: balance sheet, statement of cost of goods manufactured, income statement

33. Balance Sheet for a Manufacturing Business • __________ inventory (sometimes called __________ __________ inventory) consists of the costs of the ________ and _________ materials that have _____ yet entered the manufacturing process.

34. Balance Sheet for a Manufacturing Business • _______ in _______ inventory consists of _______ material costs, _______ _______ costs, and _______ _______ costs for products that have entered the _______ process, but are not yet _______ (in _______).

35. Balance Sheet for a Manufacturing Business • Finished _______ _______ consists of _______ (or _______) products that have not _______ _______.

36. Income Statement for a Manufacturing Company • Income statements for _______ and _______ businesses differ primarily in the reporting of the _______ of _______ (goods) available _______ _____ and _______ during the period.

37. Income Statement for a Manufacturing Company • The _______ cost of making products that are available for _______ during the period is called the _______ of _______ _______ . • The _______ of _______ _______ is often determined by preparing a statement of _______ of _______ manufactured.

38. to_______ _______ costs incurred Legend’s Cost of Goods Manufactured STEP 1: __________________________________ Materials inventory, January 1, 2014 $ 65,000 Add: Materials purchased 100,000 Cost of materials available for use $165,000 Less: Materials inventory, Dec. 31, 2014 35,000 Cost of direct materials used $130,000 (continued)

39. Legend’s Cost of Goods Manufactured STEP 2:__________________________________. Cost of direct materials used $130,000 from Step 1 (continued)

40. to_______ of goods_______ section Legend’s Cost of Goods Manufactured STEP 2: __________________________________ Cost of direct materials used $130,000 Direct labor 110,000 Factory overhead 44,000 Total manufacturing costs incurred $284,000 (continued)

41. Legend’s Cost of Goods Manufactured STEP 3:__________________________________ Work in process inventory, Jan. 1, 2014 $ 30,000 Add: Total manufacturing costs incurred 284,000 from Step 2

42. Legend’s Cost of Goods Manufactured STEP 3:__________________________________ Work in process inventory, Jan. 1, 2014 $ 30,000 Add: Total manufacturing costs incurred 284,000 Total manufacturing costs $314,000 Less: Work in process inventory, Dec. 31, 2014 24,000 Cost of goods manufactured $290,000

43. Learning Objective 4 Describe the uses of managerial accounting information.

44. Uses of ___________ Accounting • ___________ accounting provides the cost of ___________ a product, which can be used to determine its selling ___________.

45. Uses of Managerial Accounting • Managerial accounting allows for ___________ the costs of ___________ and can be used to monitor and ___________ the cost of direct ___________, direct ___________, and factory ___________.

46. Uses of Managerial Accounting • Performance reports allow management to ___________ any large amounts of ___________ materials or ___________ downtime.

47. Uses of Managerial Accounting • A report could analyze the potential ___________ and dollar ___________ of ___________ computerized equipment to speed up the production process.

48. Uses of Managerial Accounting • A report could analyze how many units need to be sold to cover ___________ ___________ and ___________. • Such information could be used to set monthly ___________ targets and ___________ for sales personnel.

49. Managerial Accounting Concepts and Principles The End