Preface

1
INTRODUCTION
2
Preface

• Managerial accounting began as factory cost
  accounting in the 19th century
• Numerous changes since then
• Computerization
• Computers available
• Smart products
• Service gt manufacturing
• Hence my notes Think o/s the factory

3
Managerial accounting is

• Financial information to use inside an
  organization
• Bound by very few rules
• Financial accounting is
• Financial information to use outside an
  organization
• Bound by many rules

4
Managerial accounting is

• Cost accounting
• What does it cost?
• Control accounting
• Did we overspend?
• Decision accounting
• What should we do?

5
Organizations

• Managerial accounting is accounting for an
  organization
• Lets list a few
• Who is involved?
• Why are they involved?
• What is their goal?
• What functions do they perform?
• Who do they serve?
• Who performs the service?

6
Goals

• Goals may be intangible and immeasurable
• Goals may be measured directly or indirectly
• Businesses measure their goals by measuring
  profitability
• How do our organizations measure goals?

7
Profitability

• Profit benefits gt costs
• What benefits do our organizations yield?
• Who reaps them?
• How are they measured?
• What costs do our organizations incur?
• Who incurs them?
• How are they measured? If at all?

8
Income statements

• Retail manufacturing
• Revenue cost of goods sold selling,
  administrative finance expenses tax expense
• Service businesses
• No cost of goods sold

9
Product versus period costs

• Cost of goods sold is wholesale cost
• Given in retail business
• Estimated in manufacturing business
• Direct labor
• Direct material
• Indirect costs manufacturing overhead

10
Assets their measurement

• Economic resources
• Controlled by an entity
• Preceded by an transaction
• All necessary costs to bring to state place for
  intended use
• Manufacturing inventory

11
Old versus new

• Model T Fords
• Heavy metal
• Lots of labor
• Sold automatically
• Palm Pilot
• Computer chip (sand) plastic
• Automated process
• Heavy competition requiring advertising

12
Two examples

• Coca Cola the Olympic Games
• BTN Paper Mill

13
Adding value vs making profit

• Profit Revenue cost of materials
  conversion costs interest - tax
• Value added Profit interest tax
  conversion costs
• Which of your organizations has high value added?

14
Paying the bills

• Count the cost
• Check the cost
• Make good decisions
• But also, pay your bills
• Accounting tracks cash in versus cash out

15
Rest of Chapter 1

• Please skim read this chapter
• Well cover the topics later
• Essence of the chapter
• The world has changed
• We need to change with it
• Managerial accounting needs to change too