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Introduction To & Building Blocks of Managerial Accounting
Introduction To & Building Blocks of Managerial Accounting
Building Blocks
of Managerial
Accounting
Ch. 1 & 2
Distinguish management accounting
from financial accounting
Users
• Financial Accounting
• Managerial Accounting
Service Company Income
Statement
• Simplest form of income statement
Routh Pet Grooming is a competitor of Latham Grooming. Routh Pet
Grooming earned $45,000 in revenues for the first quarter of 2007. Using the
following information, prepare an income statement for the first quarter of
2007 and Compute the ratio of operating expenses to total revenue and
operating income to total revenue. Thom Routh, owner, incurred the following
operating expenses to groom 2,000 dogs for
the first quarter of 2007 (January, February,
March):
Wages $ 16,000
Grooming Supplies Expense 4,000
Building rent expense 2,500
Utilities 1,000
Depreciation on Furniture/Equipment 500
journalizing
Merchandising Company Income
Statement
A merchandising company sells a product (inventory)
• 3 inventory accounts:
How Do Companies Define
Cost?
• Direct Costs versus Indirect Costs
The Flow of Costs
Compute DM used.
Manufacturing Overhead
• Indirect cost associated with the plant
(manufacturing operation):
• Indirect Materials
• Indirect Labor
Moon Dust company manufactures sunglasses. Suppose the
company's August records include the following items.
Calculate Moon Dust's total manufacturing overhead cost in
August.