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  • 2021-08-23 MGMT Acctg Budgeting

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    Kristianne Claire Incognito
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    This document provides an overview of key managerial accounting topics including: 1) The nature of transactions in merchandising, manufacturing, and service businesses and how they affect costs. 2) The differences between direct and indirect costs, product and period costs, and fixed, variable and mixed costs across business types. 3) Factors to consider in transaction planning like regulations, industry, and accounting standards. 4) An introduction to budgeting methods including historical, zero-based, and lump-sum budgets and where to start the budgeting process.

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    2021-08-23 Mgmt Acctg Budgeting

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    This document provides an overview of key managerial accounting topics including: 1) The nature of transactions in merchandising, manufacturing, and service businesses and how they affect costs. 2) The differences between direct and indirect costs, product and period costs, and fixed, variable and mixed costs across business types. 3) Factors to consider in transaction planning like regulations, industry, and accounting standards. 4) An introduction to budgeting methods including historical, zero-based, and lump-sum budgets and where to start the budgeting process.

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    © All Rights Reserved
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    2 views8 pages

    2021-08-23 MGMT Acctg Budgeting

    Uploaded by

    Kristianne Claire Incognito
    This document provides an overview of key managerial accounting topics including: 1) The nature of transactions in merchandising, manufacturing, and service businesses and how they affect costs. 2) The differences between direct and indirect costs, product and period costs, and fixed, variable and mixed costs across business types. 3) Factors to consider in transaction planning like regulations, industry, and accounting standards. 4) An introduction to budgeting methods including historical, zero-based, and lump-sum budgets and where to start the budgeting process.

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    of 8

    23/08/2021

    Principles of
    Accounting
    Managerial Accounting
    Topics
    August 23, 2021

    Nature of • Representation in your operations:


    Direct or indirect
    Transactions
    • Effect on your product/service:
    Product or period
    • Behavior as to level of output:
    Fixed vs. variable vs. mixed
    • Circumstances: Controllable and
    avoidable

    1
    23/08/2021

    Build a company…

    Merchandising Manufacturing Service


    Look-out for period Tedious; Simplest to account:
    and indirect costs three inventories to No product costs
    account

    2
    23/08/2021

    3
    23/08/2021

    Direct vs. indirect costs

    Merchandising Manufacturing Service


    Materials Direct Direct Direct/indirect
    Labor Direct Direct Direct
    Overhead Direct for manufacturing overhead Indirect
    Sales & marketing Indirect Indirect Direct if
    selling/marketing
    service
    General & admin Indirect Indirect Indirect
    Financing costs Indirect Indirect Indirect
    Taxes Direct if merchandise/materials/services have taxes (e.g.,
    excise tax, value-added tax)

    Product vs. period costs

    Merchandising Manufacturing Service


    Materials Product Product All costs are period
    Labor Product Product costs

    Overhead Product/period Product/period


    Sales & marketing Period Period
    General & admin Period Period
    Financing costs Period Period
    Taxes Product (for VAT/excise tax) / Period

    4
    23/08/2021

    Fixed/variable/mixed costs

    Merchandising Manufacturing Service


    Materials Variable Variable Variable
    Labor Mixed Mixed Fixed
    Overhead Mixed Mixed Mixed
    Sales & marketing Mixed Mixed Mixed
    General & admin Mixed Mixed Mixed
    Financing costs Fixed Fixed Fixed
    Taxes Mixed Mixed Mixed

    Controllable or uncontrollable?

    Merchandising Manufacturing Service


    Materials Controllable Controllable Controllable
    Labor Controllable Controllable Controllable
    Overhead Controllable Controllable Controllable
    Sales & marketing Controllable Controllable Controllable
    General & admin Controllable; uncontrollable only if with labor agreements
    Financing costs Controllable as to principal/interest amounts
    Uncontrollable as to interest rates
    Taxes Uncontrollable Uncontrollable Uncontrollable

    10

    5
    23/08/2021

    Considerations in
    Transaction Planning

    • Regulations
    • Industry
    • Volume
    • Organizational structure
    • Policy
    • Accounting standards

    11

    Budgeting

    • Strategize
    • Evaluate
    • Plan
    • Execute
    • Control

    12

    6
    23/08/2021

    Budgeting Methods

    Historical Zero-based budgeting Lump-sum

    13

    Where to start?

    Operating budgets: Financial budgets:


    Sales budgets Cash budget
    Production budgets Capital budget
    Expense budgets

    14

    7
    23/08/2021

    Timeline (August 4W)

    Mon. 23 Aug. Fri. 27 Aug.


    Management Accounting Asynchronous:
    Topics “What’s on your watch?”

    Synchronous:
    Financial Accounting
    Preliminaries
    Wed. 25 Aug.

    20

    Q&A
    Send an e-mail to
    jonlouis.santos@uap.asia

    22

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