Accounting English

Lecture 4

Management Accounting I
 8 Management
Chapter

Accounting Terms
Financial and Management
Accounting

Accounting System

Financial Accounting
Managerial Accounting
Reports
Reports
Periodic financial
Detailed plans and continuous
statements and related
performance reports
disclosures provided to

Internal Decision Makers

External Decision
Run the company
Makers
Evaluate the company

Creditors Investors Managers

Guitar-Making Operations of Legend
Guitars

订单 材料 加工 组装 完工的吉他
Direct and Indirect Costs

• Costs identified with cost objects are

either direct costs or indirect costs.
1. Direct costs （直接成本）are identified
with and can be traced to a cost object.
• For example, the cost of wood used to make
guitars is a direct cost.

2. Indirect costs （间接成本）cannot be

identified with or traced to a cost object.
• For example, the salaries of production
supervisors are indirect costs of producing a
guitar because their salaries cannot be
identified with or traced to any individual
guitar.
Direct and Indirect Costs
(slide 2 of 2)
Direct Costs of Legend Guitars

材料-直接成本-成本对象：吉他
Indirect Costs of Legend Guitars

生产主管-间接成本-成本对象：吉他
 Classifying Direct and Indirect Costs

识别成本对象-判断成本能否被识别或追溯至某一具体
成本对象

可追溯：直接成本；不可追溯：间接成本
 Manufacturing Costs 制造成本

• Thus, the cost of a finished product

includes:

Direct Direct labor cost Factory

materials cost 直接人工成本 overhead cost
直接材料成本 制造费用
Manufacturing Costs of Legend Guitars

直接材料成本—直接人工成本—制造费用
 Direct Materials Cost

• Manufactured products begin with raw materials

that are converted into finished products.
• To be classified as a direct materials cost!"#
$%&'(, the cost must be both of the following:
• Examples of direct materials costs include the
following:
1. The cost of the wood used in producing a guitar 原木成
本
2. Tires for an automobile 汽车轮胎成本
 Direct Labor Cost

• Most manufacturing processes use employees to

convert materials into finished products.
• The cost of employee wages that is an integral part
of the finished product is classified as direct labor
cost!"#)*&'(.
 Direct Labor Cost

• Examples of direct labor costs include the following:

1. The wages of employees who cut guitars out of raw
lumber and assemble them 切割工人与组装工人工资
2. Mechanics’ wages for repairing an automobile 修理工工
资
3. Assemblers’ wages for assembling a laptop computer组
装人员工资
 Factory Overhead Cost
(slide 1 of 2)

• Costs other than direct materials cost and direct

labor that are incurred in the manufacturing process
are combined and classified as factory overhead
cost (sometimes called manufacturing overhead)
!+,-.(.
 Factory Overhead Cost

• All factory overhead costs are indirect costs of the

product.
• Some factory overhead costs include the following:
1. Heating and lighting the factory 工厂加热和照明费用
2. Repairing and maintaining factory equipment 工厂设备检修
成本
3. Depreciation of factory plant and equipment 机器设备的折旧
 Prime Costs and Conversion Costs

• Direct materials, direct labor, and factory

overhead costs may be grouped together
for analysis and reporting.
 Prime Costs and Conversion Costs
(slide 1 of 2)

1. Two such common groupings are as follows:

• Prime costs (主要成本), which consist of direct materials
and direct labor costs
• Conversion costs（加工成本）, which consist of direct
labor and factory overhead costs
• Conversion costs are the costs of converting the materials
into a finished product.
Prime Costs and Conversion Costs
(slide 2 of 2)

直接材料—直接人工—制造费用
Product Costs and Period Costs
产品成本和期间费用
• For financial reporting purposes, costs are
classified as product costs or period costs.
 Product Costs and Period Costs
产品成本和期间费用
1. Product costs （产品成本）consist of
manufacturing costs: direct materials, direct labor,
and factory overhead.
 Product Costs and Period Costs
产品成本和期间费用
2. Period costs（期间费用） consist of selling and
administrative costs.
Examples of Product Costs
and Period Costs—Legend Guitars
End of Chapter 8
 9 Cost-Volume-Profit
Chapter

Analysis
 Cost Behavior

• Cost behaviour(成本性态) is the manner in

which a cost changes as a related activity
changes.
• Costs are normally classified as variable
costs, fixed costs, or mixed costs

variable costs fixed costs mixed costs

变动成本 固定成本 混合成本
 Variable Costs

• Variable costs are costs that vary in proportion to

changes in the activity base.
• When the activity base is units produced, direct
materials and direct labor costs are normally
classified as variable costs.
Variable Cost Graphs
 Fixed Costs

• Fixed costs are costs that remain the

same in total dollar amount as the activity
base changes.
Fixed Cost Graphs
 Mixed Costs

• Mixed costs are costs that have

characteristics of both a variable and a fixed
cost. Mixed costs are sometimes called
semivariable or semifixed costs.
Mixed Costs
Variable, Fixed, and Mixed Cost
 Cost-Volume-Profit Relationships

Cost-volume-profit analysis(本量利分析) is the

examination of the relationships among selling prices,
sales and production volume, costs, expenses, and
profits.
 Contribution Margin

• Contribution margin（边际收益）is the

excess of sales over variable costs, computed
as follows:

Contribution Margin = Sales − Variable Costs

 Contribution Margin

• Assume the following data for Lambert Inc.:

Contribution Margin Income Statement Format

 Break-Even Point

The break-even point （盈亏平衡点）is the level

of operations at which a company’s revenues and
expenses are equal.
 Break-Even Point

The following income statement for Baker verifies

the break-even point of 9,000 units:
Cost-Volume-Profit Chart
End of Chapter 9
 10
Chapter

Budgeting
Nature and Objectives of Budgeting

• Budgets (预算)play an important role

for organizations of all sizes and forms.
• For example, budgets are used in
managing the operations of government
agencies, churches, hospitals, and other
nonprofit organizations.
• This chapter describes and illustrates
budgeting for a manufacturing
company.
• 重点讲制造业的预算
Planning, Directing, and Controlling

计划-指导-控制 反馈
Human Behavior Problems in Budgeting

预算中的员工行为问题
Human Behavior and Budgeting:
Setting Budget Goals Too Tightly

• Attainable goals are more likely to

motivate employees and managers.
• For this reason, it is important for employees
and managers to be involved in the budgeting
process.
• Involving employees in the budgeting process
provides them with a sense of control and, thus,
more of a commitment in meeting budgeted goals.
• 员工和管理层都应参与到预算制定中
 Human Behavior and Budgeting:
Setting Budget Goals Too Loosely

• 设定过低的预算目标
• Although it is desirable to establish
attainable goals, it is undesirable to
plan budget goals that are too easy.
• Such budget “padding” is called
budgetary slack（预算松弛）.
Budgeting Systems

• The budgetary period for operating

activities normally includes the fiscal year
of a company.
• 预算期通常是一个会计年度.
 Budgeting Systems

• A variation of fiscal-year budgeting, called

continuous budgeting（滚动预算）,
maintains a 12-month projection into the
future.
Continuous Budgeting

滚动预算
 Budgeting Systems

• There are several methods of developing

budget estimates.
• One method, called zero-based budgeting
（零基预算）, requires managers to estimate
sales, production, and other operating data
as though operations are being started for
the first time.
• 要求管理层将公司视作首次经营
Budgeting Systems

• A more common approach is to start with last

year’s budget and revise it for actual results and
expected changes for the coming year.
• 更常见的一种方法是基于上一年度的预算，根据今
年实际情况和对未来的预期做出适当修改
• Two major budgets using this approach are the static
budget and the flexible budget.
• 静态预算和弹性预算
Static Budget

• A static budget shows the expected

results of a responsibility center for only
one activity level. Once the budget has
been determined, it is not changed,
even if the activity changes.
• 静态预算一经确定，即使业务活动发生变
化，也不做出改动
Flexible Budget

• Flexible budgets （弹性预算）show the

expected results of a responsibility center
for several activity levels.
• A flexible budget is, in effect, a series of static
budgets for different levels of activity.
• 可以看作不同作业水平下的一系列静态预算
Master Budget

• The master budget （总预算）is an

integrated set of operating and
financing budgets for a period of time.
• The operating budgets can be used to
prepare a budgeted income statement.
• The financial budgets provide information
for a budgeted balance sheet.
• Most companies prepare a master
budget on a yearly basis.
Operating Budgets

利润表预算
End of Chapter 10
ECB raises rates for first time in more than a
decade

• The European Central Bank has raised interest rates by

half a percentage point — its first increase for more than
a decade — while pledging to prevent rising borrowing
costs from sparking a eurozone debt crisis amid political
turmoil in Italy.
ECB raises rates for first time in more than a
decade

• The ECB said in a press release after its governing

council met in Frankfurt that it “judged that it is
appropriate to take a larger first step on its policy rate
normalisation path than signalled at its previous meeting”
because of higher than expected inflation and the
support of its new bond-buying scheme. The central
bank had said last month that it would raise rates by a
quarter point.
ECB raises rates for first time in more than a
decade

• The euro gained more than 0.6 per cent against the
dollar to rise to above $1.02. Concerns over global
growth and inflation pushed the common currency to
below parity last week.
• Eurozone government debt sold off. The yield on
Germany’s 10-year Bund, a proxy for borrowing costs
across the eurozone, rose sharply after the
announcement, adding 0.1 percentage points. The
rate rise and the unravelling of Mario Draghi’s national
unity coalition earlier on Thursday sent the yield on
Italy’s 10-year bond up 0.24 percentage points to 3.6
per cent.
ECB raises rates for first time in more than a
decade

• Its governing council said it would “safeguard the smooth

transmission of its monetary policy stance” under a new
programme set up to tackle any increase in the bond
yields of individual countries beyond the level justified by
economic fundamentals.
ECB raises rates for first time in more than a
decade

• The new bond-buying programme would have no upper

limit on purchases and “can be activated to counter
unwarranted, disorderly market dynamics that pose a
serious threat to the transmission of monetary policy
across the euro area”, it said. More details of the new
“transmission protection instrument” (TPI) would come in
a separate announcement at 2.45pm Frankfurt time.
ECB raises rates for first time in more than a
decade

• The central bank’s deposit rate will rise from minus 0.5
per cent to zero, while the rate on its main refinancing
operations will rise from zero to 0.5 per cent and its
marginal lending facility will increase from 0.25 per cent to
0.75 per cent. The last time it raised rates by half a
percentage point was in June 2002, a few years after the
euro’s launch.
ECB raises rates for first time in more than a
decade

• The move is the first step in reversing a decade of ultra-

easy monetary policy at the ECB, which has maintained a
negative deposit rate and bought almost €5tn of bonds to
support the economy over the past eight years. It is
tightening policy in an effort to tackle record eurozone
inflation of 8.6 per cent.
• There are growing fears that higher interest rates will tip
the eurozone into recession. The bloc has already been
hit by soaring energy and food prices following Russia’s
invasion of Ukraine, a slowdown in business activity and a
drop in consumer confidence to record lows.
ECB raises rates for first time in more than a
decade

• The ECB decision came hours after Draghi resigned as

Italy’s prime minister. His planned exit is expected to
trigger early elections this year.
• Krishna Guha, head of policy and central bank strategy at
US investment bank Evercore, said: “The combination of
a brewing giant stagflationary shock from weaponised
Russian natural gas and a political crisis in Italy is about
as close to a perfect storm as can be imagined for the
ECB.”
ECB raises rates for first time in more than a
decade

• The political turmoil in Rome has raised concerns about

how rising interest rates will affect the sustainability of
Italy’s swollen public debts, which are higher than most
eurozone countries at 150 per cent of gross domestic
product.
• Officials in more frugal countries such as Germany and
the Netherlands worry that the ECB’s new bond-buying
tool will encourage fiscal profligacy among member states
and stray into “monetary financing” of governments — the
printing of money by a central bank to prop up a country’s
budget — which is against the EU treaty.
ECB raises rates for first time in more than a
decade

• But the ECB believes its new instrument is justified

because it will ensure its monetary policy is transmitted
evenly across the bloc. It said: “By safeguarding the
transmission mechanism, the TPI will allow the governing
council to more effectively deliver on its price stability
mandate”.
• The 50 basis point increase in the ECB’s main policy
rates went beyond its guidance last month that it intended
to start raising rates by 25 basis points and exceeded
most economists’ expectations despite leaks this week
that it was considering a larger move.
ECB raises rates for first time in more than a
decade

• Central banks are typically reluctant to break their

guidance, as this risks eroding their credibility. But the
ECB has been under intense pressure from critics
accusing it of being behind the curve in tackling eurozone
inflation, which hit an all-time high of 8.6 per cent in the
year to June.
ECB raises rates for first time in more than a
decade

• The ECB lacks experience of raising rates. The last time

that it did so in 2011, under then president Jean-Claude
Trichet, it was forced to reverse the move a few months
later as the eurozone was gripped by a sovereign debt
crisis. The only current member of its 25-person
governing council who was there at the time of its last rate
rise was Klaas Knot, who had taken over at the Dutch
central bank seven days earlier.
ECB raises rates for first time in more than a
decade

• The ECB has been slower than most central banks to

respond to surging inflation and is lagging behind the US
Federal Reserve, which is next week expected to raise
rates by at least 75 basis points, matching a similar-sized
move last month.