Professional Documents
Culture Documents
CH 19
CH 19
Thirteenth Edition
Weygandt Kimmel Kieso
Chapter 19
Managerial Accounting
Prepared by
Coby Harmon
University of California, Santa Barbara
Westmont College
Chapter 19
Managerial Accounting
Chapter Outline
Learning Objectives
LO 1 Identify the features of managerial accounting and
the functions of management.
LO 2 Describe the classes of manufacturing costs and
the differences between product and period
costs.
LO 3 Demonstrate how to compute cost of goods
manufactured and prepare financial statements for
a manufacturer.
LO 4 Discuss trends in managerial accounting.
Copyright ©2019 John Wiley & Son, Inc. 3
Managerial Accounting Basics
Provides economic and financial information for
managers and other internal users.
Comparing Managerial and Financial Accounting
Similarities and differences:
Each field deals with economic events of a business
Both require that economic events be quantified
and communicated to interested parties
Communicate financial
Purpose Decision making position to outsiders
Manufacturing
Overhead
LO 2 Copyright ©2019 John Wiley & Son, Inc. 14
Manufacturing Costs
Direct Materials
Direct Materials
Raw Materials
Basic materials and parts used in manufacturing
process
Raw materials that can be physically and directly
associated with finished product during the
manufacturing process are direct materials
Manufacturing Overhead
Indirect materials
Indirect labor
Other indirect costs ILLUSTRATION 19.3
Product versus period costs
Product Costs
Direct Direct Manufacturing Period
Cost Item Materials Labor Overhead Costs
5. Advertising costs (€60,000 per
year) X
6. Sales commissions (€20 per
board) X
7. Maintenance salaries (factory
facilities, €45,000 per year) X
8. Salary of plant manager
(€70,000 per year) X
9. Cost of shipping boards (€8 per
board) X
ILLUSTRATION 19.5
Computation of total
LO 2 manufacturing costs Copyright ©2019 John Wiley & Son, Inc. 24
DO IT! 2 Managerial Cost Concepts
A bicycle company has these costs: tires, salaries of employees who put
tires on the wheels, factory depreciation, advertising expenditures,
lubricants, spokes, salary of factory manager, salary of accountant,
handlebars, and salaries of factory maintenance employees. Classify each
cost as direct materials, direct labor, overhead, or a period cost.
“COGS”
LO 3 Copyright ©2019 John Wiley & Son, Inc. 26
Income Statement ILLUSTRATION 19.6
Cost of goods sold
components
Merchandiser
Cost of
Goods Sold
Manufacturer
Beginning Ending
Cost of Goods
Finished Goods + - Finished Goods =
Manufactured
Inventory Inventory
ILLUSTRATION 19.12
A manufacturer’s value chain
3. ______
e Systems implemented to reduce defects in finished
products with the goal of achieving zero defects.
b A performance-measurement
4. ______ Terms:
approach that uses both financial a. Activity-based costing
b. Balanced scorecard
and nonfinancial measures, tied to c. Company social responsibility
company objectives, to evaluate a d. Just-in-time (JIT) inventory
company’s operations in an e. Total quality management (TQM)
f. Statement of Ethical Professional
integrated fashion. Practice
g. Value chain
d Inventory system in which
5. ______
goods are manufactured or purchased
just as they are needed for use.
c
6. ______ A company’s efforts to Terms:
employ sustainable business a. Activity-based costing
b. Balanced scorecard
practices with regards to its c. Company social responsibility
employees, society, and the d. Just-in-time (JIT) inventory
environment. e. Total quality management (TQM)
f. Statement of Ethical Professional
Practice
f
7. ______ A code of ethical standards g. Value chain
developed by the Institute of
Management Accountants.