Managerial Accounting

1. Basic Concepts Product terms = accept Labor (DL) + Direct Materials (DM) + Manufacturing smash-up (MOH) Financial accountingManagerial Accounting + Sales+ Sales - COGS- inconstant Costs = Gross Profit= Contribution Margin - SG&A- Fixed Costs = cabbage Profit= Net Profit COGS (Cost of Goods Sold) is an inventoriable make up ( recorded in the equilibrate Sheet as inventory and expensed (Income Statement) when goods ar sold SG&A (Selling, global & Administrative) are periodical costs ( expensed as incurred directly in the Income Statement Economic Value: ROCE WACC (ROCE = Return on Capital Employed) 2.

Seligram good example and Anagene Case - Effective cost systems Classical cost systems: Overhead allocated based on DL$ Products that clear many machine-hours are undercosted; vice-versa for labor-intensive merchandises If the total belt is allocated to products, we enter the DEATH-SPIRAL: the more we authorize unprofitable products, the less profitable become the remaining products (because they absorb the cost of excess capacity) Possible paradox: very dearly-won machines are bought to automate production of one single product ( direct labor required for the product is reduced convey to automation ( the driver for overhead allocation (which is DL$) decreases ( overhead cost for the product decreases! (rationally, it should increase of the cost of the machine) Effective cost systems: allocation of overhead based on drivers Steps to arrange: 1) Quantify the total amount of resources 2) Identify the cost pools and evaluate their costs 3) Identify suited drivers for each cost pool 4) For each driver, forecast the burden rate (beware of excess capacity!) 5) Allocate the cost pools to the cost objects (products) using the drivers Benefits: - Accuracy of managerial decision (pricing) - offend allocation of resources Costs: - Complexity - Tracking / metering costs - Expensive to be implemented When... If you penury to get a full essay, order it on our website: Orderessay

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