1. Welcome to Principle of Accounting II, Managerial Accounting ACCT 2302 Course # 93212 Atef Abuelaish 1

2. Instructor Name : Atef Abuelaish Married with 3 kids, Born in Cairo/Egypt. Like traveling, Reading, and Sports activities. Master of Science in Accounting, Kaplan University. Master Tax Advisor, Enrolled Agent. Accreditation council for accountancy & Taxation [ATP # 1101038551]. Working with HR Block for 10 years. Atef Abuelaish 2

3. Instructor Name : Atef Abuelaish Accountant with long experiences with domestic and international companies. 3.92 GPA Master of Science in Accounting, Kaplan University [3.92 GPA; Highest honor]. 3.85 GPA Bachelor degree in accounting and diploma in accounting applied science [3.85 GPA - highest honor]. Atef Abuelaish 3

4. Contact Me Email address: atef.abuelaish1@hccs.edu Cell # 832-474-1118 Online McGraw – Hill’s Connect McGraw – Hill’s Connect All Course materials under the course name and number. Atef Abuelaish 4

5. Meet NO. DatesChapterTopicHomework Assignment 101/191Managerial Accounting Concepts and Principles. Using Connect – 7 Questions for 60 Points. 201/262Job Order Costing and Analysis.Using Connect – 6 Questions for 60 Points. 302/023Process Costing and Analysis.Using Connect – 7 Questions for 60 Points. 402/09REV. EX 01 Chapters 1, 2, and 3 Using Connect - EXAM # 1; 3 PARTS FOR 60 POINTS. in class 502/164Activity-Based Costing and Analysis. Using Connect – 7 Questions for 60 Points. 602/235 Cost Behavior and Cost-Volume- Profit Analysis. Using Connect – 7 Questions for 60 Points. 703/016Variable Costing and Analysis.Using Connect – 7 Questions for 60 Points. Atef Abuelaish5

6. Meet NO. DatesChapterTopicHomework Assignment 803/08REV. EX 02 Chapters 4, 5, and 6 Using Connect - EXAM # 2; 3 PARTS FOR 60 POINTS. in class 903/15NO CLASS SPRING BREAK 1003/227 Master Budgets and Performance Planning. Using Connect – 7 Questions for 60 Points. 1103/298Flexible Budgets and Standard Costs. Using Connect – 6 Questions for 60 Points. 1204/059 Performance Measurement and Responsibility Accounting. Using Connect – 8 Questions for 60 Points. 1304/12REV. EX 03 Chapters 7, 8, and 9 Using Connect - EXAM # 3; 3 PARTS FOR 60 POINTS. in class Atef Abuelaish6

7. Meet NO. DatesChapterTopicHomework Assignment 14 04/1910Relevant Costing for Managerial Decisions. Using Connect – 8 Questions for 60 Points. 15 04/2611 Capital Budgeting and Investment Analysis. Using Connect – 7 Questions for 60 Points. 1605/0313 Analysis of Financial Statement. Using Connect – 6 Questions for 60 Points. Atef Abuelaish7 1705/10FINAL COURSE FINAL EXAM Chapters 10, 11, AND 13 Using Connect - EXAM of 3 PARTS FOR 60 POINTS. in class

8. Evaluation Requirements Homework – At Home 720 points Homework – At Home 720 points 4 Quizzes 40 points 4 Quizzes 40 points 3 Exams – In Class 180 points 3 Exams – In Class 180 points Final Exam – In Class 60 Points Final Exam – In Class 60 Points Grand Total 1000 points Grand Total 1000 points Atef Abuelaish8

9. HCC Grading Scale 90 – 100% = A 900 –1000 points 90 – 100% = A 900 –1000 points 80 – 89% = B 800 – 899 points 80 – 89% = B 800 – 899 points 70 – 79% = C 700 – 799 points 70 – 79% = C 700 – 799 points 60 – 69% = D 600 – 699 points 60 – 69% = D 600 – 699 points BELOW 60% = F 0 – 599 points BELOW 60% = F 0 – 599 points Atef Abuelaish9

10. COURSE PLAN Syllabus : Service to direct the activities that all of us must undertake to move everyone from where he/she is, to where he/she wants to be. Atef Abuelaish10

11. Managerial Accounting Concepts and Principles Chapter 1 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Wild and Shaw Managerial Accounting 5th Edition Wild and Shaw Managerial Accounting 5th Edition

12. Purpose of Managerial Accounting Purpose of Managerial Accounting 12

13. Managerial accounting provides financial and nonfinancial information for managers of an organization and other decision makers. Managerial Accounting Basics 13 C 1

14. Purpose of Managerial Accounting 14 C 1

15. Nature of Managerial Accounting 15 C 1

16. Fraud and Ethics in Managerial Accounting 16 Fraud affects all business and it is costly: A 2014 Report to the Nation from the Association of Certified Fraud Examiners (ACFE) estimates the average U.S. business loses 5% of its annual revenues to fraud. The Institute of Management Accountants has issued a code of ethics to help accountants involved in solving ethical dilemmas. C 1

17. Cost Classifications Cost Classifications 17

18. Activity Cost Activity Cost Types of Cost Classifications Classification by Behavior 18 Cost behavior refers to how a cost will react to changes in the level of business activity. Total fixed costs do not change when activity changes. Total variable costs change in proportion to activity changes. C 2

19. Direct costs Costs traceable to a single cost object. Examples: material and labor cost for a product. Indirect costs Costs that cannot be traced to a single cost object. Example: A maintenance expenditure benefiting two or more departments. Types of Cost Classifications Classification by Traceability 19 C 2

20. Comparing Product and Period Costs Comparing Product and Period Costs 20

21. Product Types of Cost Classifications Classification by Function 21 Direct Labor Direct Material Manufacturing Overhead Period costs are expenses not attached to the product. Administrative costs are non-manufacturing costs of staff support and administrative functions. Selling costs are incurred to obtain orders and to deliver finished goods to customers. C 3

22. Period and Product Costs in Financial Statements 22 C 3

23. Identifications of Cost Classifications 23 C 3

24. Cost Concepts for Service Companies 24 C 3 The cost concepts described are generally applicable to service organizations. For example, the cost of beverages for passengers of Southwest Airlines is a variable cost based on number of passengers.

25. Following are the costs of a company that manufactures computer chips. Classify each as either a product cost or a period cost. Then classify each of the product costs as direct material, direct labor, or factory overhead. 1. Plastic board used to mount the chip5. Real estate taxes paid on the factory 2. Advertising costs6. Factory supervisor salary 3. Factory maintenance workers’ salaries7. Depreciation on factory equipment 4. Real estate taxes paid on the sales office8. Assembly worker hourly pay to make chips Direct Material Direct Labor Factory Overhead Period Cost 1. Plastic board used to mount the chipX 2. Advertising costsX 3. Factory maintenance workers’ salariesX 4. Real estate taxes paid on the sales officeX 5. Real estate taxes paid on the factoryX 6. Factory supervisor salaryX 7. Depreciation on factory equipmentX 8. Assembly worker hourly pay to make chipsX Product Costs All Factory Costs Assets on Balance Sheet Period Costs Non-Factory Costs Expensed on Income Statement as Selling, General and Administrative C2/C 3 25

26. Manufacturer’s Costs 26 C 3

27. Example: Steel used in the frame of a mountain bike. Direct Materials 27 Direct material costs are the expenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods. C 3

28. Example: Wages paid to a mountain bike assembly worker. Direct Labor 28 Direct labor costs are the wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods. C 3

29. Examples: Indirect labor – maintenance. Indirect material – cleaning supplies. Factory utility costs. Supervisory costs. Factory Overhead 29 Factory overhead consists of all manufacturing costs that are not direct materials or direct labor and the costs cannot be separately or readily traced to finished goods. C 3

30. Direct Material Direct Labor Manufacturing Overhead Prime Cost Conversion Cost Manufacturing costs are often combined as follows: Prime and Conversion Costs 30 C 3

31. 10 Minutes Break Atef Abuelaish31

32. Balance Sheet Balance Sheet 32

33. Merchandisers...  Buy finished goods.  Sell finished goods. SaleMart Manufacturers...  Buy raw materials.  Produce and sell finished goods. Reporting Manufacturing Activities 33 C 4

34. MERCHANDISER Current Assets  Cash  Receivables  Merchandise Inventory MANUFACTURER Current Assets  Cash  Receivables  Inventories Raw Materials Goods in Process Finished Goods The primary difference is inventory. Manufacturer’s Balance Sheet 34 C 4

35. Manufacturer’s Balance Sheet 35 Completed products for sale. Materials waiting to be processed. Can be direct or indirect. Partially complete products. Material to which some labor and/or overhead have been added. Raw Materials Finished Goods Goods in Process C 4

36. Income Statement Income Statement 36

37. Manufacturer’s Income Statement 37 P 1

38. Cost of Goods Sold for a Merchandiser and Manufacturer 38 P 1 Cost of goods sold for manufacturers differs only slightly from cost of goods sold for merchandisers.

39. NEED-TO-KNOW Indicate whether the following financial statement items apply to a manufacturer, a merchandiser, or a service provider. Some items apply to more than one type of organization. 1. Merchandise inventory4. Operating expenses 2. Finished goods inventory5. Cost of goods manufactured 3. Cost of goods sold6. Supplies inventory ManufacturerMerchandiserService Provider 1. Merchandise inventoryX 2. Finished goods inventoryX 3. Cost of goods soldXX 4. Operating expensesXXX 5. Cost of goods manufacturedX 6. Supplies inventoryXXX Manufacturer Produces units for sale Balance Sheet includes: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Merchandiser Purchases units for resale Balance Sheet includes: Merchandise Inventory Service Provider Does not provide a product to its customers; no inventories. P 1 39

40. Flow of Manufacturing Activities Flow of Manufacturing Activities 40

41. Activities and Cost Flows in Manufacturing 41 C 5

42. Schedule of Cost of Goods Manufactured Schedule of Cost of Goods Manufactured 42

43. Summarizes the types and amounts of costs incurred in a company’s manufacturing process. Schedule of Cost of Good Manufactured 43 Direct Materials Used +Direct Labor +Factory Overhead =Total Manufacturing Costs +Beginning Work in Process – Ending Work in Process =Cost of Goods Manufactured P 2

44. Manufacturing Statement 44 P 2

45. Manufacturing Statement 45

46. Include all direct labor costs incurred during the current period. Manufacturing Statement 46 P 2

47. Manufacturing Statement 47 P 2

48. Manufacturing Statement 48 P 2

49. Overhead Cost Flows Across Accounting Reports 49 P 2

50. NEED-TO-KNOW Compute the following three measures using the information below. 1. Cost of materials used 2. Cost of goods manufactured 3. Cost of goods sold Beginning raw materials inventory$15,500Ending raw materials inventory$10,600 Beginning work in process inventory29,000Ending work in process inventory44,000 Beginning finished goods inventory24,000Ending finished goods inventory37,400 Raw materials purchased66,000Direct labor used38,000 Total factory overhead used80,000 Beg. Inv.15,500Beg. Inv.29,000Beg. Inv.24,000 Purchases66,000Matls. Used70,900Cost of GM173,900 Direct Labor38,000 Fact. OH80,000 Avail for Use81,500Avail for Mfg.217,900Avail for Sale197,900 Matls. Used70,900Cost of GM173,900Cost of GS160,500 End. Inv.10,600End. Inv.44,000End. Inv.37,400 Finished Goods Inventory Cost of Direct Materials transferred from Raw Materials Inventory to Work in Process Inventory. Cost of goods completed in the current period and transferred from Work in Process Inventory to Finished Goods Inventory. Cost of goods leaving Finished Goods Inventory and going to the customer. Expensed on the income statement. Raw Materials InventoryWork in Process Inventory $70,900 $173,900 $160,500 P1/P 2 50

51. NEED-TO-KNOW Beg. Inv.15,500Beg. Inv.29,000Beg. Inv.24,000 Purchases66,000Matls. Used70,900Cost of GM173,900 Direct Labor38,000 Fact. OH80,000 Avail for Use81,500Avail for Mfg.217,900Avail for Sale197,900 Matls. Used70,900Cost of GM173,900Cost of GS160,500 End. Inv.10,600End. Inv.44,000End. Inv.37,400 Finished Goods InventoryRaw Materials InventoryWork in Process Inventory Balance Sheet Current assets: Raw Materials Inventory$10,600 Work in Process Inventory44,000 Finished Goods Inventory37,400 Income Statement Sales$XXXXX Cost of Goods Sold(160,500) P1/P 2 51

52. Trends in Managerial Accounting Trends in Managerial Accounting 52

53. Trends in Managerial Accounting 53 Customer Orientation E-Commerce Global Economy Service Economy Lean Practices Value Chain C 6

54. Customer Orientation 54 C 6

55. Quality improvement applied to all aspects of business activities. Seek and uncover waste. Employees encouraged to try new methods to improve quality. Company emphasizes value of quality through quality awards. Total Quality Management 55 C 6 Constant Focus on Higher Standards

56. Complete products just-in-time to ship to customers Complete parts just-in-time for assembly into products Schedule Production Receive materials just-in-time for production Receive customer orders Just-In-Time (JIT) Manufacturing 56 C 6

57. Value Chain 57 The value chain refers to the series of activities that add value to a company’s products or services. Companies can use lean practices to increase efficiency and profits. C 6

58. Global View 58

59. Raw Materials Inventory Turnover and Days’ Sales Raw Materials Inventory Turnover and Days’ Sales 59

60. 1) Raw Materials Inventory Turnover 60 A1 Raw materials Inventory turnover = Raw materials used Average materials inventory

61. Important Stuff  Raw materials Inventory turnover = Raw materials used / Average materials inventory  Manufacturers cost of Goods Sold (COGS) = Beg. Inventory + Purchases Costs – End. Inventory = COGS  Merchandisers Cost of Goods Sold = Beg. Inventory + Cost of Goods Manufactured – End. Inventory = COGS  Cost of Goods Manufactured = Direct Materials + Direct Labors + Factory Overhead = Total Manufacturing Costs + Beg. Work in Progress - End. Work in Progress = Cost of Goods Manufactured Atef Abuelaish61

62. Homework assignment  Using Connect – 7 Questions for 60 Points.  Complete the “Connect Orientation” at Connect web site for 10 points, before 2/15/2016. 2  Prepare chapter 2 “ Job Order Costing and Analysis. ” Happiness is having all homework up to date Atef Abuelaish62

63. Thank you and See You Next Week at the Same Time, Take Care Thank you and See You Next Week at the Same Time, Take Care Atef Abuelaish63