1. part I –Managerial accounting basics
Manufacturing
part I –Managerial accounting basics

2. Comparison of managerial and financial
Managerial accounting
Financial accounting
Accounting to Insiders-different levels of management and other employees
Proforma data
Narrowly focused
Single purpose custom statements for one product, one department, one day, etc.
No GAAP
Statements prepared as needed--Hourly, weekly
Accounting to Outsiders-investors, government, creditors, etc.
Historical data impacting accounting equation
Broadly focused
Multi-purpose statements – income statement, balance sheet, cash flow
GAAP
Statements prepared on a regular basis-Annual, quarterly
Comparison of managerial and financial

3. Matching principle & manufacturing
Basic rule -- Record expenses in the same time period as the revenues that they help to generate
Timing is everything!
Manufacturing costs are expensed when the manufactured product is sold-cost of goods sold expense
Expensing manufacturing costs, then is delayed until the product is sold
Manufacturing costs initially start in an asset account, such as a particular type of inventory
Matching principle & manufacturing

4. Expense or not to expense!
Period costs
Product costs
Selling costs-marketing the product and finding customers
Office & administrative costs-support functions of the business
Expensed as incurred
Benefit received when service performed or asset used up
Direct and indirect factory costs
Direct (raw) materials-becomes the product
Direct labor-cost of hands-on workers
Factory overhead-all other factory costs-indirect
Key words to look for – factory, production, manufacturing, product, direct or raw materials, direct labor
Expensed only as product is sold
Expense or not to expense!