1. MANAGERIAL ACCOUNTING 20  Managerial accounting basics  Cost concepts  Manufacturing costs  Contemporary developments

2. Managerial Accounting Basics “The league is projecting losses of $100 million during the first two years, with plans to edge into the black in year three.” Business Week, October 2000 Planning Uses of Accounting Information

3. “…ditching money-losing routes, launching early discount sales to fill planes.” Decision-Making Business Week, October 2000 Control “With better forecasting, the company can alert bottlers to rev up production lines.” Business Week, May 2000

4. Financial Accounting  stockholders, banks, IRS  CEOs, sales managers, production managers  comparable and reliable  relevant  financial statements  internal reports Managerial Accounting  business as a whole  subunits of the business

5. Manufacturing Costs Prime Costs Conversion Costs Direct Materials Direct Labor Factory Overhead (Product Costs)

6. Product Costs Period Costs  identified with products produced  added to the cost of inventory  identified with a period of time  recorded as an expense when products are sold  recorded as an expense immediately  selling and administrative expenses

7. Finished Goods Work in Process Direct Materials Three Inventory Accounts

8. DM used in production ? Direct Materials Beginning DM $25 Ending DM $40 DM Purchased $195 Changes in DM Inventory

9. Work in Process Beg WIP $42 DM Used $180 Direct Labor $220 Factory Overhead $70 Goods Manufactured ? Ending WIP $22 Changes in WIP Inventory

10. Goods Sold ? Finished Goods Manufactured $490 Beginning Finished Goods $14 Ending Finished Goods $37 Changes in Finished Goods Inventory

11. Contemporary Developments Growing Service Industry

12. R & D Product Design Production Marketing Distribution Customer Service The Value Chain Value Change Management

13.  Inventory ordered / goods produced JIT  Benefits  lower inventory costs  more efficient production  quicker response times  Requires  greater reliability  fewer defects  reduced setup time Just-in-Time Inventory

14.  Customer satisfaction  Problem solving teams  Plan-do-check-act  benchmarking Total Quality Management