History of the Boss

History of the Boss

Accounting Review!!

Chapter 1
Managerial accounting: is more financial oriented and looks to the long run. Does not have to follow GAAP.

Management accounting could also be called internal accounting because of its planning controlling and decision making.
Information may be financial or nonfinancial and may be more subjective.

Chapter 2:
Product cost- direct labor, direct materials, indirect materials-overhead costs. Get expensed when they are sold. Can be inventoried until they are sold.
Period – administrative overhead, advertising, sales commissions. Expensed as they are incurred.

Marketing, distribution and customer service are selling costs.
Designing, developing and general administration are administrative costs

Difference between actual and normal costing is the estimated overhead.
Helps set sales prices ahead of time, and does not change price when different overhead costs are incurred.

Predetermined overhead rate:
Est overhead/ estimated cost driver
Cost driver x actual C D/ over applied

**Calculating Percentages of sales revenue for each line on income statement
- Divide each statement by the sales revenue

+ Purch
- RM End
= DM used. --' Beg WIP + DM used+ DL + MOH APPLIED – End WIP = cogm
+ DL
+ OH
= Total Manufacturing Costs
+ WIP (beginning of month)
- WIP (end of month)

+ finished goods Beginning
- finished goods end
= Cost of goods sold

Units Sold
Finished goods beginning
+ goods finished during month
- finished goods end
= units sold for that month

Preparing an income statement for a manufacturing firm
Sales Revenue (# of product x price of product)
+ Cost of goods sold
= Gross margin
Selling expense
Commissions ( % x Sales revenue)
+ fixed selling expense
- administrative expense
= Operating Income

Preparing an income statement for a service organization

- Cost of services sold (DM, DL, OH)...

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