Introduction to Managerial Accounting

Question: What is an annual report? Briefly describe the key parts of the annual report.

Question: Suppose Muddyriver.com sells 2,000 books on account for \(19 each (cost of these books is \)22,800), credit terms 1/20, n/45 on October 10, to The Salem Store. The Salem Store paid the balance to Muddyriver.com on October 22.

Requirements 

1. Journalize the Salem Store’s October transactions. 

2. Journalize Muddyriver.com’s October transactions. Assume Muddyriver.com uses the gross method to record sales revenue.

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps creditors make lending decisions

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 

2. Helps in planning and controlling operations.

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 

3. Is not required to follow GAAP.

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 

4. Has a focus on the future.

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 

5. Summary reports prepared quarterly or annually.

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

6. Wages of assembly line workers for a factory

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

7. Wages of the office receptionist in an administrative office

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

8. Property taxes on the factory

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

9. Sugar and flour used to make cookies

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

10.Salary of the factory maintenance supervisor

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

11.Salary of the sales manager

ABC Manufacturing Company has the following data for 2019 (amounts in millions): 

Direct Materials, January 1                                                       $ 5 

Direct Materials, December 31                                                  7 

Work-in-Process Inventory, January 1                                     12 

Work-in-Process Inventory, December 31                              16 

Finished Goods Inventory, January 1                                        8

 Finished Goods Inventory, December 31                               6 

Direct Materials Purchased, including Freight In                   25 

Direct Labor                                                                                  36 

Manufacturing Overhead                                                           17 

Prepare the schedule of cost of goods manufactured and the cost of goods sold section of the income statement for the year ended December 31, 2019.

Match the definition to the key term. 

13. Triple bottom line 

14. Value chain 

15. Just-in-time management 

16. Enterprise resource planning 

17. Total quality management 

a. A cost management system in which a company produces products just in time to satisfy needs. 

b. A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services, while meeting organizational goals throughout the value chain. 

c. Software system that can integrate all of a company’s functions, departments, and data into a single system. 

d. Evaluating a company’s performance by its economic (profits), social (people), and environmental (planet) impact. 

e. Includes all activities that add value to a company’s products and services

ABC Cleaning Company cleaned 45 offices and incurred costs of $2,340. What was the cost to clean each office?

1. What is the primary purpose of managerial accounting?

List six differences between financial accounting and managerial accounting.

Explain the difference between line positions and staff positions.

Explain the differences between planning, directing, and controlling.

List the four IMA standards of ethical practice, and briefly describe each.

Describe a merchandising company, and give an example.

How do manufacturing companies differ from merchandising companies?

List the three inventory accounts used by manufacturing companies, and describe each.

What are product costs?

Describe a service company, and give an example.

Comparing managerial accounting and financial accounting For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

b. Provides detailed reports on parts of the company.

Comparing managerial accounting and financial accounting

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

e. Reports audited annually by independent certified public accountants.

Explain the difference between a direct cost and an indirect cost.

What are the three manufacturing costs for a manufacturing company? Describe each.

What are prime costs? Conversion costs?

How do period costs differ from product costs?                            

Comparing managerial accounting and financial accounting 

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

e. Reports audited annually by independent certified public accountants

Comparing managerial accounting and financial accounting 

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

d. Reports must follow Generally Accepted Accounting Principles (GAAP).

Comparing managerial accounting and financial accounting 

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

c. Helps in planning and controlling operations

Comparing managerial accounting and financial accounting 

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA): 

Identifying ethical standards 

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

Identifying ethical standards 

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

b. You see others take home office supplies for personal use. As an intern, you do the same thing, assuming that this is a “perk.”

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

c. At a company-paid conference on e-commerce, you skip the afternoon session and go sightseeing

Identifying ethical standards 

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

d. You failed to read the detailed specifications of a new accounting software package that you asked your company to purchase. After it is installed, you are surprised that it is incompatible with some of your company’s older accounting software.

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

e. You do not provide top management with the detailed job descriptions they requested because you fear they may use this information to cut a position in your department.

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost: 

b. Cost of computer software to track WIP Inventory

How is cost of goods manufactured calculated?

How does a manufacturing company calculate cost of goods sold? How is this different from a merchandising company?

How does a manufacturing company calculate unit product cost?

How does a manufacturing company calculate unit product cost?

How does a service company calculate unit cost per service?

How does a service company calculate unit cost per service? 

How does a merchandising company calculate unit cost per item?

How does a merchandising company calculate unit cost per item?