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Accounting 211 Financial and Managerial Accounting

Accounting 211 Financial and Managerial Accounting. Teaching Assistant Hyun Jung (JoAnn) Lee. Contents. 1. Introduction 2. Review of Chapter 12 3. Practice. 1. Introduction. Personal Blog : www.personal.psu.edu/hul152 Click on “ACCTG 211 Spring 2008”

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Accounting 211 Financial and Managerial Accounting

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  1. Accounting 211Financial and Managerial Accounting Teaching Assistant Hyun Jung (JoAnn) Lee

  2. Contents 1. Introduction 2. Review of Chapter 12 3. Practice

  3. 1 Introduction

  4. Personal Blog : www.personal.psu.edu/hul152 Click on “ACCTG 211 Spring 2008” Office : 381A Business Building, 814-863-3796 Office Hour : 8 AM. ~ 10:00 AM on Monday Email : hul152@psu.edu Homework : Third-Third folder on Angel Due date : 3 AM. Next Tuesday Recitation Materials

  5. 2 Review of Managerial Accounting

  6. In management accounting, cost can be classified as: Direct or indirect = Traceability Variable or fixed = Behavior Financial Reporting issues = Product or period. Inventoriable or noninventoriable. Cost Classification

  7. Cost Equations • Total Costs = Variable Costs + Fixed Costs • At Breakeven Point • Sales dollars = Variable Costs + Fixed costs Indirect materials. • ZERO Profit!!~ • Profit • Sales dollars = Variable Costs + Fixed costs + Profit • Contribution Margin(CM) = Sales dollars – Variable Costs • Net Income = Contribution Margin – Fixed Costs

  8. Break-Even point = Fixed Costs / CM Targeted Sales = ( Fixed Costs + Profit ) / CM Weighted Average Contribution Margin Contribution Margin x Sales Mix Percentage Product or period. Contribution Margin ratio = CM / Sales Break Even Point

  9. How costs change in relation to volume or activity. Cost Behavior • Total costsPer unit costs • VC Vary with Stay same • # of units • FC Stay same Vary with • # of units

  10. Examples of VC, FC, and Mixed Costs • Variable Costs • Direct materials • Direct labor (hourly) , Indirect labor (hourly) • Operating supplies • Fixed Costs • Depreciation of machinery & building • Insurance premiums , Labor (salaried) • Supervisory salaries , Property taxes • Mixed Costs • Electrical power, Telephone, Heat

  11. Used to separate Fixed & Variable costs from Mixed costs Method Difference in Cost (A) = HIGH COST – LOW COST Difference in Driver (B) = HIGH “driver” – LOW “driver” Drivers could be labor hours, machine hours, etc. Cost per VC = (A) / (B) High-Low Method

  12. 3 Practice!!!

  13. Please see the excel file 1st Managerial Stuffs

  14. Do you have any questions? 381A Business Building 814-863-3796, hul152@psu.edu Welcome to Accounting World!!~

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