Class notes for Chapter 14: Managerial Accounting

Chapter 14: Managerial
Accounting
Learning Objectives:

Identify the features of managerial accounting and the functions of
management.

Describe the classes of manufacturing costs and the differences between
product and period costs.

Demonstrate how to compute the cost of goods manufactured and prepare
financial statements for a manufacturer.

Discuss trends in managerial accounting.

Must-know formulas:

Direct Materials Used

Direct Materials Used = Beginning Direct Materials + Direct Materials Purchased
- Ending Direct Materials

Work-in-Progress (WIP) Inventory

Cost of Goods Manufactured = Manufacturing COsts Incurred + Beggining
Work-in-Process Inventory - Ending Work-in-Process Inventory

Cost of Good Sold (COGS)

COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured -
Ending Finished Goods Inventory

Total Manufacturing Costs

Total Manufacturing Costs = Direct Materials Costs + Direct Labour Costs +
Current Period Manufacturing Overhead Costs

Total Costs of Work-in-Process Inventory

Total Costs of Work-in-Process Inventory = Beggining Work-in-Process Inventory
+ Total Manufacturing Costs

Cost of Goods Manufactured (COGM)




Chapter 14: Managerial Accounting 1

, COGM = Total Cost of Work-in-Process Inventory - Ending Work-in-Process
Inventory

COGM = Beginning Work-in-Process Inventory + Manufacturing Costs Incurred -
Ending Work-in-Process Inventory

Manufacturing Costs Incurred

Manufacturing Costs Incurred = Direct Materials Used + Direct Labour +
Manufacturing Overhead

Product Costs
Product Costs = Direct Costs + Manufacturing Overhead/Indirect Costs

Direct Costs

Direct Costs = Direct Materials Costs + Direct Labour Costs

Period Costs

Period Costs = Selling Expenses + Administrative Expenses




Chapter 14: Managerial Accounting 2