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

Spring, Contents 1. Introduction 2. Review of Chapter Practice

Introduction 1

Spring, Personal Blog : Click on “ACCTG 211 Spring 2008” Office : 381A Business Building, Office Hour : 8 AM. ~ 10:00 AM on Monday Homework : Third-Third folder on Angel Due date : 3 AM. Next Tuesday Recitation Materials

Review of Managerial Accounting 2

Spring, 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

Spring, 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

Spring, 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

Spring, How costs change in relation to volume or activity. Cost Behavior Total costs Per unit costs VC Vary with Stay same # of units FC Stay same Vary with # of units

Spring, 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

Spring, 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

3 Practice!!!

Spring, Please see the excel file 1 st Managerial Stuffs

Spring, Do you have any questions? Welcome to Accounting World!!~ 381A Business Building ,