Managerial Accounting Essay

2037 words - 8 pages

Managerial accountingFinancial Accounting - Develops in formationFinancial accounting is external for the outside worldGoal is to publish the financial statementsIncome statementBalance sheetCash flowsAccording to the rulesManagerial accounting is internal and stays in the companyNo rules!!!Is usually confidentialIPhoneSales = Units x PriceCost? Plastic Research: - SalariesMetal - Equipment + spaceLabor Market studyShipping AdvertisingBattery Legal FeesDutyMr. Young's story: MedtronicAll product sold in Europe went through the DutchDistribution centerThe price of the product to each "sister" company was the end price to the customer, less 30%.Financial accountingSwitzerland GreeceSales $3,000 $1,200COGS 2,100 840Gross profit 900 360Selling Expenses 600 200Profit 300 160Return on sales 10% 13%Management reportingSwitzerland GreeceSales $3,000 $1,200COGS 1,000 1000Gross profit 2,000 200Selling Expenses 600 200Profit 1,400 0Return on sales 47% 0%Cost behaviorHow costs react to changes in activityCost driver = Something which causes a cost to happen
Activity

Cost

Cost driver

Production

Labor

# Of products labor hours

Research

Salaries

# Of new products

Marketing

Advertising

Target Range
Type of Media
# Of ads

Shipping

Transportation

# Of Boxes
Type of transport
Distance
Weight

2 types of costs1/ Variable costs (VC): Change directly with a change in the level of activity2/ Fixed costs (FC): Does not change with a change in the level of activityVariable Cost /UnitRelevant RangeVC/UnitCost Remains thesameUnitsFixed CostsMove in stepsRelevant RangeCostUnitsAs the level of activity increases

Total Cost

Cost per Unit

Variable costs

Increase

No change

Fixed costs

No change

Decrease

Add a 2nd coke MachineMonthly rental: $200/Month. Fixed costEach can cost: $1.00/can. Variable$ ProfitLossBreakeven point CansPrice: $1.50Calculate breakeven pointStart with unit contribution margin (marginal Income)Sales -Variable cost(Price) (Per unit)$1.50 - $1.00 = $0.50Coke machineMonthly rent $ 200/monthCost of a can $ 1.00/canSales price $ 1.50/canUnit contribution: Price - V.C1.50 - 1.00= $ 0.50B.E.P in units: Fixed costs/unit contribution= 200/0.50=400 cansBreakeven Point in $% Of salesUnits 400Price $ 1.50Sales $ 600 100%V.C $ 400 67%Contribution $ 200 33%MarginF.C $ 200Profit 0Contribution margin % (ratio)Breakeven Point in $ = Fixed Costs / Contribution margin %= 200 / 0.33= $ 600Target Profit = $ 300Target Units = (Fixed Costs + Target Profit) / Unit contributionTarget Units = (200 + 300) / 0.50Target Units = 1000 CansTargets Sale in $ = (Fixed Costs + Target Profit) / Contribution Margin %= (200 + 300) / 0.33= $ 1,500The choice between fixed and variable costsCoke machine Sales price = $ 1.502 optionsMonthly rent = $ 200 Each can costs $ 100Monthly rent = $ 400 Each can costs $ 0.50B.E.P (1) = 200 / 0.50 = 400 cansB.E.P (2) = 400 / 1.00 = 400 cans600 cans(1) (2)Sales $900 $900V.C 600 300F.C 200 400Profit 100 200200...

Find Another Essay On managerial accounting

Managerial and Financial Accounting Essay

1117 words - 4 pages Managerial and Financial Accounting PAGE \* Arabic 1 Running Head: Managerial and Financial AccountingManagerial and Financial AccountingACC 300Managerial and Financial AccountingAccounting is a large field of study which can be broken down into many different categories. Managerial and financial accounting is two main areas of the cost accounting system. Many similarities and differences lie between managerial and financial accounting, not

Accounting: Managerial and Financial Essay

915 words - 4 pages Managerial and financial accounting are two very different types of accounting. They differ so much, that many schools offer separate classes on both. The uses and users of both types of accounting vary as much as the information provided by each. In this paper, the differences between managerial and financial accounting will be discussed. The users and decisions that are able to be made with both will also be discussed.Managerial

Managerial Financial Accounting Paper

760 words - 3 pages Both Managerial and financial accounting play an important role within Today's business companies. Understanding the difference and similarities of managerial and financial accounting will strengthen a company as a whole. Though, managerial and financial accountings seem to contain similar information; managerial accounting provides information that financial accounting does not. Managerial accounting is the progression of identifying, measuring

Financial vs. Managerial Accounting

992 words - 4 pages Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external

Managerial and Financial Accounting

902 words - 4 pages Financial statements are a necessity when it comes to businesses. They are used by both internal managers as well as outside users and provide information about the entire company. Managerial accounting is primarily used by individuals within a company or organization. The main purpose of financial accounting is to prepare financial reports that provide information about an organization's performance to external parties like creditors, investors

Managerial and Finanical Accounting Report

605 words - 2 pages There are two broad categories in accounting, financial accounting and managerial accounting. They differ in the type of user of the information presented. Financial accounting is concerned with preparing financial statements for external decision makers, such as stockholders and creditors. Managerial accounting presents information for internal decision making my managers.Financial accounting involves record keeping. A major objective is the

Managerial and Financial Accounting Paper

873 words - 3 pages IntroductionManagement has been described as the process whereby resources are combined into an integrated system to accomplish the objectives of the system. In most organizations, management, at its many levels, plans and sets goal and objectives and strives to ensure that they are met. Managerial Accounting is considered to be the backbone to a business's operation. It's the spreadsheets that show not only the numbers for the financial

Decision Making in Managerial Accounting

2668 words - 11 pages Managerial accountants need to use accounting information in seeing to it that they are able to plan, evaluate the company performance, manage risks and control the business operations in a manner that is deemed beneficial to the business as a whole (Caplan, n. d). This can be achieved through: having high standards of ethics in all situations; employing the techniques of management reports, budgetary control, and analysis of fund flows and

Difference between financial and managerial accounting

833 words - 4 pages The primary difference between financial and managerial accounting is that financial accounting is used for external members of the company; they do not control or run the businesses’ operations. An example of external members would be customers and shareholders of the business. On the other hand, managerial accounting is used for internal members in the company such as managers and officers. The internal members use managerial accounting to

Financial and Managerial Accounting: What's The Difference?

2912 words - 12 pages Financial and Managerial Accounting: What's The Difference? Whether it is a sole proprietorship, partnership, corporation, or a limited liability company, all businesses survive on the buying/selling of goods and services for cash or credit. They may buy land and build office complexes, stores, or factories. They may buy supplies, equipment

A Brief look at Managerial Accounting

3430 words - 14 pages A day doesn't go by without Managerial Accounting in our capitalistic world we call, America. Whether we recognize it or not it's in our lives everywhere we turn. It can be seen in the company you work at to the fast-food chain you buy breakfast. Managerial Accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization's goals.An organization needs resources and people to

Similar Essays

Financial Accounting Versus Managerial Accounting Essay

2039 words - 8 pages What is the difference between financial accounting and managerial accounting and who benefits from the information derived for the reports and advice offered by these accountants? Financial accounting is typically used for external oriented groups and results in the development of a balance sheet and financial statements. Managerial accounting, on the other hand, uses the information in the balance sheet and on the profit and loss statement in

Managerial Accounting And Financial Accounting Essay

742 words - 3 pages organizations. Managerial and financial accountants are required to operate with highest ethical standards.Managerial Accounting is the process of identifying, measuring, analyzing, interpreting and communicating information in order to achieve an organization's goals (Thompson, 2006). Managerial Accounting is widely known as Cost Accounting all over the world. Management accounting is concentrated towards managers of organizations to assist them

Managerial Accounting Versus Financial Accounting Essay

2578 words - 10 pages Final Essay: Accounting 206 Final Essay: Managerial Accounting versus Financial AccountingHeather SpencerAcc 206Instructor Lisa FoleyMay 17, 2010In this essay I will discuss what management accounting is and what the sources of data are. I will also divulge the differences in these accounting methods. In my learning of accounting principles, I have learned that there is a difference between financial accounting and managerial accounting. The

Managerial And Financial Accounting Essay

933 words - 4 pages Managerial and Financial Accounting Paper PAGE 1 Running Head: Managerial and Financial AccountingManagerial and Financial Accounting PaperTeam AUniversity of Phoenix-AustinACC/300 Principles of AccountingManagerial and Financial Accounting PaperIn today's corporate world, it is common to find financial statements relating to managerial and financial accounting. The financial statements are critical to both external users of the corporation as