Lesson 1

Managerial Accounting
Wenli Wu
Email ： wuwenli@mail.hust.edu.cn
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

Lesson
1
Accounting,
Business, and
Competitiveness
1-3
Part 1
and the Business
Environment
Chapter 1
1-4
Learning Objectives
 Identify the major differences and

similarities between financial and
managerial accounting
 Understand the role of management
accountants in an organization.
 Understand the basic concepts underlying
Lean Production, the Theory of
Constraints, and Six Sigma.
 Understand the importance of upholding
ethical standards.
1-5

1-6

1-7
Internet Usage
The
The Internet
Internet fuels
fuels globalization
globalization
by
by providing
providing companies
companies withwith greater
greater
access
access to
to geographically
geographically dispersed
dispersed
customers,
customers, employees,
employees, and and suppliers.
suppliers.
The
The number
number ofof internet
internet users
users more
more
than
than doubled
doubled during
during the
the first
first four
four
years
years of
of the
the new
new millennium.
millennium.
1-8
Strategy
A strategy
is a “game plan”
that enables a company
to attract customers
by distinguishing itself
from competitors.
The
The focal
focal point
point of
of aa
company’s
company’s strategy
strategy should
should
be
be its
its target
target customers.
customers.
1-9
事
故
的
达 2012 年 1 月 19 日，柯达公司在纽约依据《破产法》第
柯
11 章申请破产保护。对于成立 131 年的影像巨头柯达来
说，辉煌的历史终于走到尽头。柯达股价在过去一年累积
下跌了 88% ，目前仅为 0.55 美元，市值不到 1.5 亿美元
同一个月，富士胶片在拉斯维加斯召开的消费电子展
(CES) 发布了重量级单电相机 X Pro 1 。目前富士市值将
近 120 亿美元，全年营收接近 500 亿美元
 柯达失败在于 R&D 投入不足？

1-10
亚
基
诺
与 2012 年 4 月 25 日，投资评级机构惠誉（ Fitch ）将诺
果
苹基亚信用评级下调至投资级以下的垃圾级，原因主要是诺
基亚手机业务在第一季度继续恶化，且前景不容乐观
同日，苹果发布 2012 财年第二财季财报。报告显示，苹

果第二财季净利 116.22 亿美元同比增 94% ，股价大涨
7.69% ，报 603.34 美元，市值 5200 亿美元，冠绝全球
 Nokia 失败的原因？

1-11
Customer Value Propositions
Customer
Understand
Understand andand respond
respond to
to
Intimacy
individual
individual customer
customer needs.
needs.
Strategy
Operational Deliver
Deliver products
products andand services
services
Excellence faster,
faster, more
more conveniently,
conveniently,
Strategy and
and atat lower
lower prices.
prices.
Product
Leadership Offer
Offer higher
higher quality
quality products.
products.
Strategy

1-12
场
道
谷 2006 年中国成长百强企业中，五谷道场的控股母公司中
五
旺集团以 2003.27% 的成长速度高居冠军，五谷道场和
王中旺本人，成为全国当之无愧的明星企业和明星企业家
但在 2007 年起，开始出现品牌危机、债务危机、办事处
大换血、占用经销商货款、拖欠员工工资，即资金链出现
危机

1-13
Work of Management
Planning
Planning
Directing
Directing and
and
Motivating
Motivating
Controlling
Controlling

1-14
Planning
Identify
Identify
alternatives.
alternatives.
Select
Select alternative
alternative that
that does
does
the
the best
best job
job of
of furthering
furthering
organization’s
organization’s objectives.
objectives.
Develop
Develop budgets
budgets to
to guide
guide
progress
progress toward
toward the
the
selected
selected alternative.
alternative.
1-15
Directing and Motivating
Directing and motivating involves managing

day-to-day activities to keep the organization
running smoothly.
 Employee work assignments.
 Routine problem solving.
 Conflict resolution.
 Effective communications.

1-16
Controlling
The
The control
control function
function ensures
ensures
that
that plans
plans are
are being
being followed.
followed.
Feedback
Feedback inin the
the form
form ofof performance
performance reports
reports
that
that compare
compare actual
actual results
results with
with the
the budget
budget
are
are an
an essential
essential part
part of
of the
the control
control function.
function.

1-17
Exhibit
Planning and Control Cycle 1-2
Formulating
Formulatinglong-
long- Begin
and
andshort-term
short-termplans
plans
(Planning)
(Planning)
Comparing
Comparingactual
actual Implementing
Implementing
to
toplanned
planned Decision plans
performance Making plans(Directing
(Directing
performance and
(Controlling) andMotivating)
Motivating)
(Controlling)
Measuring
Measuring
performance
performance
(Controlling)
(Controlling)
1-18
Learning Objective 1
Identify the major

differences and similarities
between financial and
managerial accounting

1-19
Comparison of Financial and

1-20
Understand the role of

management accountants
in an organization.

1-21
Organizational Structure
Decentralization
Decentralization is
is the
the delegation
delegation of
of decision-
decision-
making
making authority
authority throughout
throughout anan organization.
organization.
Corporate O rganization Chart

B oard of D irectors
P resident
P urchasing P ersonnel V ice P resident C hief Financial

O perations O fficer
Treasurer C ontroller

1-22
Line and Staff Relationships
Line positions are directly Staff positions support

related to achievement of and assist line positions.
the basic objectives of an  Example: Cost
organization. accountants in the
 Example: Production manufacturing plant.
supervisors in a
manufacturing plant.

1-23
The Chief Financial Officer (CFO)
A member of the top management team

responsible for:
 Providing timely and relevant data to support
planning and control activities.
 Preparing financial statements for external users.

1-24
Understand the basic

concepts underlying Lean
Production, the Theory of
Constraints, and Six Sigma.

1-25
Process Management
A business
process is a series of
steps that are followed in order to
carry out some task in
a business.
Product Customer
R&D Design Manufacturing Marketing Distribution Service
Business functions making up the value chain

1-26
Process Management
There are three approaches to

improving business processes . . .
Theory of
Constraints (TOC)
Lean Six
Production Sigma

1-27
Traditional “Push”
Manufacturing Company
Forecast Sales Order components Store Inventory
Make Sales from

Finished Goods Store Produce goods in
Inventory Inventory Anticipation of Sales

1-28
Traditional “Push”
Manufacturing Company
Traditional “push” Large

manufacturing inventories
Raw Work in Finished

materials process goods
Materials
Materials waiting
waiting Completed
Completed products
products
to
to be
be processed.
processed. awaiting
awaiting sale.
sale.
Partially
Partially completed
completed products
products
requiring
requiring more
more work
work before
before
they
they are
are ready
ready for
for sale.
sale.
1-29 Exhibit
Lean Production
1-6
 Identify
 Identify value
value  Identify
Identify the
the
in
in specific
specific business
business process
process
products/services.
products/services. that
that delivers
delivers value.
value.
The
The lean
lean thinking
thinking  Organize
Organize work
work
arrangements
arrangements around
around
model
model is
is aa five
five the
the flow
flow of
of the
the
step
step approach.
approach. business
business process.
process.
 Continuously
 Continuously pursue
pursue  Create
Create aa pull
pull
perfection
perfection in
in the
the system
system that
that responds
responds
business
business process.
process. to
to customer
customer orders.
orders.
1-30
Lean Production
The
The five
five step
step process
process results
results in
in aa “pull”
“pull” manufacturing
manufacturing system
system
that
that reduces
reduces inventories,
inventories, decreases
decreases defects,
defects, reduces
reduces
wasted
wasted effort,
effort, and
and shortens
shortens customer
customer response
response times.
times.
Customer Places Create Production Generate Component

an Order Order Requirements
Goods Delivered Production Begins Components

when needed as Parts Arrive are Ordered
1-31
Lean Production
Lean thinking may be used to improve business

processes that link companies together.
The term supply chain management refers to

the coordination of business processes across
companies to better serve end consumers.
1-32
Theory of Constraints
A constraint (also called a bottleneck) is anything that
prevents you from getting more of what you want.
The Theory of Constraints is based on the observation that
effectively managing the constraint is the key to success.
The
The constraint
constraint inin aa system
system is
is determined
determined
by
by the
the step
step that
that has
has the
the smallest
smallest capacity.
capacity.

1-33
Theory of Constraints
Only actions 2.
2. Allow
Allow the
the
that strengthen weakest
weakestlink
linkto
to
the weakest link set
in the “chain” setthe
thetempo.
tempo.
improve the
process.
3.
3. Focus
Focuson on
1.
1. Identify
Identifythe
the improving
improving
weakest
weakestlink.
link. the
theweakest
weakest
link.
link.
4.
4. Recognize
Recognizethat
that
the
theweakest
weakestlink
link
is
isno
nolonger
longerso.
so.
1-34
Six Sigma
AA process
process improvement
improvement method
method relying
relying on
on customer
customer
feedback
feedback and
and fact-based
fact-based data
data gathering
gathering and
and analysis
analysis
techniques
techniques to
to drive
drive process
process improvement.
improvement.
Refers
Refers to
to aa process
process that
that generates
generates no
no more
more
than
than 3.4
3.4 defects
defects per
per million
million opportunities.
opportunities.
Sometimes
Sometimes associated
associated
with
with the
the term
term zero
zero defects.
defects.

1-35 Exhibit
Six Sigma
1-8
The Six Sigma DMAIC Framework

Stage Goals
Define ● Establish the scope and purpose of the project.
● Diagram the flow of the current process.
● Establish the customer's requirements for the
process.
Measure ● Gather baseline performance data related to
the existing process.
● Narrow the scope of the project to the most
important problems.
Analyze ● Identify the root cause(s) of the problems
identified in the Measure stage.
Improve ● Develop, evaluate, and implement solutions
to the problems.
Control ● Ensure that problems remain fixed.
● Seek to improve the new methods over time.
1-36
E-Commerce
E-commerce
E-commerce refers
refers to
to business
business
conducted
conducted using
using the
the Internet.
Internet.
In
In addition
addition to
to dot.com
dot.com companies,
companies, traditional
traditional
businesses,
businesses, such
such as
as banks
banks andand retailers,
retailers,
continue
continue to
to expand
expand their
their Internet
Internet presence.
presence.
The
The growth
growth inin e-commerce
e-commerce is is occurring
occurring
because
because the
the Internet
Internet has
has important
important advantages
advantages
over
over more
more conventional
conventional marketplaces
marketplaces for
for many
many
kinds
kinds of
of transactions.
transactions.
1-37
Enterprise Systems
A single software system that

integrates data across an organization,
thereby enabling all employees to
have simultaneous access to a
common set of data.
All
All data
data are
are recorded
recorded only
only
once
once inin the
the company’s
company’s
centralized
centralized database.
database.
The
The unique
unique data
data elements
elements
contained
contained within
within aa database
database
can
can be
be linked
linked together.
together.
1-38
Understand the
importance of upholding
ethical standards.

1-39
子曰：志于道，据于德，依
于仁，游于艺。
------- 论语

1-40
Code of Conduct for
Management Accountants
The Institute of Management Accountant’s (IMA)

Standards of Ethical Conduct for Practitioners
of Management Accounting and Financial
Management have two major parts,
which offer guidelines for:
 Ethical behavior.
 Resolution for an ethical conflict.

1-41
IMA Guidelines for Ethical Behavior
Recognize
Recognize andand
communicate
communicate professional
professional
limitations
limitations that
that preclude
preclude
responsible
responsible judgment.
judgment.
Maintain
Maintain Follow
Follow applicable
applicable
professional
professional Competence
Competence laws,
laws, regulations
regulations
competence.
competence. and
and standards.
standards.
Provide
Provide accurate,
accurate, clear,
clear,
concise,
concise, and
and timely
timely decision
decision
support
support information.
information.
McGraw-Hill/Irwin http://www.imanet.org/about_ethics_statement.asp
Copyright © 2008, The McGraw-Hill Companies, Inc.
1-42
Do
Do not
not disclose
disclose confidential
confidential
information
information unless
unless legally
legally
obligated
obligated to
to do
do so.
so.
Do
Do not
not use
use
confidential
confidential
information
information forfor Confidentiality
Confidentiality
unethical
unethical or
or illegal
illegal
advantage.
advantage.
Ensure
Ensure that
that subordinates
subordinates do
do
not
not disclose
disclose confidential
confidential
information.
information.
1-43
Mitigate
Mitigate conflicts
conflicts of
of
interest
interest and
and advise
advise others
others
of
of potential
potential conflicts.
conflicts.
Refrain
Refrain from
from
conduct
conduct that
that
would
would prejudice
prejudice Integrity
Integrity
carrying
carrying out
out
duties
duties ethically.
ethically.
Abstain
Abstain from
from activities
activities that
that
might
might discredit
discredit the
the
profession.
profession.
1-44
Communicate
Communicateinformation
information
fairly
fairlyand
andobjectively.
objectively.
Disclose
Disclosedelays
delaysor
or
deficiencies
deficienciesin ininformation
information
Credibility
Credibility timeliness,
timeliness, processing,
processing, oror
internal
internal controls.
controls.
Disclose
Discloseall
all relevant
relevant
information
informationthat
thatcould
could
influence
influenceaauser’s
user’s
understanding
understandingof ofreports
reports
and
andrecommendations.
recommendations.
1-45
Codes of Conduct on
the International Level
The
The Code
Code ofof Ethics
Ethics for
for Professional
Professional
Accountants,
Accountants, issued
issued by
by the
the International
International
Federation
Federation of of Accountants
Accountants (IFAC),
(IFAC), govern
govern the
the
activities
activities of
of professional
professional accountants
accountants worldwide.
worldwide.
In
In addition
addition to
to competence,
competence, objectivity,
objectivity, independence,
independence,
and
and confidentiality,
confidentiality, the
the IFAC’s
IFAC’s code
code deals
deals with
with
the
the accountant’s
accountant’s ethical
ethical responsibilities
responsibilities in:in:
Taxes
Taxes
Independence
Independence
Fees
Fees and
and commissions
commissions
Advertising
Advertising and
and solicitation
solicitation
Handling
Handling of of monies
monies
Cross-border
Cross-border activities.
activities.
1-46
Why Have Ethical Standards?
Ethical
Ethical standards
standards in
in business
business are
are essential
essential for
for aa
smooth
smooth functioning
functioning advanced
advanced market
market economy.
economy.
Without ethical standards in business, the

economy, and all of us who depend on it for
jobs, goods, and services, would suffer.
Abandoning ethical standards in business would

lead to a lower quality of life with less
desirable goods and services at higher prices.
1-47
Company Codes of Conduct
Broad-based
Broad-based statements
statements ofof aa
company’s
company’s responsibilities
responsibilities to:
to:
Employees
Employees Customers
Customers Suppliers
Suppliers
And
And to
to the
the communities
communities in
in
which
which the
the company
company operates.
operates.
1-48
Corporate Governance
The
The system
system byby
which
which aa company
company is
is directed
directed
and
and controlled.
controlled.
Board
Board of
of Incentives and
Directors
Directors monitoring for
Top
Top To pursue
Management objectives of
Management
Stockholders
Stockholders
1-49
Corporate Governance
An
An effective
effective corporate
corporate governance
governance system
system
should
should also
also protect
protect the
the interests
interests of
of the
the
company’s
company’s other
other stakeholders.
stakeholders.
Employees
Employees Customers
Customers Creditors
Creditors Suppliers
Suppliers
And
And the
the communities
communities in
in
which
which the
the company
company operates.
operates.
1-50
Enterprise Risk Management
Should I try to avoid the risk,

share the risk, accept the
risk, or reduce the risk?
A process used
by a company to
proactively identify
and manage risk.
Once
Once aa company
company identifies
identifies its
its risks,
risks, perhaps
perhaps the
the
most
most common
common riskrisk management
management tactictactic is
is to
to reduce
reduce
risks
risks by
by implementing
implementing specific
specific controls.
controls.
1-51
Corporate Social Responsibility
Corporate social responsibility (CSR) is a concept

whereby organizations consider the needs
of all stakeholders when making decisions.
Environmental
Customers Employees Suppliers Communities Stockholders & Human Rights
Advocates
CSR extends beyond legal compliance

to include voluntary actions that satisfy
stakeholder expectations.
1-52
End of Chapter 1

1-53
Part 2
and Cost Concepts
Chapter 2
1-54
Learning Objectives
• Define and illustrate a cost object.

• Compare, contrast, and give an example
of each of the following types of costs:
 direct and indirect
 prime and conversion
 product and period
 variable, fixed
 total and unit
 relevant, irrelevant
 incremental, opportunity, and sunk
1-55
Cost Objects

1-56
Cost
• the amount, measured in money, of cash

expended or other property transferred,
capital stock issued, services performed, or
a liability incurred, in consideration of goods
or services received or to be received.
----The American Institute of Certified
Public Accountants (AICPA)

1-57
什么是成本
什么是成本 ??
不同的经济环境，不同的行业特
不同的经济环境，不同的行业特
点，对成本的内涵有不同的理
点，对成本的内涵有不同的理
?
解。但是，成本的经济内容归
解。但是，成本的经济内容归
纳起来有两点是共同的：一是
纳起来有两点是共同的：一是
成本的形成是以某种目标为对
成本的形成是以某种目标为对
象的；二是成本是为实现一定
象的；二是成本是为实现一定
的目标而发生的耗费
的目标而发生的耗费 ..

1-58
成本与费用
成本与费用既有紧密联系
成本与费用既有紧密联系
又有一定的区别。
又有一定的区别。
成本代表经济资源的牺牲，而费用
成本代表经济资源的牺牲，而费用
?
是会计期间为获得收益而发生的
是会计期间为获得收益而发生的
消耗。
消耗。
费用是成本的基础；按对象归集的
费用是成本的基础；按对象归集的
费用构成成本。
费用构成成本。
成本会计关注的是成本而不是费用。
成本会计关注的是成本而不是费用。

1-59
Cost object
Cost object Examples
Product TV, personal computer, book, table, car, pencil
Service Teaching a course, consulting, accounting work
Activity Shelf-stocking, customer support, computer
processing, credit control, materials
storage/handling
Machine A molding machine, photocopying machine
Process Brewing, brick-making, coal mining
Department Accounting department, operations department,
marketing department
Customer Any customer – individual or company
Program An MBA program, a vaccination campaign
Project Building a house, constructing a highway
1-60
Cost Collection System
• Stage 1 – The system accumulates costs by

classifying them into certain categories such
as materials, labour and overhead costs.
• Stage 2 – The system assigns these costs to
cost objects.

1-61
直接成本可以很经济方
直接成本可以很经济方
便的直接追踪成本至成
便的直接追踪成本至成
本库或成本标的之成本
本库或成本标的之成本间接成本无法以便
间接成本无法以便
利或经济的方式追
利或经济的方式追
踪成本或成本库至
踪成本或成本库至
成本标的。
成本标的。
运用成本动因（分摊基
运用成本动因（分摊基
础），将间接成本分派至成
础），将间接成本分派至成
本库和成本标的的过程，称
本库和成本标的的过程，称
作成本分摊。
作成本分摊。

1-62
Identify and give examples

of each of the three basic
manufacturing cost
categories.

1-63
Manufacturing Cost Concepts
Financial Managerial
Accounting Accounting
Cost is a measure of Product costs are the
resources used or costs a company
given up to achieve a assigns to units
stated purpose. produced.

1-64
Manufacturing Costs
Direct
Direct Direct
Direct Manufacturing
Manufacturing
Materials
Materials Labor
Labor Overhead
Overhead
The Product

1-65
Direct Materials
Raw materials that become an integral part of

the product and that can be conveniently
traced directly to it.
Example:
Example: A
A radio
radio installed
installed in
in an
an automobile
automobile

1-66
直接材料
牛奶 + 糖
+ 面粉
=
直接材料包含产品的材料成本，扣除进货折
扣，加上废料与瑕疵品的合理耗损。

1-67
Direct Labor
Those labor costs that can be easily traced to

individual units of product.
Example:
Example: Wages
Wages paid
paid to
to automobile
automobile assembly
assembly workers
workers

1-68
Manufacturing Overhead
Manufacturing costs that cannot be traced directly

to specific units produced.
Examples:
Examples: Indirect
Indirect labor
labor and
and indirect
indirect materials
materials
Wages paid to employees Materials used to support

who are not directly the production process.
involved in production
work. Examples: lubricants and
Examples: maintenance cleaning supplies used in the
workers, janitors and automobile assembly plant.
security guards.

1-69
Prime and Conversion costs
Manufacturing costs are often

classified as follows:
Direct Direct Manufacturing
Material Labor Overhead
Prime Conversion
Cost Cost

1-70
Assignment of direct and indirect costs
Direct Cost tracing

costs
Cost
objects
Indirect Cost
costs allocation

1-71
Assigning Costs to Cost Objects
Direct costs Indirect costs

• Costs that can be • Costs that cannot be
easily and conveniently easily and conveniently
traced to a unit of traced to a unit of
product or other cost product or other cost
object. object.
• Examples: direct • Example: manufacturing
material and direct labor overhead

1-72
成本分摊非常重要，为什么？
• 假设公司正研究是否购
买一套昂贵的电脑系统，
帮助部门经理人更有效 •
IBM ， 1980-1990 期间，
地处理资料。把 R&D 费用分摊给率
• 1 、部门无需承担电脑先使用这些技术的部门，
费用；后使用的部门不比承担
• 2 、部门必须承担该设费用？
备的使用成本。 • 1992 年改变内部成本方
案后发现 PC 一直不盈
利

1-73
直接材料
按经济用途直接人工
划分
制造费用
产品按产品在
主要成本
成本制造过程
作用划分加工成本
按成本与成
直接成本
本对象之间
的关系划分间接成本

1-74
Non-manufacturing Costs
Selling Administrative
Costs Costs
Costs necessary to get All executive,

the order and deliver organizational, and
the product. clerical costs.

1-75
Cost classification
on financial
statements

1-76
Product Costs Versus Period Costs
Product costs include Period costs include all

direct materials, direct selling costs and
labor, and administrative costs.
manufacturing
overhead.
Inventory Cost of Good Sold Expense
Sale
Balance Income Income

Sheet Statement Statement
1-77
Quick Check 
Which of the following costs would be

considered a period rather than a product cost
in a manufacturing company?
A. Manufacturing equipment depreciation.
B. Property taxes on corporate headquarters.
C. Direct materials costs.
D. Electrical costs to light the production
facility.
E. Sales commissions.

1-78
Quick Check 
Which of the following costs would be

considered a period rather than a product cost
in a manufacturing company?
A. Manufacturing equipment depreciation.
B. Property taxes on corporate headquarters.
C. Direct materials costs.
D. Electrical costs to light the production
facility.
E. Sales commissions.

1-79
Product costs Asset
(also called manufacturing (inventory)
costs)
direct materials unsold raw materials inventory
direct labour work in progress inventory
manufacturing overhead finished goods inventory
When finished
goods are sold
Period costs
(also called non-
manufacturing costs) Expense
Examples: always Recorded as an expense in the
president’s salary
financial statement of the
sales salaries
current accounting period
travel expense
depreciation on showroom
1-80
Comparing Merchandising and
Manufacturing Activities
Example ： Two companies are used —
Corner Convenience Store and Door
Manufacturing Company — to illustrate
the concepts discussed in this section.
MegaLoMart

1-81
Comparing Merchandising and
Manufacturing Activities
Merchandisers . . . Manufacturers . . .
 Buy finished goods.  Buy raw materials.
 Sell finished goods.  Produce and sell
finished goods.
MegaLoMart

1-82
Balance Sheet
Merchandiser Manufacturer
Current assets Current Assets
 Cash  Cash
 Receivables  Receivables
 Prepaid Expenses
 Inventories
 Merchandise
• Raw Materials
Inventory
• Work in Process
• Finished Goods

1-83
Balance Sheet
Merchandiser Manufacturer
Current assets Current Assets
 Cash  Cash
 Receivables  Receivables
Materials waiting to
 Prepaid Expenses be processed.
Partially complete  Inventories
 Merchandise
products – some
Inventory • Raw Materials
material, labor, or • Work in Process
overhead has been • Finished Goods
added.
Completed products
awaiting sale.
1-84
Prepare an income statement
Example
Inventories accounts Beginning balance Ending balance

Corner Convenience Store
Merchandise inventory €40,000 €55,000
Door Manufacturing Company
Raw materials €80,000 €95,000
Work in progress €50,000 €35,000
Finished goods €90,000 €130,000

1-85
Example

1-86

1-87
Basic Equation for Inventory Accounts
Withdrawals
Withdrawals
Beginning
Beginning Additions
Additions Ending
Ending
balance
balance
+ to
to inventory
inventory
= balance
balance
+ from
from
inventory
inventory

1-88
Inventory Flows
Beginning
Beginning Additions
Additions Available
Available
balance
balance + $$$
$$$
= $$$$$
$$$$$
$$
$$
_
Withdrawals
Withdrawals
$$$
$$$
=
Ending
Ending
balance
balance
$$
$$

1-89
Quick Check 
If your inventory balance at the beginning of the

month was $1,000, you bought $100 during the
month, and sold $300 during the month, what
would be the balance at the end of the month?
A. $1,000.
B. $ 800.
C. $1,200.
D. $ 200.

1-90
Quick Check 
If your inventory balance at the beginning of the

month was $1,000, you bought $100 during the
month, and sold $300 during the month, what
would be the balance at the end of the month?
A. $1,000.
$1,000 + $100 = $1,100
B. $ 800. $1,100 - $300 = $800
C. $1,200.
D. $ 200.

1-91

1-92
Schedule of Cost of Goods
Manufactured
Calculates the cost of raw

material, direct labor and
manufacturing overhead used
in production.
Calculates the manufacturing

costs associated with goods
that were finished during the
period.
1-93
Product Cost Flows
Manufacturing Work
Raw Materials Costs In Process
Beginning raw Direct materials

materials inventory
+ Raw materials
purchased
= Raw materials
available for use
in production
– Ending raw materials
inventory
= Raw materials used As
Asitems
itemsare
areremoved
removedfrom
fromrawraw
in production materials
materialsinventory
inventoryand
andplaced
placedinto
into
the
theproduction
productionprocess,
process, they
theyare
are
called
calleddirect
directmaterials.
materials.
1-94
Product Cost Flows
Manufacturing Work
Conversion
Conversion
Beginning raw Direct materials
materials inventory + Direct labor
costs
costsare
arecosts
costs
+ Raw materials + Mfg. overhead incurred
incurredtoto
purchased = Total manufacturing convert
convertthe
the
= Raw materials costs
available for use
direct
directmaterial
material
in production into
intoaafinished
finished
– Ending raw materials product.
product.
inventory
= Raw materials used
in production

1-95
Product Cost Flows
Manufacturing Work
Beginning raw Direct materials Beginning work in

materials inventory + Direct labor process inventory
+ Raw materials + Mfg. overhead + Total manufacturing
purchased = Total manufacturing costs
= Raw materials costs = Total work in
available for use process for the
in production period
– Ending raw materials
inventory All
All manufacturing
manufacturingcosts
costsincurred
incurred
= Raw materials used during
duringthe
theperiod
periodare
areadded
addedto
tothe
the
in production
beginning
beginningbalance
balanceof
ofwork
workin
in
process.
process.

1-96
Product Cost Flows
Manufacturing Work
Beginning raw Direct materials Beginning work in

materials inventory + Direct labor process inventory
+ Raw materials + Mfg. overhead + Total manufacturing
purchased = Total manufacturing costs
= Raw materials costs = Total work in
available for use process for the
in production period
– Ending raw materials – Ending work in
inventory process inventory
Costs associated with
withthe
thegoods
goodsthat
=Costs associated
Raw materials used that = Cost of goods
are
areincompleted
production during
completed duringthe
theperiod
periodareare manufactured
transferred
transferredto
tofinished
finishedgoods
goods
inventory.
inventory.

1-97
Product Cost Flows

1-98
Manufacturing Cost Flows
Balance Sheet Income

Costs Inventories Statement
Expenses
Material Purchases Raw Materials
Direct Labor Work in

Process
Manufacturing
Overhead Cost of
Finished
Goods
Goods
Sold
Selling and Period Costs Selling and

Administrative Administrative
1-99
Quick Check 
Beginning raw materials inventory was $32,000.

During the month, $276,000 of raw material was
purchased. A count at the end of the month
revealed that $28,000 of raw material was still
present. What is the cost of direct material
used?
A. $276,000
B. $272,000
C. $280,000
D. $ 2,000

1-100
Quick Check 
Beginning raw materials inventory was $32,000.

During the month, $276,000 of raw material was
purchased. A count at the end of the month
revealed that $28,000 of raw material was still
present. What is the cost of direct material used?
A. $276,000
B. $272,000
C. $280,000
D. $ 2,000

1-101
Quick Check 
Direct materials used in production totaled

$280,000. Direct labor was $375,000 and
factory overhead was $180,000. What were
total manufacturing costs incurred for the
month?
A. $555,000
B. $835,000
C. $655,000
D. Cannot be determined.

1-102
Quick Check 
Direct materials used in production totaled

$280,000. Direct labor was $375,000 and
factory overhead was $180,000. What were
total manufacturing costs incurred for the
month?
A. $555,000
B. $835,000
C. $655,000

1-103
Quick Check 
Beginning work in process was $125,000.

Manufacturing costs incurred for the month
were $835,000. There were $200,000 of
partially finished goods remaining in work
in process inventory at the end of the
month. What was the cost of goods
manufactured during the month?
A. $1,160,000
B. $ 910,000
C. $ 760,000
1-104
Quick Check 
Beginning work in process was $125,000.

Manufacturing costs incurred for the month
were $835,000. There were $200,000 of
partially finished goods remaining in work
in process inventory at the end of the
month. What was the cost of goods
manufactured during the month?
A. $1,160,000
B. $ 910,000
C. $ 760,000
1-105
Quick Check 
Beginning finished goods inventory was

$130,000. The cost of goods manufactured
for the month was $760,000. And the ending
finished goods inventory was $150,000.
What was the cost of goods sold for the
month?
A. $ 20,000.
B. $740,000.
C. $780,000.
D. $760,000.
1-106
Quick Check 
Beginning finished goods inventory was

$130,000. The cost of goods manufactured
for the month was $760,000. And the ending
finished goods inventory was $150,000.
What was the cost of goods sold for the
month?
A. $ 20,000. $130,000 + $760,000 = $890,000
B. $740,000. $890,000 - $150,000 = $740,000
C. $780,000.
D. $760,000.
1-107
Variable costs and fixed

costs.

Cost Classifications for Predicting Cost
1-108
Behavior
How
How aa cost
cost will
will react
react to
to
changes
changes inin the
the level
level of
of
activity
activity within
within thethe
relevant
relevant range.
range.
 Total
Total variable
variablecosts
costs
change
changewhenwhenactivity
activity
changes.
changes.
 Total
Total fixed
fixedcosts
costs remain
remain
unchanged
unchangedwhen when
activity
activitychanges.
changes.

1-109
Variable Cost
Your total long distance telephone bill is

based on how many minutes you talk.
Total Long Distance
Telephone Bill
Minutes Talked
1-110
Variable Cost Per Unit
The cost per long distance minute talked is

constant. For example, 10 cents per minute.
Telephone Charge
Per Minute
Minutes Talked
1-111
Fixed Cost
Your monthly basic telephone bill probably

does not change when you make more local
calls.
Telephone Bill
Monthly Basic
Number of Local Calls

1-112
Fixed Cost Per Unit
The average fixed cost per local call

decreases as more local calls are made.
Telephone Bill per Local

Monthly Basic
Call
Number of Local Calls

Cost Classifications for Predicting Cost
1-113
Behavior
Behavior of Cost (within the relevant range)

Cost In Total Per Unit
Variable Total variable cost changes Variable cost per unit remains
as activity level changes. the same over wide ranges
of activity.
Fixed Total fixed cost remains Average fixed cost per unit goes
the same even when the down as activity level goes up.
activity level changes.

1-114
Quick Check 
Which of the following costs would be variable

with respect to the number of cones sold at a
Baskins & Robbins shop? (There may be more
than one correct answer.)
A. The cost of lighting the store.
B. The wages of the store manager.
C. The cost of ice cream.
D. The cost of napkins for customers.

1-115
Quick Check 
Which of the following costs would be variable

with respect to the number of cones sold at a
Baskins & Robbins shop? (There may be more
than one correct answer.)
A. The cost of lighting the store.
B. The wages of the store manager.
C. The cost of ice cream.
D. The cost of napkins for customers.

1-116
Cost classifications
used in making
decisions

1-117
Example: Consider this simple situation. A company is

considering selling desk units as either unassembled or
assembled products.
Alternative 1 Alternative 2
Unassembled Assembled
Selling price €200 €215
Prime costs
Wood cost €90 €90
Other direct materials 30 30
Direct labour — cutting 10 10
Direct labour — assembly — 20
Total prime costs
McGraw-Hill/Irwin
€130 Copyright © 2008, The McGraw-Hill
€150 Companies, Inc.
1-118
Cost Classifications for Decision
Making
• Every decision involves a choice between at
least two alternatives.
• Relevant costs are those costs appropriate

to a specific management decision.
 it must be a future cost because current
decisions can have no effect on past
expenditures
 it must differ between decision alternatives
because, if a cost remains the same regardless
of the chosen alternative, it is irrelevant in the
decision-making process.
1-119
Quick Check 
Suppose you are trying to decide whether to

drive or take the train to Portland to attend a
concert. You have ample cash to do either, but
you don’t want to waste money needlessly. Is
the cost of the train ticket relevant in this
decision? In other words, should the cost of the
train ticket affect the decision of whether you
drive or take the train to Portland?
A. Yes, the cost of the train ticket is relevant.
B. No, the cost of the train ticket is not relevant.

1-120
Quick Check 

the cost of the train ticket relevant in this
decision? In other words, should the cost of the
train ticket affect the decision of whether you
drive or take the train to Portland?
A. Yes, the cost of the train ticket is relevant.
B. No, the cost of the train ticket is not relevant.

1-121
Quick Check 

the annual cost of licensing your car relevant in
this decision?
A. Yes, the licensing cost is relevant.
B. No, the licensing cost is not relevant.

1-122
Quick Check 

the annual cost of licensing your car relevant in
this decision?
A. Yes, the licensing cost is relevant.
B. No, the licensing cost is not relevant.

1-123
Differential Cost and Revenue
Costs and revenues that differ among

alternatives(also known as an incremental
cost and revenues).
Example: You have a job paying $1,500 per month in

your hometown. You have a job offer in a neighboring
city that pays $2,000 per month. The commuting cost
to the city is $300 per month.
Differential revenue is:

$2,000 – $1,500 = $500
Differential cost is:

$300
1-124
Opportunity Cost
The potential benefit that

is given up when one
alternative is selected over
another.
Example: If you were

not attending college,
you could be earning
$15,000 per year.
Your opportunity cost
of attending college for
one year is $15,000.
1-125
Sunk Costs
Sunk costs have already been incurred and cannot be

changed now or in the future. They should be
ignored when making decisions.
Example: You bought an automobile that cost

$10,000 two years ago. The $10,000 cost is sunk
because whether you drive it, park it, trade it, or
sell it, you cannot change the $10,000 cost.

1-126
Quick Check 
Suppose that your car could be sold now for

$5,000. Is this a sunk cost?
A. Yes, it is a sunk cost.
B. No, it is not a sunk cost.

1-127
Quick Check 
Suppose that your car could be sold now for

$5,000. Is this a sunk cost?
A. Yes, it is a sunk cost.
B. No, it is not a sunk cost.

Further Classification of
Labor Costs
Appendix 2A

1-129
(Appendix 2A)
Properly account for
labor costs associated
with idle time, overtime,
and fringe benefits.

1-130
Direct labour
Cost of all manufacturing labour
specifically traced to the cost
object
Indirect labour
Labour costs Labour costs related to the cost
object but cannot be traced
directly to it (that is, janitors,
supervisors,etc.)
Other labour costs

(that is, idle time, overtime
premium, and fringe benefits)

1-131
Idle Time
Machine Material
Breakdowns Shortages
Power
Failures
The labor costs incurred

during idle time are ordinarily
treated as manufacturing
overhead.
1-132
Overtime
The overtime premiums for all factory

workers are usually considered to be part
of manufacturing overhead.

1-133
Labor Fringe Benefits
Fringe benefits include employer paid

costs for insurance programs, retirement
plans, supplemental unemployment
programs, Social Security, Medicare,
workers’ compensation and
unemployment taxes.
Some companies Other companies treat

include all of these fringe benefit
costs in expenses of direct
manufacturing laborers as additional
overhead. direct labor costs.
1-134
Example:Labour cost
• Consider the example of Tom and Jerry working

at Mickey Manufacturing Plant. Tom is a press
operator and earns €20 per hour and Jerry is his
supervisor and earns €800 per week. Tom is
paid for a normal 40-hour workweek but was
idle for 5 hours last week due to materials
shortage. Tom and Jerry were asked to work
10 hours overtime to complete an important job.
Tom was paid €30 per hour for the overtime and
Jerry an extra amount of €300. Labour fringe
benefits for that week were €100 for Tom and
€150 for Jerry.
1-135

1-136
Summary of the Types of Cost
Classifications
Financial Predicting Cost

Reporting Behavior
Assigning Costs Making Business

to Cost Objects Decisions

Cost of Quality
Appendix 2B

1-138
(Appendix 2B)
Identify the four types of
quality costs and explain
how they interact.

1-139
Quality of Conformance
When the overwhelming majority of

products produced conform to design
specifications and are free from
defects.

1-140
Prevention and Appraisal Costs
Support activities
Prevention whose purpose is to
Costs reduce the number of
defects
Incurred to identify
defective products
Appraisal Costs before the products are
shipped

1-141
Internal and External Failure Costs
Incurred as a result of
Internal Failure
identifying defects
Costs before they are shipped
Incurred as a result of
External Failure defective products
Costs being delivered to
customers

1-142
Examples of Quality Costs
Appraisal Costs
Prevention Costs • Testing & inspecting
• Quality training
incoming materials
• Quality circles
• Final product testing
• Statistical process
• Depreciation of testing
control activities
equipment
External Failure Costs

Internal Failure Costs • Cost of field servicing &
• Scrap
handling complaints
• Spoilage
• Warranty repairs
• Rework
• Lost sales

1-143
Distribution of Quality Costs
When quality of conformance is low, total

quality cost is high and consists mostly of
internal and external failure.
Total quality costs drop rapidly as the quality

of conformance increases.
Companies reduce their total quality costs by

focusing their efforts on prevention and
appraisal because the cost savings from
reduced defects usually overwhelm the
costs of additional prevention and
appraisal.
Total quality costs are minimized when the

quality of conformance is slightly less
than 100%.
1-144
(Appendix 2B)
Prepare and interpret a
quality cost report.

1-145 Quality Cost Report
For Years 1 and 2
Year 2 Year 1
Amount Percent* Amount Percent*
Prevention costs:
Systems development $ 400,000 0.80% $ 270,000 0.54%
Quality training 210,000 0.42% 130,000 0.26%
Supervision of prevention activities 70,000 0.14% 40,000 0.08%
Quality improvement 320,000 0.64% 210,000 0.42%
Total prevention cost 1,000,000 2.00% 650,000 1.30%
Appraisal costs: Quality cost

Inspection 600,000 1.20% 560,000 1.12%
Reliability testing 580,000 1.16% 420,000 0.84% reports provide
Supervision of testing and inspection 120,000 0.24% 80,000 0.16%
Depreciation of test equipment 200,000 0.40% 140,000 0.28% an estimate of
Total appraisal cost 1,500,000 3.00% 1,200,000 2.40%
the financial
Internal failure costs:
Net cost of scrap 900,000 1.80% 750,000 1.50%
consequences
Rework labor and overhead
Downtime due to defects in quality
1,430,000
170,000
2.86%
0.34%
810,000
100,000
1.62%
0.20%
of the
Disposal of defective products 500,000 1.00% 340,000 0.68% company’s
Total internal failure cost 3,000,000 6.00% 2,000,000 4.00%
current defect
External failure costs:
Warranty repairs 400,000 0.80% 900,000 1.80% rate.
Warranty replacements 870,000 1.74% 2,300,000 4.60%
Allowances 130,000 0.26% 630,000 1.26%
Cost of field servicing 600,000 1.20% 1,320,000 2.64%
Total external failure cost 2,000,000 4.00% 5,150,000 10.30%
Total quality cost $ 7,500,000 15.00% $ 9,000,000 18.00%
* AsMcGraw-Hill/Irwin
a percentage of total sales. In each year sales totaled $50,000,000. Copyright © 2008, The McGraw-Hill Companies, Inc.
1-146
Quality Cost Reports in Graphic Form
$10 20
9
Quality 18
Quality Cost as a Percentage of Sales

8
reports 16
Quality Cost (in millions)
7
External External
can also 14
External External
6 Failure Failure
be 12 Failure Failure
5
prepared 10
4 Internal
Failure
in 8 Internal
Failure
3 Internal
Failure
graphic 6 Internal
Failure
2
Appraisal form. 4
Appraisal
Appraisal Appraisal
1 2
Prevention Prevention Prevention Prevention
0 0
1 2 1 2
Year Year
1-147
Uses of Quality Cost Information
Help managers see the

financial significance of
defects.
Help managers identify

the relative importance
of the quality problems.
Help managers see
whether their quality
costs are poorly
distributed.
1-148
Limitations of Quality Cost Information
Simply measuring quality

cost problems does not
solve quality problems.
Results usually lag

behind quality
improvement programs.
The most important

quality cost, lost sales, is
often omitted from
quality cost reports.
1-149
ISO 9000 Standards
ISO 9000 standards have become

international measures of quality.
To become ISO 9000 certified, a
company must demonstrate:
1. A quality control system is in use, and the
system clearly defines an expected level of
quality.
2. The system is fully operational and is backed
up with detailed documentation of quality
control procedures.
3. The intended level of quality is being achieved
on a sustained basis.
1-150
End of Chapter 2

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Managerial Accounting

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

 Identify the major differences and

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 柯达失败在于 R&D 投入不足？

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同日，苹果发布 2012 财年第二财季财报。报告显示，苹

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Customer Value Propositions

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Directing and Motivating

Directing and motivating involves managing

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McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

Identify the major

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Understand the role of

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Corporate O rganization Chart

P urchasing P ersonnel V ice P resident C hief Financial

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Line and Staff Relationships

Line positions are directly Staff positions support

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The Chief Financial Officer (CFO)

A member of the top management team

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Understand the basic

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Business functions making up the value chain

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There are three approaches to

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Forecast Sales Order components Store Inventory

Make Sales from

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

Traditional “push” Large

Raw Work in Finished

Customer Places Create Production Generate Component

Goods Delivered Production Begins Components

Lean thinking may be used to improve business

The term supply chain management refers to

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The Six Sigma DMAIC Framework

A single software system that

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McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

The Institute of Management Accountant’s (IMA)

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior