Accounting 21th waren reeve fess chapter 18

Chapter 18 Introduction to Managerial Accounting and Job Order Cost Systems Accounting, 21st Edition Warren Reeve Fess PowerPoint Presentation by Douglas Cloud Professor Emeritus of Accounting Pepperdine University © Copyright 2004 South-Western, a division of Thomson Learning All rights reserved Task Force Image Gallery clip art included in this electronic presentation is used with the permission of NVTech Inc Some Some of of the the action action has has been been automated, automated, so so click click the the mouse mouse when when you you see see this this lightning lightningbolt bolt in in the the lower lower right-hand right-hand corner corner of of the the screen screen You You can can point point and and click click anywhere anywhere on on the the screen screen Objectives Objectives Describe the differences between After After studying studying this this managerial and financial accounting chapter, you should chapter, you should Evaluate the organizational role of be able to: be able to: management accountants Define and illustrate materials, factory labor, and factory overhead costs Describe accounting systems used by manufacturing businesses Objectives Objectives Describe and prepare summary journal entries for a job order cost accounting system Use job order cost information for decision making Diagram the flow of costs for a service business that uses a job order cost accounting system The Differences Between Managerial and Financial Accounting Financial and Managerial Accounting Financial Accounting Managerial Accounting Users of Accounting Information Shareholders Shareholders Creditors Creditors Government Government General General Public Public Management Management Management Management Financial Accounting Users: Characteristics: Financial Statements External Users and Management Objective Objective Prepared Preparedaccording according to toGAAP GAAP Prepared Preparedperiodically periodically Business Businessentity entity Managerial Accounting Users: Characteristics: Management Reports Management Objective Objectiveand andsubjective subjective Prepared Preparedaccording accordingto to management managementneeds needs Prepared Preparedperiodically periodically or oras asneeded needed Business Businessentity entityor orsegment segment Partial Organization Chart – Callaway Golf Company Chief ChiefExecutive Executive Officer Officer Vice-President— Global Sales Vice-President— Manufacturing Vice-President Vice-President New NewProduct Product Development Development Manager——Pro Tour Relations Plant Manager-Carlsbad, CA Plant Manager—Shaft Development Chief Financial Officer Controller Manufacturing Manufacturing Cost Cost Terms Terms Examples Examples of of Period Period Costs Costs SELLING EXPENSES  Advertising expenses  Sales salaries expenses  Commission expenses Examples Examples of of Period Period Costs Costs ADMINISTRATIVE EXPENSES  Office salaries expenses  Office supplies expenses  Depreciation expense— office buildings and office equipment Goodwell Printers Income Statement For the Month Ended December 31, 2006 Sales $28,000 Cost of goods sold 20,150 Gross profit 7,850 Selling and admin expenses: Sales salaries expense Office salaries expense Total selling and admin expenses 3,500 $ $2,000 1,500 Overview of Job Order Costing Costs & Expenses Product Costs Materials Materials Purchases Purchases Direct Direct Labor Labor Factory Factory Overhead Overhead Balance Sheet Materials Materials Inventory Inventory Work Workinin Process Process Inventory Inventory Finished Finished Goods Goods Inventory Inventory Cost of goods manufactured Overview of Job Order Costing Costs & Expenses Product Costs Materials Materials Purchases Purchases Direct Direct Labor Labor Factory Factory Overhead Overhead Period Costs Selling Sellingand and Administrative Administrative Balance Sheet Materials Materials Inventory Inventory Work Workinin Process Process Inventory Inventory Finished Finished Goods Goods Inventory Inventory Period Periodcosts costsflow flow directly directlyto tothe the income incomestatement statement Income Statement Cost Costofof Goods GoodsSold Sold Selling Sellingand and Administrative Administrative Flow of Manufacturing Costs Materials Materials Purchased DM Work in Process Finished Goods DM Cost of Goods Sold Wages Payable Factory Overhead Total Wages DM Direct materials used in production Flow of Manufacturing Costs Materials Materials Purchased DM Work in Process Finished Goods DM IM Cost of Goods Sold Wages Payable Total Wages IM Factory Overhead IM Indirect materials used in production Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL Finished Goods Cost of Goods Sold Wages Payable Total Wages DL DL Factory Overhead IM Direct labor used in production Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL Finished Goods Cost of Goods Sold Wages Payable Total Wages IL Factory Overhead DL IM IL IL Indirect labor used in production Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL Finished Goods Cost of Goods Sold Wages Payable Total Wages Factory Overhead DL IM IL IL OFOH OFOH Other factory overhead costs incurred during production Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL FOHA Wages Payable Total Wages Cost of Goods Sold Factory Overhead DL IM IL IL OFOH FOHA Finished Goods FOHA Based on predetermined overhead rate Factory overhead applied to work in process Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL COGM FOHA Wages Payable Total Wages Finished Goods COGM Cost of Goods Sold Factory Overhead DL IM IL IL FOHA OFOH COGM Cost of goods manufactured and transferred to finished goods Flow of Manufacturing Costs Materials Materials Purchased Work in Process DM DM IM DL COGM FOHA Wages Payable Total Wages IM IL IL FOHA OFOH SOLD COGM SOLD Cost of Goods Sold Factory Overhead DL Finished Goods Finished goods sold SOLD Job Job Order Order Systems Systems for for Professional Professional Service Service Businesses Businesses Wages Payable Direct labor Indirect labor Supplies Purchased xxx Used Work in Process xxx xxx Cost of Services Completed jobs xxx Other costs xxx Overhead xxx Applied xxx xxx xxx Chapter 18 The The End End ... job order cost accounting system The Differences Between Managerial and Financial Accounting Financial and Managerial Accounting Financial Accounting Managerial Accounting Users of Accounting Information... differences between After After studying studying this this managerial and financial accounting chapter, you should chapter, you should Evaluate the organizational role of be able to: be able to:... factory overhead costs Describe accounting systems used by manufacturing businesses Objectives Objectives Describe and prepare summary journal entries for a job order cost accounting system Use job