An Introduction to Managerial Accounting and Cost Concepts Essay

4539 Words May 27th, 2013 19 Pages
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Chapter 1

An Introduction to Managerial Accounting and Cost Concepts

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

Objectives
1. Comparison of Financial and Managerial 2. 3. 4. 5. 6. 7. 8.

Accounting. General Cost Classifications. Product Cost versus Period Cost. Cost Classifications on Financial Statements. Cost Classifications for Predicting Cost Behavior. Cost Classification for Assigning Costs to Cost Objectives. Cost Classification for Decision Making. Review Problems
MSc. Mohammad Hicham Khalil

Introduction to Managerial Accounting

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Learning Objective 1

Comparison of Financial and Managerial Accounting

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil
…show more content…
Solder. S ld

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

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Indirect Labor
Labor costs that can't be physically traced to p particular p products or can be traced only at y great cost. Indirect labor is treated as part of manufacturing overhead. For Example:
Labor costs of janitors janitors. Labor costs of supervisors. Labor costs of materials handlers. Night securities guards.
Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil

Nonmanufacturing Costs
Administrative Costs

Selling Costs

Costs necessary to get the order and deliver the product.

All executive, organizational, and clerical costs.

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

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Prime Cost and Conversion Cost
Manufacturing costs are often classified as follows:
Direct Material Direct Labor Manufacturing Overhead

Prime Cost

Conversion Cost

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

Learning Objective 3

Product Cost versus Period Cost

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

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Product Cost versus Period Cost
To understand the difference between p product and periodic costs we must p understand “Matching Principle” from financial accounting. Matching Principle: cost incurred to generate particular revenue should be recognized as expenses in the same period that the revenue is recognized.

Introduction to Managerial

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