Managerial Acct
CHAPTER 16 (fin man); chapter 1 (man)
MANAGERIAL ACCOUNTING CONCEPTS
AND PRINCIPLES
discussion questions
1. Financial accounting and managerial accounting are different in several ways. Financial accounting information is reported in statements that are useful to persons or groups outside of a company. These statements objectively report the results of past operations at fixed periods and the financial condition of the business under generally accepted accounting principles. Managerial accounting information uses both subjective and objective information to meet the specific needs of management. The information can be reported periodically or as needed by management and can be reported for the entire entity or for segments of the organization.
2. a. A line department is directly involved in the basic objectives of the organization, while a staff department provides service, assistance, or advice to line departments or other staff departments. b. (1) Sales Department (2) Personnel Department
3. Direct materials cost
4. Prime costs are the combination of direct materials and direct labor costs, while conversion costs are the combination of direct labor costs and factory overhead costs.
5. Product costs are composed of three elements of manufacturing costs: direct materials cost, direct labor cost, and factory overhead cost. These costs are treated as assets until the product is sold. Product costs are sometimes referred to as inventoriable costs. Period costs are costs that are used in generating revenue during the current period. They are recognized as expenses on the current period’s income statement.
6. The three inventory accounts for a manufacturing business are as follows: a. Finished goods, representing goods in the state in which they are to be sold. b. Work in process, representing goods in the process of manufacture. c. Materials, representing goods in the state in which they were
MANAGERIAL ACCOUNTING CONCEPTS
AND PRINCIPLES
discussion questions
1. Financial accounting and managerial accounting are different in several ways. Financial accounting information is reported in statements that are useful to persons or groups outside of a company. These statements objectively report the results of past operations at fixed periods and the financial condition of the business under generally accepted accounting principles. Managerial accounting information uses both subjective and objective information to meet the specific needs of management. The information can be reported periodically or as needed by management and can be reported for the entire entity or for segments of the organization.
2. a. A line department is directly involved in the basic objectives of the organization, while a staff department provides service, assistance, or advice to line departments or other staff departments. b. (1) Sales Department (2) Personnel Department
3. Direct materials cost
4. Prime costs are the combination of direct materials and direct labor costs, while conversion costs are the combination of direct labor costs and factory overhead costs.
5. Product costs are composed of three elements of manufacturing costs: direct materials cost, direct labor cost, and factory overhead cost. These costs are treated as assets until the product is sold. Product costs are sometimes referred to as inventoriable costs. Period costs are costs that are used in generating revenue during the current period. They are recognized as expenses on the current period’s income statement.
6. The three inventory accounts for a manufacturing business are as follows: a. Finished goods, representing goods in the state in which they are to be sold. b. Work in process, representing goods in the process of manufacture. c. Materials, representing goods in the state in which they were