Subjects:

• Comparison of financial accounting and managerial accounting in terms of purpose, users, and constraints
• Accounting for a manufacturing firm
  • Journal entries to record inventories
  • Comparison of manufacturing and merchandising income statement and balance sheet
• Cost classifications and behavior including
  • Variable, fixed, mixed and step costs
  • Direct and indirect costs
  • Product and period costs
  • Manufacturing and non-manufacturing costs
• Absorption costing vs variable costing income statements
• Cost-Volume-Profit analysis: achieving target net profit, sensitivity analysis
• Estimation of cost functions: engineering (mentioned briefly), account analysis, visual fit, high-low, least squares regression (understanding output of regression analysis)
• Cost allocation
  • Allocation of overhead using activity-based costing vs "traditional" method
  • Allocation of central service costs
  • Allocation of service department costs (direct and step-down method)
  • Allocation of joint product costs
• Short-term decision-making with emphasis on relevant costs
  • Accept or reject a special order
  • Add or drop a product or department
  • Optimal use of limited resource
  • Pricing
  • Make or buy
  • Sell or process further
  • Replacement of old equipment
• Budgeting: sales, purchase, overhead, cash receipts, cash disbursements, cash pro forma income statement, pro forma balance sheet
• Flexible budgets and variance analysis: direct materials, direct labor, variable overhead
• Management control systems and company goals: responsibility centers and segmented income statements, centralization vs decentralization
• Performance measures: return on investment (ROI), residual income (RI), non-financial measures
• Transfer pricing

After completing ACC 202/251, students will:

• Understand the difference between financial and managerial accounting
• Understand the definitions necessary to understand managerial accounting literature
• Be able to compare job-order and process-costing systems
• Know how to calculate the flow of costs through a company?s accounting system using journal entries.
• Understand the concept of allocation of overhead costs.
• Understand the concept of activity-based costing and its uses in any type of organization.
• Be able to calculate product costs in a job-order system
• Be able to calculate product costs in a process-costing system.
• Understand the nature of mixed costs
• Be able to use the high-low method to calculate fixed and variable costs from mixed costs
• Understand the use of cost-volume-analysis as a decision-making tool
• Be able to calculate a break-even point for a firm
• Understand the use of budgets for managerial planning and evaluation of performance
• Be able to calculate variances for materials, labor, and overhead
• Understand the use of flexible budgets
• Understand how ROI and residual income are used to evaluate a manager?s performance
• Understand the concept of relevant costs when analyzing two or more alternatives