Managerial (Cost) Accounting For Beginners

Explore managerial accounting in a manufacturing context, learn how to produce items such as name tents and paper airplanes, calculate product costs, and set prices using factory overhead concepts.

Explore the cost flow in envelope manufacturing, including direct materials, direct labor, and overhead. Differentiate product from period costs, fixed from variable costs, and apply the total cost formula.

Learn how managerial accounting accounts for manufacturing costs, including direct materials, indirect materials, factory labor, indirect labor, electricity, and rent, and explore variable costs, fixed costs, and the hi-lo method.

Trace cost flow from direct materials to work in process to finished goods. Apply direct labor and overhead, then record cost of goods sold on balance sheet and income statement.

Identify and compare variable and fixed costs, prime costs, and conversion costs. Distinguish product costs from period costs, with examples such as rent, direct materials, direct labor, and manufacturing overhead.

Examine how fixed costs stay constant in total but vary per unit, while variable costs rise with output and per-unit variable costs stay the same, using rent and t-shirt examples.

Explore mixed costs as a fixed plus variable cost mix, with salaries and phone bills as examples, and learn how to break them down using the high-low method.

Apply the high-low method to decompose a mixed cost into fixed and variable components, derive the cost formula, and use it for planning and budgeting.

Explore various costing systems and master the job order costing approach for custom products, including applying manufacturing overhead to each unique job.

Explore job order costing for manufacturing guitars, including recording materials and labor costs, applying predetermined overhead via an activity base, and balancing over or under applied overhead.

explore job order costing by applying a predetermined overhead rate to direct labor hours, then compare applied overhead with actual costs to identify over or under applied overhead.

Apply job-order costing to raw materials, direct labor, and factory overhead for jobs 50 and 51, including journal entries, cost per unit, and adjusting for under- or over-applied overhead.

Learn job-order costing through journal entries for materials, direct and indirect, factory overhead and labor, and movement from work in process to finished goods and cost of goods sold.

Learn how process costing applies to identical products and differs from job-order costing, then calculate the cost per equivalent unit of production using the weighted average method.

Explore process costing for mass-produced goods, using multi-stage production lines and equivalent units to allocate costs. Apply the weighted average method to determine cost per equivalent unit.

Explore process costing for a single envelope as it moves through department a to b to c, using direct materials, labor, and overhead. The weighted average method is explained.

Learn the weighted average method for managerial (cost) accounting, calculating equivalent units using completion percentages for materials and conversion costs. Apply costs to completed and in-progress units, including transferred-out units.

Apply the weighted average process costing method to compute equivalent units of production for materials and conversion, ending inventory, and cost per equivalent unit from beginning and added costs.

Learn to compute equivalent units of production using the weighted-average method in a process costing setting, including 406,000 transferred out and ending 36,000 units with 72% materials and 50% conversion.

Learn how to compute the cost per equivalent unit using the weighted average method in process costing, by totaling materials, labor, and overhead and dividing by equivalent units of production.

Explore cost flows for mixing, molding, and packaging, recording direct materials, direct labor, and overhead, then use the weighted average method to compute equivalent units and cost of transferred goods.

Apply the weighted average method to determine equivalent units of production, compute cost per equivalent unit, and allocate costs for mixing, molding, and packing through finished goods with journal entries.

Explore the fifo method in process costing, focusing on current-period costs, beginning and started units, completed transfers, ending inventory, and calculating equivalent units of production and cost per unit.

Explore activity based costing, compare it to job order costing, and learn to apply multiple activity rates for greater product cost accuracy.

Compute total budgeted direct labor hours for jeans and khakis and apply a single plantwide overhead rate of $45 per hour. Each uses 2,000 hours, yielding $90,000 overhead per product.

Calculate activity-based overhead rates from budgeted costs and total activity bases, apply overhead to entry and dining products, and compute per-unit costs.

Solve an activity-based costing problem for a three-product line (Alpha, Beta, Omega). Compute activity rates for production setup, materials handling, inspection, and product engineering, then determine total and per-unit costs.

Apply activity based costing to calculate product costs for two products by deriving activity rates, assigning overhead per activity, and computing overhead per unit for each product.

Explore activity-based costing by calculating activity rates for multiple cost pools, applying them to products via expected activity, and totaling overhead costs.

Explore the contribution format income statement and learn break-even sales in dollars and units, shortcuts for faster calculations, and how to compute contribution margin per unit and ratio.

Learn how to use the contribution format income statement to separate variable and fixed costs, compute the contribution margin, and derive the breakeven sales formula to solve problems.

Master break-even analysis in dollars and units using the formula, and apply shortcuts: fixed costs divided by contribution margin ratio, and fixed costs divided by contribution margin per unit.

Calculate the sales needed to achieve a target net operating income of 20,000 using a contribution format income statement, relating fixed costs, variable costs, and the contribution margin.

Explore break-even for multiple products using composite units and sales mix, then build a composite unit from four-to-one oil change example to determine how many of each product to sell.

Compare actual sales to breakeven sales to determine the margin of safety, and calculate the margin of safety ratio using the Pierce company example.

Learn break even analysis using the high low method to derive variable cost per unit and fixed costs. Compute break even units and explore contribution margin and total cost concepts.

Compute the break-even point in units and the units needed for a 25,000 profit. Apply the long and short methods using price 100, variable cost 75, and fixed costs 45,000.

Absorption costing assigns all costs to product units, while variable costing uses only variable costs and uses a contribution income statement for internal decision making.

Learn variable costing in managerial accounting for beginners, and identify its role in cost analysis within a managerial context.

Compare absorption costing with variable costing by tracing cost of goods manufactured and cost of goods sold. See how fixed overhead affects finished goods and incentives tied to absorption costing.

Compare absorption costing and variable costing by calculating unit product costs for a bicycle, showing how fixed manufacturing overhead is allocated in absorption costing but excluded in variable costing.

Develop a three-month sales budget and production budget for industrial solvents, calculating sales and revenues at $41 per unit, applying cost-flow concepts to determine production of 135,110 units.

Explains how to prepare direct materials purchases budget by computing production needs in gallons, ending inventory (20% of next month), beginning balance, and purchases in dollars for January and February.

Compute the direct labor budget from planned production and direct labor hours, apply the wage rate, and estimate total overhead by using the variable overhead rate plus fixed overhead.

Compute cost of goods sold and ending inventory by combining direct materials, direct labor, and overhead per chair, totaling $51.33 per chair and $987,076 in cost of goods sold.

Develop a cash budget by projecting cash receipts from cash sales and credit collections, 70% in sale month and 28% next, using September and October data and beginning cash balance.

Prepare a master budget by building the sales budget, including cash collections, merchandise purchases, and disbursements, then calculate April–June sales at $8 per unit (41k, 48k, 68k) for quarterly total.

Learn to build a cash collections budget by applying 25/50/25 collection patterns to monthly sales, and project receipts for April, May, and June using a detailed sales timeline.

Compute the merchandise purchases budget by linking budgeted sales and ending inventories at 90% of next month’s sales, subtracting beginning inventory, and applying a $5 unit cost.

Prepare a cash disbursement budget by paying 50% in the purchase month and 50% in the following month, using the March accounts payable to forecast April through June cash outflows.

Learn how to prepare a month-by-month cash budget for April to June, including beginning cash balances, receipts, cash payments, financing through borrowing and repayments, and maintaining at least $10,000 cash.

Prepare the quarter’s income statement and three-month balance sheet with sales revenues, cost of goods sold, variable expenses, accounts receivable, inventory, depreciation, and retained earnings.

Compare standard costs with actual costs for materials, labor, and overhead for 1000 units; compute material, labor, and overhead variances, and interpret favorable or unfavorable outcomes.

Solve direct materials price and usage variances and total material variance, plus direct labor rate and total labor variances for 92,000 leather belts using standard costing.

Analyze direct materials and direct labor variances by comparing standard costs to actual results, computing price and usage variances for materials, and rate and efficiency variances for labor.

Compute labor variances for Verde Company, including the labor rate variance, labor efficiency variance, and total labor variance, using actual hours and costs versus the standard.

Compute direct materials price and usage variances for a juice plant, using a $0.05 per ounce standard and 128 oz per gallon, and solve for gallons produced and actual price.

Compute materials and labor variances for dye changeovers, including price, usage, and efficiency variances, using standard costs and actual data.

Learn performance measurement in decentralized organizations, focusing on ROI and residual income across cost, profit, and investment centers. Apply concepts like operating assets, net operating income, and manufacturing cycle efficiency.

Calculate the margin, turnover, and ROI from the provided income statement and asset figures, revealing a 15% margin, a turnover of 40, and a 600% ROI.

Compute margin, turnover, and return on investment from sales, operating income, and average operating assets for two years, illustrating year-one ROI of 3% and year-two ROI of 2%.

Compute residual income and ROI against a 9% minimum return, and determine economic value added by subtracting capital cost from after-tax operating income.

Compute residual income for two divisions by subtracting capital employed times 8% from net operating income. A division earns $285,000 and B division earns $55,000.