1B ch00 Day 1 Introduction

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Financial Accounting
Reporting the firm’s
successes and failures
Managerial Accounting
Creating the firm’s
successes and failures
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Managerial vs Financial
Accounting
Course Process Details
Course Content Overview &
Learning Objectives
2
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Fireball Company makes a Halogen bulb as a component of a
specialty lighting system.
Fireball Company’s internal “make” cost is $30 per unit
@20,000 units produced.
(including all production costs from their ERP system)
Fireball can “buy” these for $20 FOB Destination per unit @
20,000 units.
Which option should we take boss?
What is holding back your full commitment?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Costs for 20,000 bulbs
Purchase bulbs:
Make bulbs:
Direct materials
Direct labor
Variable overhead
Supervisor's salary
Total
Cost Per
Unit
$
20
Differential
Cost Per
Unit
$
20
$
$
Shared factory costs (eg. rent)
Total cost
$
Making 20,000 bulbs in-house saves:
9
5
1
2
13
30
$
9
5
1
2
17
$ 60,000
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Financial Accounting
Reporting the firm’s
successes and failures
Managerial Accounting
Creating the firm’s
successes and failures
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Financial
Accounting
vs.
Financial:
standardized reports for
external use by
investors,
lenders, and others
Managerial:
customized internal
information to gain
competitive advantages
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Financial
Managerial
Designed to
be used by
Outsiders: investors,
lenders, etc.
Internal Management
Time
Perspective
Reporting on past
performance
Decisions to effect the
future
Emphasis
Standardized by GAAP –
doing it the same as
everyone else
Customized to specific
company, segment, and
individual decision needs.
Requirements
GAAP standards of
conformity
Whatever the company
needs
Benefit
Display performance of a
company
Build competitive
advantages and profits
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Total cost of goods sold
(COGS) for the
Volkswagen group
Additional costs incurred by
adding one more option to
a new Audi All-Road
wagon
Best Buy earned $1.2B of
sales of $50B last year.
The particular business
segments performances
that are bringing them
down
Should I invest in UPS?
Will elimination of 2 day
service increase or
decrease our (UPS)
profits?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Is managerial accounting
important?
Global economy
Speed, impatience,
information, and aggression
Customer expectations:
low price / high everything else
Does it help my career if I
am not an accountant?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Managerial vs Financial
Accounting
Course Process Details
Course Content Overview &
Learning Objectives
12
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Course Information Sheet
Tutors?
Contacts
Homework
.
Two required tests
One required project, in two steps
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Managerial vs Financial
Accounting
Course Process Details
Course Content Overview &
Learning Objectives
14
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Ethical radar and corporate governance
Understanding cost behavior so we make
profitable decisions
Using the information we generate
Practicality: Inexpensive and useful trumps
expensive, perfect, and wasteful
Selling your position
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Get your feet wet
Environment
Cost types
Cost flow
Cost flow options
Job & process
Activity Based
Cost Volume Profit Analysis
Decisions based on the above
tools
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
More decision making
situations
Capital budgeting
Budgeting
Variance analysis
Segment performance
evaluation
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Apply course lessons to your vision
Central Themes
Quantifying your business ideas using formal business
research resources
Creating budgets
Using basic Excel spreadsheet capabilities to get it done
Getting it done using YOUR creativity and fortitude
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
Form groups by ethical dilemma.
Select 1 business related ethical dilemma.
Answer the questions on the paper
Really think and don’t settle for just the short
obvious answers. Be creative.
Explore the possible extensions of what to do
along with the obvious choices.
Your team will have 10 minutes to prepare for
a class discussion on your topic.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
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