Chapter Nine - McGraw Hill Higher Education - McGraw

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Chapter
Ten
An Introduction
to Management
Accounting
© 2015 McGraw-Hill Education.
Type of User versus Type of
Information
10-2
10-3
Components of Product Cost
Materials
Labor
Overhead
10-4
Average Cost per Unit
Total Cost
Number of Units
= Average Cost per Unit
For example, Average Cost Per Unit
$1,000
4
= $250
10-5
10-6
Labor Costs
10-7
Overhead Costs
10-8
Total Product Cost
10-9
Overhead Costs: A Closer Look
Indirect Costs
Depreciation
Supervisor’s
Salary
Utilities
10-10
Manufacturing Product Cost Summary
Direct
Materials
Direct
Labor
Raw material
costs that can
be easily traced
to products.
Factory wages
that can be easily
traced to products.
Manufacturing
Overhead
Other factory costs
such as indirect
materials and labor,
utilities, rent, security,
and depreciation.
10-11
The Flow of Manufacturing Costs
Through the Accounting Records
Balance Sheet
Income Statement
10-12
Schedule of Cost of Goods
Manufactured
The Schedule of
Cost of Goods
Manufactured
summarizes
product cost
information for
manager
analyses.
Appears on
Income Statement
10-13
Inventory Holding Costs
Obvious
Hidden
Decreased
Motivation
Sloppy work
Supervision
Theft,
damage,
obsolescence
Financing and
Warehouse
Space
Increased
Production
Time
10-14
Just-in-Time Inventory
JIT
Reduction or
Elimination of
Non-value
Added
Activities
Enables
Avoidance of
Lost
Opportunities
10-15
Ethical Considerations
• Certified Management Accountants are
guided by the IMA Statement of Ethical
Professional Practice
• The statement provides standards on
– Competence
– Confidentiality
– Integrity
– Credibility
– Resolution of ethical conflict
10-16
Benchmarking: Identifying Best
Practices of Global Competitors
Total Quality
Management
(TQM)
Zero defects and Customer
Satisfaction through
Continuous Improvement
Activity-Based Assessment of the Value Chain to create or
Management
refine value-added activities and eliminate
or reduce non-value-added activities.
(ABM)
Comprehensive
Value Chain
Analysis
Extends value chain analysis to all
suppliers of a company, as well as
servicers of the company’s products.
10-17
End of Chapter Ten
10-18
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