m中山大學管捏學院 经m00 BUSINESS SUN YAT-SEN UNIVERSIT Lesson 14 Managerial Accounting Applications as team of FUA DAMIEAML ACOJAVN A School of Business, Sun yat-sen University
Lesson 14 Managerial Accounting: Applications Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun yat-sen University
Outline Segmented reporting and responsibility Accounting System Q Cost-Volume-Profit Analysis Q Budgeting and Budgetary Control Standard Costs and Variance Analysis Q Managerial Decision Making Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
2 Outline ⧫Segmented Reporting and Responsibility Accounting System ⧫Cost-Volume-Profit Analysis ⧫Budgeting and Budgetary Control ⧫Standard Costs and Variance Analysis ⧫Managerial Decision Making
Introduction Q Let's look at the XYz Company example. D A manager at XYZ Company wants to replace an old machine with a new, more efficient machine. New machine. List price 900000 Annual variable expenses 800000 Expected life in years 5 old machine Original cost 720000 Remaining book value 600000 Disposal value now 150000 Annual variable expenses 1000000 Remaining life in years 5 Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 3
3 Introduction ⧫ Let’s look at the XYZ Company example. A manager at XYZ Company wants to replace an old machine with a new, more efficient machine. New machine: List price 900000 Annual variable expenses 800000 Expected life in years 5 Old machine: Original cost 720000 Remaining book value 600000 Disposal value now 150000 Annual variable expenses 1000000 Remaining life in years 5
Introduction 9XYZ's sales are $2000000 per year. Q Fixed expenses, other than amortization, are S700000 per year. Should the manager purchase the new machine Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
4 Introduction ⧫ XYZ’s sales are $2000000 per year. ⧫ Fixed expenses, other than amortization, are $700000 per year. ⧫ Should the manager purchase the new machine?
2 Introduction The manager recommends that the company not purchase the new machine since disposal of the old machine would result in a loss: Remaining book value 600000 Disposal value 150000 Loss from disposal 450000 Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 5
5 Introduction ⧫ The manager recommends that the company not purchase the new machine since disposal of the old machine would result in a loss: Remaining book value 600000 Disposal value -150000 Loss from disposal 450000
Introduction ◆ Is it correct ◆what’ s your comment to the manager’ s decision? After learning this chapter, you will know how to employ the tools of managerial accounting and ma ke decisions 2 correctly. Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 6
6 Introduction ⧫ Is it correct? ⧫ What’s your comment to the manager’s decision? ⧫ After learning this chapter, you will know how to employ the tools of managerial accounting and make decisions correctly
Segmented Reporting Q Organizations may break down their operations into various segments I divisions, stores, services, or departments. Q Management needs reports on each segment for n cost management n performance evaluation Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 7
7 Segmented Reporting ⧫Organizations may break down their operations into various segments divisions, stores, services, or departments. ⧫Management needs reports on each segment for cost management performance evaluation
Segmented Reporting A Segments may be evaluated as u a cost centre D a profit centre profit centre reports include information on a segments revenues and costs. u an investment centre Some costs are direct and some are indirect n Indirect costs may be allocated to various departments. Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
8 Segmented Reporting ⧫Segments may be evaluated as a cost centre a profit centre →Profit centre reports include information on a segment’s revenues and costs. an investment centre. ⧫Some costs are direct and some are indirect. Indirect costs may be allocated to various departments
Segmented Reporting Q Service department costs are shared indirect expenses of operation departments. Q They may be allocated using a variety of bases. Service De partment Common Allocation Bases General office Number of employees Personnel Number of employees Payroll Number of employees Adve rtising sales Purchasing Number of purchase orders Cleaning Floor space occupied Maintenance Floor space occupied Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 9
9 Service Department Common Allocation Bases General Office Number of employees Personnel Number of employees Payroll Number of employees Advertising Sales Purchasing Number of Purchase Orders Cleaning Floor space occupied Maintenance Floor space occupied Segmented Reporting ⧫ Service department costs are shared indirect expenses of operation departments. ⧫ They may be allocated using a variety of bases
Responsibility Accounting System o Responsibility Accounting System n An accounting system a assigns managers the responsibility for costs and expenses under their control Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 10
10 Responsibility Accounting System ⧫ Responsibility Accounting System An accounting system assigns managers the responsibility for costs and expenses under their control
