Management Accounting eBook

Introduction to management accounting

• The role of management accounting
• Product and service costing
• Cost classifications
• Cost versus expense
• Inventories
• Cost, selling price, margins and pricing policy

Manufacturing statements

• Structure of the manufacturing statement
• Factory and non-factory expenses
• Preparation of the manufacturing statement
• Analysis of manufacturing statements
• Transfer of cost of production
• Accounting entries

3 Cost flows

• The manufacturing process
• Flow of materials and costs
• Perpetual inventory system
• The effect of the GST
• Separate cost ledger
• Alternative factory overhead recording
• Cost flows in non-manufacturing firms

4 Materials—control and accounting

• Purchasing and storage procedures
• Issuing procedures
• Costing materials into store
• Costing materials out to production
• Physical stocktake
• Periodic stock valuation
• Accounting standards

5 Labour—control and accounting

• Definition of some payroll terms
• Payroll
• Direct and indirect labour analysis
• Labour-related costs

6 Factory overhead—control and accounting

• Factory overhead accounting
• Cost drivers
• Fixed and variable costs
• Factory overhead recovery rates
• Flexible budgeting
• Budgeting semi-variable costs
• Departmental factory overhead
• Reciprocal services
• Improved product costing
• Activity-based costing

7 Job costing

• Job cost system
• Job cost records
• Job cost accounting records—manufacturers
• Job costing with a separate cost ledger
• Under-applied or over-applied factory overhead
• Job costing in service industries

8 Responsibility accounting

• Organisation structure
• Responsibility accounting
• Responsibility centres
• Budget preparation
• Performance reports
• Cost allocation
• Overhead analysis
• Responsibility accounting and blame
• Controllability

9 Cost–volume–profit analysis

• Presentation of statement of comprehensive income for CVP analysis
• The break-even equation
• Contribution margin method
• Contribution margin ratio method
• Target net profit
• Effects of income tax
• Margin of safety
• Analysis using graphs
• Evaluating changes
• Sales mix and CVP analysis
• CVP analysis for different industries
• Assumptions and limitations of CVP analysis

10 Direct costing

• Inventory valuation
• Statements of comprehensive income with actual factory overhead
• Reconciliation of reported profits—absorption and direct costing
• Reporting variable marketing and administrative expense—direct costing
• Statements of comprehensive income with applied factory overhead
• Australian Accounting Standard AASB 102 Inventories
• Australian Taxation Office requirements
• Advantages and disadvantages of direct costing

11 Activity-based costing

• Activity-based costing
• Activity levels
• Three approaches to ABC Cost drivers
• Designing an ABC system
• ABC application rates
• Total manufacturing costs
• Accounting entries
• Full product costs
• ABC and job costing

12 Process costing fundamentals

• Cost flows
• Comparison with job costing
• Flow of units through a process
• Process costing concepts
• Cost of production report
• Accounting entries
• Beginning work in process
• Weighted average method
• First-in-first-out (FIFO) method

13 Advanced process costing

• Cost flows—more than one department
• Cost of production reports—more than one process
• Accounting entries
• Process costing and lost or spoiled units
• Process costing—more than one department and spoilage

14 Operation costing

• Illustrative example

15 Joint and by-product costing

• Why allocate joint costs?
• Allocating joint costs
• Accounting for joint costs
• Decision: sell at split-off or process further
• By-products

16 Standard costing

• Setting a standard manufacturing cost
• Different types of standards
• Flexible budgeting
• Variance analysis
• Causes of and responsibilities for variances
• Journal entries for a standard cost system
• Effect of work in process
• Disposition of variances