Cost Accounting, a Managerial Emphasis, Third Canadian Edition. Student Solutions Manual
This document thoroughly goes through the core concepts of the Managerial Accounting course utilizing textbooks and lectures. It will take you through the textbook examples with detailed explanations of concepts to ensure advanced learning. It will prepare students for the midterm and exam.
Cost Accounting A Managerial Emphasis, Canadian Edition
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Ryerson University (Ru
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Business
Acc406 (MANAGERIALACCOUNTINGACC406)
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ACC Chapter 1
Three Objectives
1. Planning
2. Controlling
3. Decision Making
Customer Orientation
Customer value is the difference between
what a customer receives and what the customer gives up when buying a product or service.
Customer Value = What customer receives= what customer gives up
Two Strategies:
1. Cost Leadership
2. Superior Products through Differentiation
Value Chain
The value chain is the set of activities required to design, develop, produce, market, and deliver
products and services to customers.
Cross Functional Perspective
Managerial accounting deals with many functions of the business, from manufacturing to
marketing to distribution to customer service, in order to provide appropriate information for
managing the value chain.
Total Quality Management
A philosophy of perfect products
Continuous Improvement is fundamental
Time as a Competitive Element
Efficiency
Both financial and nonfinancial measures are needed
Cost is a critical measure of efficiency
To be effective, cost must be properly
• Defined
• Measured
• Assigned
,Sarbanes Oxley Act of 2002
• Passed by congress in response to corporate securities fraud and corporate misconduct
• Established stronger government control and regulation of public companies through:
Establishment of Public Company Accounting Oversight Board (PCAOB)
Enhanced auditor independence
Tightened regulation of corporate governance
Control over management
Manager/auditor assessment of the firm’s internal control
Increased attention to corporate ethics
Process Value Analysis
• Focuses on cost reduction instead of cost assignment
• Emphasizes the maximization of system-wide performance
• Concerned with:
Driver analysis
Activity analysis
Performance measurement
, Costs
Cost is the amount of cash or cash equivalent sacrificed for goods and/or services that are
expected to bring a current or future benefit to the organization.
• As costs are used up in the production of revenues, they are said to expire. Expired costs
are called expenses.
• We can look more closely at the relationship between cost and revenue by focusing on
the units sold. The revenue per unit is called price. Revenue and price are the same. Price
must be greater than cost in order for the firm to earn income.
Accumulating costs is the way that costs are measured and recorded.
Assigning costs is the way that a cost is linked to some cost object. A cost object is
something for which a company wants to measure the cost. In this case,
cost assignment tells whether the money spent on telephone expense was to support the
manufacturing or the selling of the product.
A cost object is any item such as a product, service, customer, department,
project, geographic region, plant, and so on, for which costs are measured and assigned. For
example, if the Royal Bank of Canada wants to determine the cost of a platinum credit
card, then the cost object is the platinum credit card.
Direct and Indirect Costs
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