Imagine a big room where books are being stacked when they're received. If you need a book, say, Managerial Accounting by Kurt Heisinger and Joe Hoyle, you would have to check each and every book until you find it. You realize this is not a great way to organize books and so you decide to convert the room into a library. Now, to find the required book, you can look up its identification number and find exactly where it is on the shelf. Your manager loves the new library, but now wants you to provide a statement that shows where each book is located and when it was originally received so he can decide if more books should be purchased.
The big room resembles financial accounting which provides aggregated information. The library is like cost accounting whereby it would be possible to find out any book by name, subject, author or publishers. The statement is an example of managerial accounting as it combines data from both sources and presents the data so that a manager can use it.
In other words, managerial accounting gathers and reports information that helps managers make decisions. A managerial accountant is a member of management team and is quite helpful when making decisions like should we buy or lease, modernize or close down a factory, drop a product or increase its sales promotion, or expand or open up a plant at a new site.
Throughout this class, you will study the following topics found within managerial accounting:
- Difference between managerial and financial accounting
- Basic concepts of managerial accounting
- Cost behavior
- Cost-volume-profit analysis
- Job-order and process costing
- Activity-Based Costing (ABC)
- Inventory management systems - just-in-time (JIT)
- Profit planning
- Standard costing
- Flexible budgets
- Overhead - fixed and variable
- Decentralization of organizations
- Short-run decision making situations
- Capital investments
- Statement of Cash Flows
- Financial statement analysis
The goal of this course is to provide you with a working knowledge of the various aspects of managerial accounting.
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