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Managerial Accounting

Purpose of Course  showclose

In BUS103 (Financial Accounting), we learned that firms need to track various forms of data in order to report to investors, regulators, and potential business associates such as customers and vendors.  Firm managers, however, often need information that is much more detailed than the data provided in these financial reports.  They use what is known as “managerial accounting” to make various decisions about their businesses.  To avoid information overload, much of their data is tailored to the needs of a particular business unit instead of generally applicable to the firm as a whole.

As you might expect, different managers have different needs.  However, almost all management decisions deal with the same key issues: cost, price, and profit.  This course will examine this sort of decision-making, identifying the tools and methods managers use to make the best-informed decisions possible.  We will begin with an introduction to the terms that will be referenced in the later units.  We will then discuss the various methods and theories that managers deploy when tracking costs and profits.  The final section will explain how managers report the overall performance of a firm or department for internal use.  Upon completion of this course, students will be better prepared to make informed decisions within a firm.

Course Information  showclose

Welcome to BUS105: Managerial Accounting.  Below, please find general information on this course and its requirements.
 
Course Designer: Kendra Wong, Sierra Nevada College
 
Primary Resources:
  • Textbook Equity’s Open College Textbooks: Hermanson, Edwards, and Maher’s Accounting Principles: A Business Perspective, Financial Accounting (Chapters 9-18)
  • Textbook Equity’s Open College Textbooks: Hermanson, Edwards, and Ivancevich’s Accounting Principles: Managerial Accounting
  • YouTube: Susan Crosson’s Managerial Accounting Lectures
 
Requirements for Completion: In order to successfully complete this course, you must pass the final exam.
 
Time Commitment: This course should take approximately 90 hours to complete.
 
Tips/Suggestions:
  • The demonstration problems and solutions in the textbook are assigned as part of the reading.  It is highly recommended that you answer the self-test questions at the end of each chapter on your own.  The time commitment estimates include time to work through the demonstration problems and self-test questions.
  • Please note that the textbook learning objectives are not the same as the course learning outcomes.  The textbook learning objectives should guide your understanding of the information in the textbook.  The course learning outcomes are what you should be able to achieve as a result of completing this course.
  • You are expected to have a basic understanding of Microsoft Excel.  This course assumes that you are able to create mathematical formulas using order of operations properly and to use functions such as SUM, AVERAGE, COUNT, MAX, and MIN.


Learning Outcomes  showclose

Upon successful completion of this course, the student will be able to:
  • Identify and compare and contrast financial accounting and managerial accounting in terms of audience, reporting, time frame, and use of information.
  • Describe, analyze, and record transactions of a manufacturing business.
  • Calculate and use cost information to support operating and strategic decisions regarding products, customers, and long-term assets.
  • Explain how managerial accounting information facilitates planning, controlling, and decision-making activities.
  • Interpret time value of money calculations to make a capital budgeting decision.
  • Describe why managerial accounting requires a cross-functional team.

Course Requirements  showclose

In order to take this course you must:

√    Have access to a computer.

√    Have continuous broadband Internet access.

√    Have the ability/permission to install plug-ins or software (e.g., Adobe Reader or Flash).

√    Have the ability to download and save files and documents to a computer.

√    Have the ability to open Microsoft files and documents (.doc, .ppt, .xls, etc.).

√    Be competent in the English language.

√    Have read the Saylor Student Handbook.

Unit Outline show close


Expand All Resources Collapse All Resources
  • Unit 1: Cost Measurement And Estimation  

    This unit will begin by examining the differences between financial and managerial accounting.  The primary difference, as you will learn, is the audience for the financial and managerial accounting information.  Financial accounting information is geared toward external users, and managerial accounting information is geared toward internal users.  Managerial accounting is integral to making operational and strategic decisions.  At the end of this unit, you will be able to explain why there is a need for both financial and managerial accounting.

    This unit will also introduce you to the manufacturing process and related financial accounting transactions.  You will differentiate between costs assigned to products and costs assigned to the period.  One key item to notice is that the flow of costs in accounting mirrors the physical flow of the inventory.  For example, a pizza parlor purchases pepperoni, sausage, and olives (direct materials) to go on the pizzas.  When a customer orders a pizza, the direct materials are assembled and baked (work in process), and a completed pizza (finished goods) is delivered to the customer.

    Unit 1 Time Advisory   show close
    Unit 1 Learning Outcomes   show close
  • 1.1 Financial Accounting vs. Managerial Accounting  
  • 1.1.1 Introduction  

    Note: This topic is covered by the reading in subunit 1.1 and is identified in the textbook as Section 18.3.  As you are reading, pay attention to the differences between financial accounting and managerial accounting.  These are illustrated in a table on page 542.

  • 1.1.2 Managerial Decision Making  

    Note: This topic is covered by the reading in subunit 1.1 and is identified in the textbook as Section 18.2.  As you are reading, evaluate what types of managerial accounting information you use or produce in your job.  Does it surprise you to realize that you are already familiar with some parts of managerial accounting?
     
    The subtopics below will discuss how managerial accounting contributes to the planning and controlling functions.  (The four functions of management—planning, organizing, leading, and controlling—are covered in BUS208: Principles of Management.)

  • 1.1.2.1 Planning  
    • Lecture: Susan Crosson’s Management Process-2 Plan

      Link: Susan Crosson’s Management Process-2 Plan (YouTube)
       
      Instructions: Watch the video.  As you listen, identify where you believe managerial accounting is important to the planning process.  This lecture should take you about four minutes.
       
      Hint: Pay attention to budgets.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.

  • 1.1.2.2 Controlling  
  • 1.2 Merchandisers and Manufacturers  
  • 1.2.1 The Manufacturing Process  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Section 18.5.  As you read, think about Dell Corporation and how the company would account for a computer.

  • 1.2.2 Period Costs vs. Product Costs  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Section 18.4.  Product costs are all costs that can be attributed to a product.  For example, direct materials, direct labor, indirect materials, and indirect labor are product costs.  All other costs are period costs.  The easiest way to translate this to financial accounting is to remember that period costs are operating expenses.

  • 1.2.3 Direct Materials  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Section 18.4.  Go back to the example of Dell Corporation.  What are some of the direct materials for Dell?  Keys on a keyboard, computer screens, computer chips.  Those are all materials that are in the actual product a customer receives.  Think about a tennis shoe manufacturer.  What would direct materials be for that company?

  • 1.2.4 Direct Labor  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Section 18.4.  A good way to determine if someone should be included in direct labor is to consider if that person’s primary job function is to work on the actual product.  If my job were to assemble computers at Dell, my payroll costs would be allocated to direct labor.  If my job were to oversee the person assembling computers, my payroll costs would be allocated to indirect labor and, thus, manufacturing overhead.  (For more on manufacturing overhead, see subsection 1.2.5 below.)

  • 1.2.5 Manufacturing Overhead  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Section 18.4.  Recall the definition of a product cost from section 1.2.2.  Manufacturing overhead is any product cost that is not direct materials or direct labor.  Thus, manufacturing overhead is all of the costs required for the production process that are not directly related to the product.  Consider the following items: factory utilities, administration building utilities, showroom utilities, factory depreciation, administration computer depreciation.  Which items would be considered manufacturing overhead and which items would be period costs?  Hint: If it pertains to the factory, it is likely manufacturing overhead.

    • Assessment: AccountingCoach: Manufacturing Overhead Quiz

      Link: AccountingCoach: Manufacturing Overhead Quiz (HTML)
       
      Instructions: Take the quiz above to test your understanding of manufacturing overhead.  For ease of use, print the quiz before checking your answers.  Use the print function in your browser; do not use the “Print PDF” link.  This quiz should take you approximately 45 minutes.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.

    • Assessment: Study Shack: DM-DL-Mfg OH Flashcards

      Link: Study Shack: DM-DL-Mfg OH Flashcards (HTML)
       
      Instructions: Classify each of the items listed on the cards as Direct Materials, Direct Labor, Manufacturing Overhead, Selling Cost, or Administrative Cost.  Check your answer by flipping the card.  Click Correct Cards or Incorrect Cards to record your outcome and move on to the next card.  This assessment should take you approximately 20 minutes.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.
       

  • 1.2.6 Inventory Management  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Sections 18.5 and 18.6.  As you are reading, notice how the accounting process reflects the physical flow of inventory.  This is illustrated on page 553.

  • 1.2.6.1 Raw Materials  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Sections 18.5 and 18.6.  This topic is also covered by the lecture in subunit 1.2.6.

  • 1.2.6.2 Work In Progress  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Sections 18.5 and 18.6.

    • Lecture: Susan Crosson’s Cost Concepts-5 WIP & OH

      Link: Susan Crosson’s Cost Concepts-5 WIP & OH (YouTube)
       
      Instructions: Watch the video.  Pay attention to the discussion regarding overhead allocation to work in process.  The three approaches to allocating manufacturing overhead to work in process will be addressed in Unit 2.  This lecture should take you approximately five minutes.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.

  • 1.2.6.3 Finished Goods  

    Note: This topic is covered by the reading in subunit 1.2 and is identified in the textbook as Sections 18.5 and 18.6.  This topic is also covered by the lecture in subunit 1.2.6.

  • Unit 2: Cost Management  

    In the previous unit, you learned about the flow of manufacturing costs.  This unit focuses on the allocation of direct materials, direct labor, and manufacturing overhead.  For a company that produces items for jobs, it is easy to identify the direct materials and direct labor for a specific job.  However, how do you determine direct materials if the company uses a continuous assembly line?  It would be inefficient to track each unit of production separately.  This unit also addresses how to allocate manufacturing overhead.  Manufacturing overhead consists of costs not directly related to the product but necessary to run the production process.  This includes, but is not limited to, factory equipment, factory rent, and utilities for the factory.

    Unit 2 Time Advisory   show close
    Unit 2 Learning Outcomes   show close
  • 2.1 Job Costing  
  • 2.1.1 Direct Materials and Direct Labor  

    Note: This topic is covered by the reading in subunit 2.1 and is identified in the textbook as Section 18.7.  Job costing is primarily used with customized products or when separate products are identified.  For example, Boeing likely uses job costing when producing airplanes.  Direct materials and direct labor are allocated to specific jobs, based on what is actually incurred.

  • 2.1.2 Actual and Applied Overhead  

    Note: This topic is covered by the reading in subunit 2.1 and is identified in the textbook as Section 18.8.  Overhead is more difficult to allocate in terms of specific jobs.  Because overhead is an accumulation of all the indirect product costs, the total amount of actual overhead is usually not known.  Thus, companies use an applied overhead rate, based on budgeted amounts, to allocate overhead to a specific job.  At the end of the reporting period, any difference between actual overhead and allocated overhead is reconciled to cost of goods sold.

  • 2.1.3 Job Order Costing  
  • 2.2 Process Costing  
  • 2.2.1 Process Costing vs. Job Costing  

    Note: This topic is covered by the reading in subunit 2.2 and is identified in the textbook as Section 19.2.  Whereas job costing focused on specific batches of production, process costing is best used in an assembly-line production environment.  The text has an excellent comparison of the similarities and differences between process costing and job costing.

  • 2.2.2 Cost Allocation Per Unit  

    Note: This topic is covered by the reading in subunit 2.2 and is identified in the textbook as Section 19.3.  As you are reading, pay attention to how department costs are allocated based on the concept of equivalent units.

  • 2.2.3 Process Order Costing  
  • 2.3 Activity Based Costing  
  • 2.3.1 Why Use Activity Based Costing?  

    Note: This topic is covered by the reading in subunit 2.3 and is identified in the textbook as Section 20.7.  Activity-based costing (ABC) is another method that can be used to allocate overhead.  ABC allocates overhead based on the activities that are driving the costs.  Note that  job costing, process costing, and ABC use the same pool of costs.  They are just three different ways of analyzing and allocating the pool.

  • 2.3.2 Four Steps in Activity-Based Costing  

    Note: This topic is covered by the reading in subunit 2.3 and is identified in the textbook as Section 20.8.  The four steps to apply ABC are relatively straightforward.  The key is to determine the appropriate cost driver for each activity.

    • Lecture: Susan Crosson’s Cost Concepts-8 OH Traditional & ABC

      Link: Susan Crosson’s Cost Concepts-8 OH Traditional & ABC (YouTube)
       
      Instructions: Watch the video.  How do you think that ABC could result in more accurate costing information?  Do you think it would be appropriate to always apply ABC?  Why or why not?  Hint: Consider the cost of implementing ABC.  This lecture should take you approximately five minutes.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.

    • Assessment: AccountingCoach: Activity Based Costing Quiz

      Link: AccountingCoach: Activity Based Costing Quiz (HTML)
       
      Instructions: Take the quiz above to test your understanding of activity-based costing.  For ease of use, print the quiz before checking your answers.  Use the print function in your browser; do not use the “Print PDF” link.  This quiz should take you approximately 30 minutes.
       
      Terms of Use: Please respect the copyright terms of use displayed on the webpage above.

  • Unit 3: Short-Term Decision Making  

    This unit will introduce a new way to evaluate costs.  Rather than examining direct materials, direct labor, and manufacturing overhead, this information is rearranged into variable costs, fixed costs, and mixed costs.  For example, a factory worker who earns a salary and an annual bonus based on company performance was classified as direct labor in the previous unit.  In this unit, salary is allocated to fixed costs and the bonus to variable costs.

    Understanding how costs behave means you will be able to make predictions about revenue and operating income, given certain changes in sales volume.  You will also be able to determine how many units a company needs to sell to break even.  If a company cannot break even, it should reconsider its business model.

    This unit also introduces differential analysis.  Differential analysis will enable you to make specific strategic decisions for a company.  For example, should a company accept a special order?  Should a company make a component for its product or purchase it prefabricated?

    Unit 3 Time Advisory   show close
    Unit 3 Learning Outcomes   show close
  • 3.1 Costs  
  • 3.1.1 Variable Costs  

    Note: This topic is covered by the reading in subunit 3.1 and is identified in the textbook as Section 21.3.  The key to understanding costs is to remember that we are thinking about how costs behave relative to production in sales.  So, variable costs will fluctuate based on how much product is sold.

  • 3.1.2 Fixed Costs  

    Note: This topic is covered by the reading in subunit 3.1 and is identified in the textbook as Section 21.3.  Fixed costs are going to be incurred whether no units are sold or a billion units are sold.  After you have completed this section, take the assessment under subsection 3.1.3 to test your understanding.

  • 3.1.3 Mixed Costs  

    Note: This topic is covered by the reading in subunit 3.1 and is identified in the textbook as Section 21.3.  Mixed costs have both a fixed and a variable component.  You can think of your cell phone bill as a mixed cost.  You pay a flat fee for a certain number of minutes.  If you exceed the set amount of minutes, then you have to pay by the minute.  Can you think of other examples of mixed costs?

  • 3.2 Costs-Volume-Profit-Analysis  
  • 3.2.1 Revenue  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.5.  In Illustration 21.7 in the text (page 99), notice that the Sales line is constant.  Cost-volume-profit analysis assumes that the selling price per unit is the same throughout the relevant range.

  • 3.2.2 Operating Income  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.5.  Cost-volume-profit analysis introduces the contribution margin income statement.  Ultimately, operating income is the same on the traditional income statement and the contribution income statement.  The difference is that cost of goods sold and operating expenses are allocated between variable expenses and fixed expenses on the contribution margin income statement.

  • 3.2.3 Contribution Margin  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.5.  “Contribution margin” is a key term in cost-volume-profit analysis.  Be sure that you understand the term and can calculate contribution margin.

  • 3.2.4 Break-Even Analysis  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.6.  At a minimum, how much does a company need to sell?  Understanding the break-even point helps us determine how much we need to sell.

  • 3.2.5 Margin of Safety  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.6.  Margin of safety lets a company know how much sales can decrease before the company starts losing money.  Why would this be an important measure to understand?

  • 3.2.6 Assumptions of Cost-Volume-Profit Analysis  

    Note: This topic is covered by the reading in subunit 3.2 and is identified in the textbook as Section 21.8.  Just like any other analysis tool, you must keep in mind that cost-volume-profit analysis makes certain assumptions that may not hold true in a real business environment.  Thus, it is important to understand that cost-volume-profit analysis must be taken into consideration with other models as well.  In particular, companies use cost-volume-profit analysis with budgeting, which we will cover in Unit 4.

  • 3.2.7 Cost, Profit, Volume of Activity, and Business Decisions  
  • 3.3 Differential Analysis  
  • 3.3.1 Introduction  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.3.  With respect to differential analysis, we need to focus on relevant costs.  For example, suppose you were going on vacation.  You live in Chicago and you are going to San Francisco.  You can either fly or drive.  Regardless of which method of travel you choose, you only have fourteen days of vacation.  What factors would be relevant to your decision?  Hint: There are both tangible and intangible factors to consider.

  • 3.3.1.1 Differential Analysis  
  • 3.3.1.2 Make or Buy Decisions  
  • 3.3.1.3 Product Line Decisions  
  • 3.3.1.4 Customer Decisions  
  • 3.3.1.5 Special Order Decisions  
  • 3.3.2 Pricing Decisions  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.4.  Differential analysis can be used in pricing decisions by understanding what demand for your product will be at a given price point.

  • 3.3.3 Special Order  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.4.  Keep in mind that there could be intangible costs to consider when evaluating a special order.

  • 3.3.4 Product Lines and Segments  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.4.  Evaluating product lines and segments can result in costly mistakes if all costs are not evaluated correctly.  Again, do not forget to evaluate intangible costs.
     

  • 3.3.5 Joint Products  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.4.  Products that share a production line are joint products.  The decision to process a product further or sell a product at its raw stage is evaluated by the companies involved.  Your book identifies one of the most common industries for joint product decisions.

  • 3.3.6 Make or Buy Decisions  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.4.  When evaluating make-or-buy decisions, do not forget to factor intellectual property decisions into your analysis.

  • 3.3.7 Product Quality  

    Note: This topic is covered by the reading in subunit 3.3 and is identified in the textbook as Section 22.5.  Sometimes the higher cost of producing a quality product is worth the time and effort.

  • 3.3.8 Scarce Resources  
  • Unit 4: Budgeting And Cost Variances  

    The budget process is essential to planning and controlling cycles.  It provides a plan for operations and a benchmark by which to measure progress.  The budget process involves coordination among all the departments in a company.

    In this unit, you will learn about the components of the master budget and prepare all of the underlying schedules.  Once the master budget is complete, the company can measure actual performance against the budget.  Throughout the year, a company will create a flexible budget to understand why there are variances from the original master budget.  It is important to understand that the budgeting process is a continuous cycle.  While the original master budget is static, a company will use actual results to adjust operations and expectations.

    Unit 4 Time Advisory   show close
    Unit 4 Learning Outcomes   show close
  • 4.1 Budgeting  
  • 4.1.1 The Role of Budgets  

    Note: This topic is covered by the reading in subunit 4.1 and is identified in the textbook as Section 23.2.  Budgeting is vital to the planning and controlling phases of the management cycle.  For a company that has a December 31 fiscal year end, the budgeting process can start as early as August.

  • 4.1.2 The Master Budget  

    Note: This topic is covered by the reading in subunit 4.1 and is identified in the textbook as Sections 23.2 and 23.3.  When you are reviewing Section 23.3, it is recommended that you create your own Master Budget Template in Microsoft Excel.  Furthermore, watch the series of videos below for more practice with master budgets.

  • 4.1.2.1 Starting Point: The Sales Budgets  

    Note: This topic is covered by the reading in subunit 4.1 and is identified in the textbook as Sections 23.2 and 23.3.  This topic is also covered in the web media in subunit 4.1.2.

  • 4.1.2.2 Operating Budgets  

    Note: This topic is covered by the reading in subunit 4.1 and is identified in the textbook as Sections 23.2 and 23.3.  This topic is also covered in the web media in subunit 4.1.2.

  • 4.1.2.3 Flexible Budget  

    Note: This topic is covered by the reading in subunit 4.1 and is identified in the textbook as Sections 23.2 and 23.3.  How do we evaluate actual differences from the master budget?  Once we know our actual spending, we create a flexible budget in order to analyze why actual spending differed from the master budget.  Watch the series of videos below on how to prepare a flexible budget.
     

  • 4.2 Variances  
  • 4.2.1 Standard Costs  

    Note: This topic is covered by the reading in subunit 4.2 and is identified in the textbook as Sections 24.2 through 24.4

  • 4.2.2 Direct Cost Variances  

    Note: This topic is covered by the reading in subunit 4.2 and is identified in the textbook as Section 24.5.  Variances help us determine why there are differences between the flexible budget and actual results.  For instance, did we pay more than expected for direct costs?  Did our employees work more hours than expected?

  • 4.2.2.1 Materials Variances  
  • 4.2.2.2 Labor Variances  
  • 4.2.2.3 Overhead Cost Variances  

    Note: This topic is covered by the reading in subunit 4.2 and is identified in the textbook as Section 24.5.  Overhead variances are similar to direct cost variances; overhead variances explain why there is a difference between the budget and actual results.

  • 4.2.2.4 Control Processes and Operational Budgets  
  • Unit 5: Capital Budgeting  

    The previous unit focused on budgeting for the day-to-day operations of a business.  We will now focus on budgeting for long-term investments in capital projects, such as machinery.  The capital budgeting processes is usually performed simultaneously when preparing the master budget.  A company uses capital budgeting to evaluate long-term investments.  For example, should the company replace a machine now or wait another three years?

    We use several different methods to evaluate the results of capital budgeting.  Project selection or rejection criteria are based on the time value of money and discounted cash flows.  Thus, this unit will briefly introduce you to the time value of money.

    Unit 5 Time Advisory   show close
    Unit 5 Learning Outcomes   show close
  • 5.1 Capital Budgeting  
  • 5.1.1 The Capital Budgeting Process  
  • 5.1.1.1 The Payback Period  
  • 5.1.1.2 Net Present Value  
  • 5.1.1.3 Internal Rate of Return  
  • 5.1.1.4 Profitability Index  
  • 5.1.2 Cash Flows  

    Note: This topic is covered by the reading in subunit 5.1 and is identified in the textbook as Sections 26.2 and 26.3.  When performing capital budgeting, it is important to translate traditional operating results on the accrual basis to the cash basis.  Two items people commonly forget to consider are depreciation and taxes, covered in subunit 5.1.2.

  • 5.1.3 Depreciation and Taxes  

    Note: This topic is covered by the reading in subunit 5.1 and is identified in the textbook as Section 26.3.  It is important to remember that depreciation is a non-cash expense, and it is a tax-deductible expense.  Thus, while it may seem redundant to subtract deprecation to calculate tax expense, and to add depreciation to arrive at cash flows, it does serve an important purpose.

  • 5.2 Introduction to Time Value of Money  
  • 5.3 Project Selection  
  • 5.3.1 Payback Period  

    Note: This topic is covered by the reading in subunit 5.3 and is identified in the textbook as Section 26.4.  To calculate payback period in Excel, it will be important to calculate the proportion of the investment recovered in the last year.

  • 5.3.2 Profitability Index  

    Note: This topic is covered by the reading in subunit 5.3 and is identified in the textbook as Section 26.7.  Utilize the NPV formula in Excel to calculate the profitability index.

  • 5.3.3 Net Present Value  

    Note: This topic is covered by the reading in subunit 5.3 and is identified in the textbook as Section 26.6.  Be careful using the NPV formula in Excel, as it does not factor in the initial investment.  You must manually subtract that amount.

  • 5.3.3 Internal Rate of Return  

    Note: This topic is covered by the reading in subunit 5.3 and is identified in the textbook as Sections 26.5 and 26.8.  Utilize the IRR formula in Excel to calculate the internal rate of return.

  • Unit 6: Performance Evaluation  

    This unit will explore ways in which managerial accounting helps companies evaluate performance of the company, segments, departments, and individuals.  Responsibility accounting assumes that every cost incurred by a company is the responsibility of someone.  Thus, companies that utilize responsibility accounting connect compensation to financial performance.  Operations managers are not only evaluated by their ability to manage costs, but also by the quality and efficiency of the production process they oversee.

    Two common methods that companies employ to evaluate performance are just-in-time inventory management and the balanced scorecard.  Just-in-time inventory management is most common with repetitive manufacturing processes where the same products are produced on a regular basis.  The balanced scorecard is a performance management tool that assists a company in evaluating strategic objectives.  The balanced scorecard allows companies to evaluate both financial and non-financial measurements.

    Unit 6 Time Advisory   show close
    Unit 6 Learning Outcomes   show close
  • 6.1 Responsibility Accounting  
  • 6.1.1 Segment Income Statements  

    Note: This topic is covered by the reading in subunit 6.1 and is identified in the textbook as Sections 25.2 through 25.8.

  • 6.1.2 Return On Investment  

    Note: This topic is covered by the reading in subunit 6.1 and is identified in the textbook as Section 25.9.

  • 6.1.3 Economic Value Added  

    Note: This topic is covered by the reading in subunit 6.1 and is identified in the textbook as Section 25.10.

  • 6.2 Just-In-Time Inventory  
  • 6.2.1 Quality and Cost  

    Note: This topic is covered by the reading in subunit 6.2 and is identified in the textbook as Sections 20.2 through 20.5.

  • 6.2.2 Responsibilities  

    Note: This topic is covered by the reading in subunit 6.2 and is identified in the textbook as Section 20.6.

  • 6.3 Balanced Scorecard  

    Note: This topic is covered by the reading in subunit 6.2 and is identified in the textbook as Section 20.5.

  • Final Exam  

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