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Conceptual Foundation

 

This page is the gateway to the basic concepts that are used in this management accounting Web. A few [e.g. GAAP financial statements, revenues and accrual accounting] should be a review of earlier material.] The concepts are listed more or less in the order that they are covered in the class. However, one used, they cannot be set aside as "old news." We'll use them over and over throughout the semester.

Module Number Concepts covered [there are hyperlinks in the right-hand set of columns below when there are multiple pages in the module]
1 Introduction Revenues and accruals [what's the difference between revenue and income?]

Costs and cost classifications [how many ways can we classify costs?]

Contribution margin [What is left over after we subtract variable costs from revenues?]

Income statements [Yes, there is more than one format!]

Balance sheets [What is the financial position of the business?]

2 Breakeven and CVP analysis

Can we make money? How much? What do our costs look like?

3 Incremental Analysis

Decisions about special orders, pricing, alternative resource inputs. What to do about Charlie's skinflint nephew.

4 Operational budgeting

If all the trees fall the right way, how much profit will we make next year? How much cash will we have left?

  Product costing

Cost flows in the basic cost accounting model [definitions and basic terminology]

Overhead and the flows between inventory accounts
Extension to cost of goods sold
Input resources, inventories and the financial statements
Conceptualization and absorption and variable costing
  Capital budgeting [not yet implemented] Should we invest in new capital assets? What criteria do we use to decide?
  Cost behavior analysis [not yet implemented] Algebraic methods; OLS regression
  Performance evaluation [not yet implemented] Flexible budgets; variances; how did we do compared to plan?
Copyright 2004 Gerald M. Myers. All rights reserved. This site has been developed as aid to instructors and students in managerial accounting. The scenarios contained herein are not intended to reflect effective or ineffective handling of managerial situations. Any resemblance to existing organizations is purely coincidental.
Last modified: August 03, 2005