1. Basic Managerial Accounting Concepts Costs: provide future benefits • Become expenses when used up Accumulating costs: linking costs to cost object • Cost object: • cheeseburger • flying passenger to Tampa • Building a Walgreens • Rural King store in Paris

2. Basic Managerial Accounting Concepts Methods of assigning costs: easy versus accurate • Administration costs for student in BUS 2102 • Direct costs: generally easy to trace • BUS 2102 class • Indirect costs: more difficult to trace • BUS 2102 class • Variable costs: • Fixed costs: • Opportunity costs:

3. Basic Managerial Accounting Concepts Product costs= • Direct materials+ • Cheeseburger • Direct labor+ • Cheeseburger • Manufacturing overhead: • Indirect materials and indirect labor

4. Basic Managerial Accounting Concepts Period costs: not part of product costs • Selling costs • Cheeseburger • Administration costs • Cheeseburger • Cost of services • Direct period costs • Indirect period costs

5. Basic Managerial Accounting Concepts Preparing Income Statements • Manufacturing Firms • Sales • -COGS • =Gross Profit

6. Basic Managerial Accounting Concepts Preparing Income Statements • COGS • Beginning Inventory • +COGM • =COGA • -Ending Inventory • =COGS

7. Basic Managerial Accounting Concepts Preparing Income Statements • COGS • Beginning Inventory • +COGM • =COGA • -Ending Inventory • =COGS

8. Basic Managerial Accounting Concepts Preparing Income Statements • COGM • Beginning WIP • +Direct Materials • +Direct Labor • Manufacturing Overhead • =Manufacturing Costs • -Ending WIP • =COGM