Chapter 12 - Managerial accounting and cost-volume-profit relationships. After reading this chapter, you should be able to answer the following questions: What is the managerial planning and control cycle? What are the major differences between financial accounting and managerial accounting? What is the difference between variable and fixed cost behavior patterns, and what simplifying assumptions are made in this classification method? | 2008 The McGraw Hill Companies Inc. All Rights Reserved. McGraw Hill Irwin Copyright 2014 by The McGraw Hill Companies Inc. All rights reserved. Chapter 12 Managerial Accounting and Cost Volume Profit Relationships PowerPoint Authors Susan Coomer Galbreath . CPA Charles W. Caldwell . CMA Jon A. Booker . CPA CIA Cynthia J. Rooney . CPA McGraw Hill Irwin Copyright 2014 by The McGraw Hill Companies Inc. All rights reserved. 1-3 The Management Process L O 1 McGraw Hill Irwin 12 3 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-4 L O 2 Managerial Accounting versus Financial Accounting Managerial accounting Financial accounting has supports the internal more of a scorekeeping planning future-oriented historical orientation decisions made by that provides information management. to owners and others outside the organization. McGraw Hill Irwin 12 4 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-5 L O 2 Managerial Accounting versus Financial Accounting Managerial Financial Accounting Accounting Service perspective External to investors Internal to managers and creditors Time Frame Present and Future Historical perspective Breadth of concern Micro - Individual units Macro - Entire organization of organization Reporting frequency Frequent and timely - Monthly - a week or and promptness one day after period ends more after period ends Degree of precision Relevance more important High accuracy desired - than reliability reliability very important Reporting standards Must follow GAAP None imposed and prescribed formats McGraw Hill Irwin 12 5 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-6 L O 3 Relationship of Total Cost to Volume of Activity How How aa cost cost will will react react to to changes changes in in the the level level of of business business activity. activity. Total Totalvariable variablecosts costs change changewhen whenactivity activity changes. changes. Total Totalfixed fixedcosts costs remain .
