Unit 6 cost and managerial accounting

GETTING STARTED

1. Scan this passage. Working with a partner, try to define the terms “management accounting”/“cost accounting” and “management accounting information”. Say what managerial / cost accountants’ work involves and what the difference between managerial and financial accounting is.

Managerial accounting, sometimes called management accounting, involves using economic and financial information to plan and control many of the activities of the entity, and to support the management decision-making process. Cost accounting is a subset of managerial accounting that relates primarily to the determination and accumulation of product, process, or service costs. Managerial accounting and cost accounting ordinarily have an internal orientation, as opposed to the primarily external orientation of financial accounting. Much of the same data used in or generated by the financial accounting process are used in managerial and cost accounting, but the latter are more likely to have a future orientation, such as in the preparation of budgets. So, Managerial accounting is concerned with providing information to managers – that is, to those who are inside an organization and who are charged with directing and controlling its operations. Managerial accounting can be contrasted with financial accounting, which is concerned with providing information to shareholders, creditors, and others who are outside an organization.

As with financial accounting, managerial accounting and cost accounting have special terminology or, as many would say, jargon. Most of these terms relate to different types of costs. An important fact about managerial and cost accounting is that there are different costs for different purposes. When a marketing or production manager asks a management accountant what a certain item or activity costs, the accountant is not being disrespectful when asking: "Why do you want to know?" Costs used for valuing inventory are different from the costs that should be considered when analyzing a product modification or potential new product.

Company’s president, vice president of sales, service manager, and other managers do not have the time to examine the details of the operating information. Instead, they rely on summaries of this information. They use these summaries, together with other information, to carry out their management responsibilities. The accounting information specifically prepared to aid managers is called management accounting information. This information is used in three management functions: (1) planning, (2) implementation, and (3) control.

Managerial accountants and cost accountants are professionals who have usually earned a Bachelor of Science degree with a major in accounting. Their work frequently involves close coordination with the production, marketing, and finance functions of the entity. The Certified Management Accountant (CMA) professional desig­nation is earned by a management accountant/cost accountant who passes a broad four-part examination administered over a two-day period, and who meets certain experience requirements.

USEFUL VOCABULARY

cost and management accounting overhead variable (factory) overheads cost of production cost of manufacturing recovery n direct costs indirect cost direct labour product cost cost centre cost allocation conversion costs marginal costs fixed costs cost apportionment interlocking cost accounts integrated cost accounts

учет и анализ затрат; управленческий учет накладные расходы. переменные общезаводские накладные расходы производственные издержки все издержки, затраченные на производственный процесс в течение определенного периода возмещение; получение обратно; взыскание, инкассирование прямые затраты, производственные затраты косвенные расходы прямые затраты на оплату труда себестоимость продукции центр затрат, подразделение отнесение/распределение затрат 1.себестоимость изготовления; 2.pl.издержки обработки предельные/маржинальные издержки постоянные издержки, постоянные затраты (постатейное) распределение прямых затрат различные счета издержек, которые выверяются интегрированные (комплексные) счета издержек

READING

1. Read the text about one of the two main types of cost involved in producing products: overheads. The text says that 'direct costs vary directly with production' (lines 1-2). What does this sentence suggest about indirect costs?