...Aviation Management AVMT 6001 – Accounting for Business Decisions AVMT 6001 – Group Project 2 Managerial Accounting - JetBlue Airways Corporation Group Members: Cherrish Bridgemohan - 807001633 Rajiv Debie - 04708006 Israel Duncan - 814004144 Kenrick Duncan - 814002425 Neil Shepherd - 814004177 Signatures: Cherrish Bridgemohan ___________________________ Rajiv Debie Israel Duncan Kenrick Duncan Neil Shepherd ___________________________ ___________________________ ___________________________ ___________________________ November 16, 2014 Table of Contents I. II. Table of Abbreviations ........................................................................................................................ 5 Executive Summary............................................................................................................................ 6 III. Introduction......................................................................................................................................... 7 IV. Background – JetBlue Airways ......................................................................................................... 7 V. Management Accounting Information.............................................................................................. 8 Financial Accounting versus Management Accounting ............................................................................... 8 Uses of Management Accounting Information ....................
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...Comparison of Variable and Absorption Costing OMGT422 – Managerial Accounting August 7, 2015 P S Summary There are two types of costing methods and they are absorption and variable costing methods and they refer to the way in which product costs are determined. Absorption costing is a method that aims to include all expenses including overheads in the calculation of the cost of producing goods or services and variable costing treats fixed factory overhead as a period expense. These variable costs consist of direct materials, direct labor, and variable factory overhead. Most companies use absorption and variable costing together, both of the systems have their own benefits and limitations. Absorption Costing * According to Mowen & Heitger chapter 8, “absorption costing uses fixed factory overhead as a product cost. Unit product cost consists of direct materials, direct labor, variable factory overhead, and fixed factory overhead.” Companies may use absorption costing if they want to gain a full understanding of the extent to which costs are covered by sales income. An absorption cost is required for external reporting and is a general accepted accounting principle that the Internal Revenue Service will accept. * Variable Costing * Variable costing treats fixed factory overhead as a period expense. Unit product cost consists of direct materials, direct...
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...MANAGERIAL ACCOUNTING SOMNATH DAS BASICS OF MANAGERIAL ACCOUNTING Purpose of the course - familiarize you with: 1. Managerial accounting concepts. 2. Managerial accounting practices. 3. Use of managerial accounting information for decision making. 4. Pitfalls. Accounting is a branch of study concerned with the generation ( identification & measurement ) and provision (Communication) of information. Managerial accounting is in particular accounting for the internal management of organizations. A. Financial versus Managerial Accounting Financial Accounting Management Accounting Approach ! unifying concept: assets=equities ! no underlying unity-- many approaches Rules ! G.A.A.P. ! no general principles ! mandatory ! mostly optional Measurement ! almost exclusively $ ! many non-financial elements ! emphasis on precision, objectivity ! subjective estimates Past/Future ! based on past ! many future estimates and forecasts Aggregation ! overall summary of business ! very segmented ! general purpose information ! specific purpose reports Frequency ! less/mandatory frequency ! more frequent and optional Similarity ! basic data source same End result ! ends with financial statements ! integral part of other business aspects B. Cost Accounting Terminology 1. Nature of Cost Cost - A sacrifice of resources:...
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...CHAPTER 1 Managerial Accounting in the Information Age Summary of Questions by Objectives and Bloom’s Taxonomy |Item | |1. | |49. | |143. | |144. | |159. |3 |K |161. | |Sales |$180,000 |$182,000 |$2,000 | |Less: | | | | | Cost of ingredients |142,000 |146,000 |(4,000) | | Salaries |11,000 |11,200 |(200) | |Controllable profit |$27,000 |$24,800 |($2,200) | ...
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...SUBJECT: Cost Accounting Systems Managerial accounting concerns utilizing information available that assists managers to plan, control, and execute the company’s performance. It emphasizes on the relationships of internal costs and internal control tools in a systematic way. In a manufacturing organization, a typical cost accounting system aims to identify and allocate costs reasonably so that the organization can estimate the profitability of its products. With the input of numerical information such as direct materials and direct costs, management within the organization can make decisions such as the selling price of its products. The system is also a tool for managers to control the product lines. There are several types of costing systems, including job-order system, process costing system, and activity-based system. For instance, the activity-based system is composed of cost drivers, fixed cost, variable cost, and fixed/variable overheads. Cost drivers help allocate variable cost to the production of different product lines. Process costing method distributes the cost according to the manufacturing progress of the products, while job-order costing system assigns costs to different categories of job functions. Driven by the objective of controlling relevant cost and minimizing ineffective activities, managers of the organization examines the costs from a macro perspective instead of focusing on each piece of products. Under the method of full absorption costing, costs...
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...CHAPTER 1 MANAGERIAL ACCOUNTING IN THE INFORMATION AGE CHAPTER Introduction FINANCIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT RELATE TO PREPARING REPORTS FOR EXTERNAL USERS OF ACCOUNTING INFORMATION. IN COMPARISON, MANAGERIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT ARE RELEVANT TO PREPARING REPORTS FOR INTERNAL USERS OF ACCOUNTING INFORMATION. THIS CHAPTER PROVIDES AN OVERVIEW OF THE ROLE OF MANAGERIAL ACCOUNTING IN PLANNING, CONTROL, AND DECISION MAKING. IT ALSO DEFINES IMPORTANT COST CONCEPTS AND INTRODUCES KEY IDEAS THAT WILL BE EMPHASIZED THROUGHOUT THE TEXT. THE CHAPTER CONCLUDES WITH A DISCUSSION OF THE INFORMATION AGE AND THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS, A FRAMEWORK FOR ETHICAL DECISION-MAKING AND THE ROLE OF THE CONTROLLER AS THE TOP MANAGEMENT ACCOUNTANT. NOTE THAT YOU CAN ENHANCE AND TEST YOUR KNOWLEDGE OF THE CHAPTER USING WILEY’S ONLINE RESOURCES, THE SELF-ASSESSMENT QUIZ AND REVIEW PROBLEMS AT THE END OF THE CHAPTER. Objectives, Terms, and Discussions LO1 State the primary goal of managerial accounting. GOAL OF MANAGERIAL ACCOUNTING Managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information managers need for planning, control, and decision making. LO2 Describe how budgets are used in planning. Planning A plan communicates a company's goals to employees and specifies the resources needed...
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...costs that can bankrupt a company. 3. Landau’s margin on products for the months of June and July. 4. The company is looking for a new approach for internal managerial purposes. Alternative Courses of Action 1. Variable Costing System Pros * Provides benchmark on the profitability of manufactured products * It simplifies the bookkeeping of the company * It helps in establishing a responsible accounting in the company from which it identifies what the costs should be, who are the responsible personnel and whether costs are still under control. * Reduce time consuming efforts of allocating fixed overhead to individual products * Advantageous in making periodic management decision for the use in internal reports * Profit for a period is not affected in the changes in inventories Cons * Variable costing is usually prepared on a monthly basis. The information in the reports may not be used or too insignificant for the next accounting period. * Variable costing cannot produce reliable tax reports or any external reports such as the government. * In variable costing products might be sold in their marginal or usual mark up over variable cost. * Identification of variances Volume is not being considered in variable costing due to no fixed overhead is applied to products. 2. Full Absorption Costing System Pros * Required for financial reporting, income tax purposes, and...
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...ACCOUNTING AND THE GERMAN CULTURE March 18, 2009 TABLE OF CONTENTS INTRODUCTION 1 REVIEW OF LITERATURE 1 ANALYSIS 2 CONCLUSIONS AND RECOMMENDATIONS 7 LIST OF REFERENCES 8 INTRODUCTION Grenzplankostenrechnung (GPK) is a German-based costing methodology that was developed in the late 1940's and 1950's. GPK is credited to an automotive engineer, Hans George Plaut, and an academic, Wolfgang Kilger. They worked together to identify and deliver a comprehensive methodology to give exact and improve cost accounting information. It is designed to provide a consistent and accurate application of managerial costs that are calculated and assigned to a product or service (Cooper and Kaplan, 1998). GPK has been the staple accounting method used in German-speaking countries for many years now. Is it actually better than the United States traditional accounting management style? REVIEW OF LITERATURE GPKs definition by United States standards is flexible margin costing system. Flexible margin costing, or GPK, is a cost accounting system used by many companies in German-speaking countries and is taught at German universities. It has proven it validity through its ability to give accurate, quick information about companies' financial position. GPK uses marginal costing instead of full costing. It helps to make short-term decision that lead to long-term plans for the organization. They form cost centers instead of activities and processes (Adkins, 2006). ...
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...prepared under absorption costing and variable costing usually produce different net operating income figures. Under absorption costing if inventories increase then some of the fixed manufacturing costs of the current period will not appear on the income statement as part of cost of goods sold. Instead, these costs are deferred to a future period and are carried on the balance sheet as part of the inventory account. Such a deferral of cost is known as fixed manufacturing overhead deferred in inventory, as the accountant said that the July production was well below standard volume because of employee vacations this caused overhead to be under absorbed so as we can see in the income statement a large amount of overhead volume the amount 63,779 is deducted from gross margin and it cause less income however the sales are increased, but in variable costing because we don’t include this overhead volume and we have just a fix amount of fix cost for every month this problem is not visible. Income Statement June and July | EMBA 2016 - Managerial Accounting - Case Study 2 Landau Company Problem 1 Input Data Provided - Sales increased in July - Production decreased in July below standard because of employee vacations - As a result of vacations overhead costs have been under absorbed in July - Large unfavorable volume variance had been generated to offset gross margin Explanation Required On the Income Statements under Full costing and Variable costing some line items indicate ...
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...THE ACCOUNTING REVIEW Vol. 88, No. 2 2013 pp. 463–498 American Accounting Association DOI: 10.2308/accr-50318 Managerial Ability and Earnings Quality Peter R. Demerjian Emory University Baruch Lev New York University Melissa F. Lewis University of Utah Sarah E. McVay University of Washington ABSTRACT: We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings. Keywords: managerial ability; managerial efficiency; earnings quality; accruals quality. Data Availability: Data are publicly available from the sources identified in the text. I. INTRODUCTION W e examine the relation between managerial ability and earnings quality. We anticipate that superior managers are more knowledgeable of their business, leading to better judgments and estimates and, thus, higher quality earnings.1 Alternatively, the benefit We thank two anonymous reviewers, Asher Curtis, Patty Dechow, Ilia Dichev, Weili Ge, Marlene Plumlee, Phil Shane, Terry Shevlin, Wayne Thomas (editor), Ben Whipple, and workshop participants at the 2010 Kapnick Accounting Conference...
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...Management Accounting Costing and Budgeting Introduction: Management accounting is the most vital part of accounting process. The function of this department is increasing day by day. Because in the present world many company are rising very quickly. The function of management accounting is to manage the process of accounting department. It is very essential for manage all kinds of this activity. There are various functions in accounting. Management accounting remotes all the functions of accounting department. Managers have to evaluate the genuine results of function to budgeted data to evaluate the presentation of the business. They use managerial accounting practice such as measure to evaluate the routine of explicit departments. They then make required adjustments in those departments which are not the stage on form. The manners management accountants supply general of forecasting and planning, performing discrepancy analysis, reconsidering and monitoring costs innate in the business are ones that have double liability to both finance and the business panel. Examples of errands where accountability may be more consequential to the business management team vs. the business finance department are the expansion of new product costing, operations research, business driver metrics, sales management achieve carding, and client prosperity analysis. Equally, the research of certain financial reports, reconciliations of the financial data to basis structures, risk and dictatorial...
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...wiL1084x_fm_i-xxiv_1.indd Page i 1/10/11 7:53:00 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 Managerial Accounting John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia 3 rd edition wiL1084x_fm_i-xxiv_1.indd Page ii 1/10/11 9:14:31 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 To my students and family, especially Kimberly, Jonathan, Stephanie, and Trevor. To my wife Linda and children, Erin, Emily, and Jacob. MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2012, 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811084-9 MHID 0-07-811084-X Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim...
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...ACC403 - Principles of Accounting Module 2 – Case 2 One of the advantages of the discovery of mathematics is the birth of a systemic way of coming up into a generally accepted prediction based on facts and other factors and/or elements. With a set of rules being followed, this is what is normally called statistics. And in one way or another from it were devised a series of complex mathematical systems that tend to keep records of various activities – mostly business and financial ones. We will take a look at a certain example and eventually prepare an income statement utilizing the given data. Also in preparing the net income statements, the direct (variable) and full absorption will be considered which according to one of the sources considered here are the traditional methods (Martin, Management Accounting: Concepts, Techniques & Controversial Issues). With the assumptions given in the problem, that (a) costs per unit are the same for units in beginning inventory and units produced during the year; (b) and also, prices and unit costs did not change during the year, we now look at the income statement for this problem. DIRECT (VARIABLE) COSTING INCOME STATEMENT With the given 450,000 production capacity plus a selling price of $29.00 per unit and also considering an ending inventory of 55,000 units, we arrive with total ideal sales of 345,000 units or $11,455,000.00. Figure 1 Direct (Variable) Costing Income Statement FULL ABSORPTION COSTING INCOME STATEMENT ...
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...ABUBAKAR TAFAWA BALEWA UNIVERSITY BAUCHI, SCHOOL OF MANAGEMENT TECHNOLOGY DEPARTMENT OF ACCOUNTING AND FINANCE. COURSE TITTLE: COST ACCOUNTING (BAT 212) ASSIGNMENT QUESTION:- WITH A CASE STUDY, DISCUSS THE IMPORTANCE AND APPLICATION OF COSTING TECHNIQUES IN HOSPITALITY INDUSTRY IN NIGERIA? (CASE STUDY OF YANKARI MASS TRANSIT CORPORATION) By Nwankwo Stephen c. TABLE OF CONTENTS 1.0 INTRODUCTION 1.1 Background of the assignment 1.2 Purpose/objectives of the assignment 1.3 Definition of the term 1.4 Historical background of the case study ABSTRACT The aim of the assignment is to find out the importance of using costing techniques such as operating costing, standard costing, direct costing, absorption costing etc. in one of the sub-sector of Nigerian economy(hospitality). And also to identify the techniques adopted by the hospitality industry and it’s important to the organization. INTRODUCTION 1.1 BACKGROUND OF THE ASSIGNMENT The hospitality industry is a broad category of fields within the service industry that include lodging, transportation, and additional fields within the tourism industry. Since the introduction of money, people have been concerned with cost. They think of how to manage money. Costing system was first recognized in manufacturing industries with the aim of finding the cost of production or cost of a product, presently, the...
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...Management Accounting Essay Critique Managerial Empire Building, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs 1 Management Accounting Essay Critique Main aim of essay critique is to evaluate the results of the research paper The main aim of this essay critique is to evaluate some of the results between corporate governance and the asymmetrical behavior of cost, namely selling, general and administrative (SG&A). It will also discuss pertinent points concerning corporate governance and the limitations of this study. There are a few important findings in this paper The purpose of this research paper is to examine whether managerial incentive is an additional explanation from the SG&A cost asymmetry and whether corporate governance plays an important role in mitigating this asymmetry. A secondary objective would be to examine whether the SG&A asymmetry manifests itself as either cost stickiness or cost speediness and whether corporate governance mitigates cost asymmetry through reducing cost stickiness, cost speediness or both. The results are as follow: 1) It was able to provide substantial evidence to explain the SG&A cost asymmetry phenomenon from the agency theory perspective (managerial incentive). 2) Besides that, it yielded a negative relationship between corporate governance and SG&A cost asymmetry. 3) For its secondary objective, the paper substantiated its concept of “cost speediness”, which provides an...
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