How to use this guide
This guide covers the first half of a managerial accounting course: chapters 1, 2, 3, 6 and 8 of the course text, in the order those topics are taught. The topic order follows the course outline's schedule and the lecture slides for those chapters. The material builds in a line: first why managers need cost information, then which costs there are, then how a factory puts costs on products, then what happens to profit when volume changes, and finally how the same factory can report two different profits.
Topic order. Work the tabs left to right. 01 Managerial accounting covers what managerial accounting is, the three management functions, the organization chart and ethics. 02 Cost concepts sorts costs (direct and indirect, product and period, variable, fixed and mixed), applies the high-low method, and builds the cost of goods manufactured and a manufacturer's income statement. 03 Job-order costing follows costs through the accounts, applies overhead with a predetermined rate and clears the difference. 04 CVP analysis finds break-even points, targets and the effect of a sales mix. 05 Absorption and variable costing shows why fixed overhead treatment moves net income.
Inside each topic: read the idea, do each worked example on paper before opening the solution (they run simplest first), then break the lab by changing numbers. Finish with the Drill until you get several in a row right. The self-learning parts of the course (ethics, regression analysis) are included but briefly, as ideas to know rather than long calculations.
This guide follows the topics in the course's published schedule and the standard managerial accounting methods taught at this level. Instructors' emphasis and notation vary, so check your own course outline for what is examined.
| Level | What it asks | Example |
|---|---|---|
| Beginner | One definition, or one formula in one step | Is this a product or period cost? Break-even units; unit cost under absorption costing |
| Intermediate | A standard calculation with a few steps | High-low cost equation; COGM; overhead applied to a job; margin of safety |
| Exam level | A full exam-style question with several parts | Target net income with tax; prorating under-applied overhead; two income statements side by side |
| Hard | Twists: combining ideas, working backwards, traps | Purchases worked back from COGS; the volume a price cut needs; inventory units from a net income gap |
The drill starts at Beginner and steps up a level after three correct answers in a row; you can also pick a level yourself. The written questions, multiple choice and flashcards are ordered easy → hard, so working through them in order builds each idea from the ground up.
The core formulas
- Prime = DM + DL · conversion = DL + MOH · product costs = DM + DL + MOH
- High-low: variable cost per unit = (high cost − low cost) ÷ (high activity − low activity)
- DM used = beg. RM + purchases − end. RM · COGM = WIP at start + DM + DL + MOH − WIP at end · COGS = beg. FG + COGM − end. FG
- POR = estimated MOH ÷ estimated activity · MOH applied = POR × actual activity
- Under-applied = actual MOH − applied MOH (positive); over-applied is negative
- CM = price − variable cost · CM ratio = CM ÷ price
- Break-even units = TFC ÷ CM per unit (round up) · dollars = TFC ÷ CM ratio
- Target units = (TFC + target operating income) ÷ CM · operating income = net income ÷ (1 − tax rate)
- Absorption NI − variable NI = fixed MOH per unit × (ending units − beginning units)
- PVV = fixed POR × (budgeted units − actual units produced)
Rules people forget: memorize
- Selling and administrative costs are period costs under every method
- High and low come from activity, never from the highest and lowest cost
- MOH is a clearing account: it should be zero after applied overhead is compared with actual
- Actual above applied means under-applied, and under-applied raises COGS
- Break-even units always round up; break-even dollars are not rounded
- Target net income must be grossed up for tax before it goes into the formula
- Production equals sales: the two net incomes are equal. Production above sales: absorption is higher
- Fixed MOH is a product cost only under absorption costing
Exam format, weight and allowed aids differ between sections and terms. Check your own course outline.
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