ACCT 2102 1st Edition Lecture 3 Outline of Last Lecture:I. Sustainability and Social Responsibility II. Triple Bottom LineOutline of Current Lecture: III. Basic Business Model Service companies Merchandising companies Manufacturing companies IV. Value ChainCurrent Lecture: Building Blocks of Managerial Accounting (Chapter 2, Part 1)III. Basic business models- Mostly deal with merchandising and manufacturing, but rarely do we deal with service.o Service companies Have no inventory Example: accounting firmo Merchandising companies Buy items from other companies and resell them. Example: Walmarto Manufacturing companies Make goods. Example: Apple and HondaIV. Value Chain- Adding value to the company’s products• Research and Development• Design• Production or Purchase• Marketing • Distribution• Customer ServiceA company incurs cost in every activity of the value chain. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Total costs should be used for internal decision-making.- However, GAAP says we must treat certain costs as inventoriable product costs and all others as period costs for financial reporting purposes. - Period costs, or office costs, are acquired in the administration or sales department (SG&A) and are expensed when incurred.o If the product is out of the factory, then it is a period cost.- Product costs, or factory or inventorial costs, are expensed when sold—COGS (Cost of goods sold).o If product is still in factory, then it is a product
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