Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. Hes also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

	Required:
1.	Choose whether the characteristics on the Managerial vs. Financial panel are most often associated with managerial accounting or financial accounting.
2.	Charles has provided some of the costs he expects to incur on the Cost Classification panel. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.
3.	Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B on the Income Statements panel, and balance sheets C and D on the Balance Sheets panel. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie company. Then, on the Financial Statements panel, denote which income statement and balance sheet would be most appropriate for a manufacturing business.
4.	At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data hes collected, but he was unable to figure out some of the amounts. On the Costs and Balances panel, determine the missing amounts. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values.

Choose whether the following characteristics are most often associated with managerial accounting or financial accounting.

	Managerial Accounting	Financial Accounting
Primarily used for internal decision making
Generally Accepted Accounting Principles (GAAP) must be used
Prepared statements usually pertain to the company as a whole rather than individual departments or products
Information provided will often be subjective, such as estimated future results
Often prepared on an as-needed basis rather than at fixed intervals
Use principles of the Sustainability Accounting Standards Board (SASB) to provide sustainability information to external financial statement users
Consideration of sustainability practices to contribute to the companys long-term success
Using eco-efficiency measures to reduce expenses

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

Cost	Product	Period	Direct	Direct	Factory	Selling	Administrative	Direct	Indirect	Prime	Conversion
	Cost	Cost	Materials	Labor	Overhead	Expense	Expense	Cost	Cost	Cost	Cost
Eggs used to make cheesecakes
Bakers wages
Delivery driver wages
Depreciation of office computers
Power to run the cheesecake ovens
Presidents salary
Sales commissions
Factory supervisor salary

Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B on the Income Statements panel, and balance sheets C and D on the Balance Sheets panel. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Which income statement is most appropriate for a manufacturing business?

Income statement A

Income statement B

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet C

Balance sheet D