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29 Cards in this Set
- Front
- Back
Managerial Accounting (purposes)
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Internal and External transactions for future, planning directing and deciding, rules set by management and IMA, not required, reported only as needed, cost-benefits
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Financial Accounting (purposes)
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Externally reported to investors/stakeholders/SEC, based on historical info, rules set by GAAP and SEC, required by SEC, annually and quarterly reported, determines worth of investment
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Managerial Ethics (4 Necessary parts and info)
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Managers must follow IMA, must avoid and report fraud to directors, avoid and stop any padding in the budget
COMPETENCE CONFIDENTIALITY INTEGRITY CREDIBILITY |
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Cost-Benefit Analysis
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HELPS MAKE A DECISION! PV of FV benefits to determine compare costs, outcomes can be different. QUANTITATIVE and QUALITATIVE.
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Quantitative Benefits
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$$$$ and more inventory sold
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Qualitative
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Customer service increased and loyalty gained
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Cost Object
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the object being measured ie) materials, hours, units, etc.
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Cost Driver
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(Price)/(cost rate)
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Direct Costs
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Measurable and traceable to a cost object
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Indirect Costs
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untraceable to a cost object, but have an affect on VC or mixed costs
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Relevant Costs
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future oriented and can be changed
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Irrelevant Costs
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focuses on past costs that were paid off and will not recur
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Period Costs
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not related to the manufacturing of a cost object, but rather is considered overhead
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Product Costs
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related directly to the manufacturing of a product. factory costs, direct material costs, direct labor, electricity in factory, depreciation of the building, factory janitor. NOT: corporate building, corporate salaries, sales commissions, etc.
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Cost of Goods Sold (Calculation steps)
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Beginning inventory
+purchases =Cost of goods available -ending inventory =COGS |
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The importance of Overhead Allocation
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decision-making advice
efficiency w/ resources identify indirect costs and measure them in order to eliminate waste and reduce use of resources; allows managers to allocate funds not only to the direct, traceable costs BUT ALSO to the indirect costs that have been incurred historically and will be incurred again |
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Plantwide Overhead
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(total estimated cost of managerial overhead)/(allocation base)
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Departmental Overhead
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(est dept cost)/(allocation base)
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ABC Costing
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1. Identify Activities and MOH of each
2. Select allocation bases for activities and estimate a total for the activity 3. (Estimated total indirect cost of activity)/(Estimated total quantity of cost allocation base) |
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Contribution Margin Income Statement
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Sales Revenue
-total Variable Costs =CONTRIBUTION MARGIN -total Fixed Costs =Operating Income |
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Contribution Margin in $
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Sales Revenues - Total VC
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Unit Contribution Margin
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Sales Price per unit - cost per unit
OR (sales revenue)/(Total Units sold) - (Total VC)/(UNITS PRODUCED) |
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Contribution Margin (purpose)
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to show how much revenue is remaining to pay off fixed costs; (for ratio) to determine what percent of revenue contributes towards paying for variable costs
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Contribution Margin Ratio
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(CM in $)/(Revenues)
shows how much $ is remaining to pay off Fixed Costs |
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Break-Even Point (purpose)
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the number of units necessary to break-even
revenues and costs are EQUAL profits are 0 |
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Break-Even Point (units)
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Fixed Expenses=(Sales Price per unit - Cost per Unit)
(Fixed Expenses)/(CM) |
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Break-Even Point ($)
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(Total Fixed Expenses in $)/(CM Ratio)
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Margin of Safety (calculation and purpose)
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(expected sales) - (break-even point)
tells managers how much sales can drop before reaching the break-even point |
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Operating Leverage (calculation and purpose)
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(CM)/(Operating Income)
tells how much more revenue is available in relation to operating income, shows how much revenue as a % is being spent on fixed costs |