1&2 Flashcards
Strategy
a game plan that enables a company to attract customers y distinguishing itself from its competitors.
Value propositions: (3)
& define
customer intimacy: we understand our customers needs
operational excellence: we deliver fast, conveniently, and lower prices
product leadership: we offer higher quality than competitors
line positions vs staff
line: directly involved in achieving the basic objectives
(CEO, Board of Directors, COO)
staff: indirectly involved, provide assistance to line positions
(CFO, controller, treasurer)
Decentralization
delegation of decision making authority by allowing managers to make decisions relating to their area of responsibility.
Chief financial officer (CFO)
responsible for providing timely and relevant data to support planning and control activities and for preparing financial statements for external users.
Controller
accountant under CFO
business process
a series of steps that are followed in order to carry out tasks
Value Chain
major business functions that add value to a company’s products and services
Lean thinking model
pulls units through a 5 step process in response to customer orders.
-keep inventory low (JIT)
Supply chain management
the coordination of business processes across companies to better serve end consumers
Theory of constraint
effectively manage constraints
Constraint
& examples
anything that prevents you from getting more of what you want
- time, machine capacity, labor
Six Sigma
a process improvement method that relies on customer feedback and fact-based data gathering and analysis to drive process improvement.
*zero defects
DMAIC
define, measure, analyze, improve, control
Non Value Added Activities
add no value and customers not willing to pay for it
Corporate Governance
should ensure stockholders that the business is being run in their best interest
Sarbanes-Oxley Act
& 2 provisions
to protect the interest of those who invest in publicly traded companies
- whistler blower protection
- document retention
Managing Risk
identify risks before they occur to prevent loss or minimize the effects of risk
Corporate Social Responsibility
ensures that stakeholders (customers, employees, supplies, communities, environmental and human rights advocates) interest are considered when making decisions.
Planning
involves establishing a basic strategy, selecting a course of action and specifying how the action will be implemented
Directing and Motivating
mobilizing people to carry out plans and run routine operations
Controlling
ensuring the plan is effectively carried out and appropriately modified if need be.
Budget (budgeting)
plans of management
Budgets are usually prepared under the direction go the controller (the head of the accounting department)
feedback
signals whether operations are on track
planning and controlling cycle
the smooth flow of management activities from planning through directing and motivating, controlling and then back to planning again.
Managerial accounting
concerned with providing information to managers, people inside the organization
Financial accounting
providing info to stockholders, creditors, and others outside the organizations
Segments
managerial accounting focuses on the “parts” of a company
raw materials (may include both direct and indirect materials)
the materials that go into the final product
Direct materials vs Indirect
- materials that become a part of the finished product and whose costs can be conveniently traced to the finished product
- minor items that are needed for the production of the finished product but are not put into the final product. ex. glue The cost of these items are not worth tracking. (included in overhead cost)
Direct Labor vs indirect labor
- consists of labor costs that be traced to individual units product.
- labor costs that cannot be physically traced to the product or can only be traced at great cost and inconvenience.
(manufacturing overhead cost)
Manufacturing overhead
includes all manufacturing costs that have to do with the manufacturing warehouse except direct materials and direct labor.
EX. insurance, direct manufacturing warehouse, manufacturing facilities, light, property taxes, depreciation, repairs of production equipment, heat and light
*these same costs can be incurred with selling and administrative functions however, ONLY costs associated with operating the factory are included in overhead.
Selling cost
non-manufacturing cost
all costs that are incurred to secure customer orders and get the finished product to the customer and get the product to the customer.
EX. advertising, shipping, sales and travel, sales commissions, COGs warehouses
administrative costs
all costs associated with the general management of an organization rather than with manufacturing or selling.
EX. executive compensation, general accounting, secretarial, public relations
product costs
inventoriable costs
all costs involved in acquiring or making a product.
- assigned to an inventory account on the Balance sheet, when sold it goes under COGS and matched as Sales revenue.
- *treated as an expense until the related products are sold
Period Costs
all costs that are not product costs, non manufacturing costs. selling and administrative costs
EX. sales commision and rental costs of administrative
*expensed on the income statement in they period in which they are incurred
Prime cost
Direct materials + direct labor
Prime cost
Direct materials + direct labor
Conversion cost
Sum of direct labor cost and manufacturing overhead cost
Direct materials used equation
Beg.DM inventory \+ Purchased DM - end.DM.inventory
COGS Manufactured equation
Beg. W/P invent \+ DM Used \+ Direct Labor \+ Man O/H applied - End. W/P invent
COGS
Beg. F/G invent
+ cogs manufactured
- End F/G invent
COGS manufactured
cost of goods that were finished during the period
includes DM DL and O/H manufacturing costs! but only when in the period
Cost Behavior
how cost reacts to changes in the level of activity
Variable Cost
a cost that varies in total, direct proportions to changes in level of activity
ex. electricity bill, DIRECT materials: DM’s used during any given period will vary, in direct proportion to the number of units produced
also, shipping costs and sales commissions, some elements of O/H costs such as lubricants
Fixed cost
remains constant regardless of the changes in activity
ex. rent, salaries, advertising, straight-line depreciation
average fixed cost per unit increases and decreases inversely with changes in activity
direct cost
a cost that can be easily and conveniently traced to a specified cost object.
ex. assigning costs to regional and national sale offices; the salary of a sales manager in the tokyo office would be a direct cost of that office.
Indirect cost
a cost that cannot be easily and conveniently traced t a specified cost object.
ex. Campbell Soup factory; the sales managers salary is an indirect cost of a variety of soup, such as chicken noodle or cream of mushroom. The salary is a Common Cost
common cost
a cost that is incurred to support a number of cost objects but cannot be traced back to one individually.
it is a type of Indirect Cost
Net Operating Income
Sales Rev - COGS = (GDP) - OP Expenses (over cost that aren't factory)
