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ACCT MD 1 > ACCT Final > Flashcards

ACCT Final Flashcards

1
Q

CH 1

What are the three main responsibilities of managers

A

Planning: Setting goals and a plan to achieve them
Directing: Day to Day Operations
Controlling: Analyzing actual result based on what the plan was

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2
Q

CH 1

Give characteristics of Managerial Accounting

A

Used for internal decisions, focus on future and depends on RELEVANCE

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3
Q

CH 1

Give characteristics of Financial Accounting

A

Used for external decisions, creditors, shareholders and external auditors. Focus of past and RELIABILITY

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4
Q

CH 1

Be familiar with the org structure of Businesse

A

Board of Directors
Ceo
COO CFO

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5
Q

CH 2

Name 3 types of companies and what their inventories look like

A

Service– No Inventory
Merchandise– One inventory (merchandise)
Manufacturing– Three inventories (Raw Material, Work In Progress and Finished Goods)

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6
Q

CH 2

What are the 6 stages of the Value Chain, in order from first to last?

A

R&D, Design, Production/Purchases, Marketing, Distribution, Customer Service

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7
Q

CH 2

Distinguish between Direct and Indirect Costs

A

Direct: Easily traced to the cost object

Indirect: Not easily traced to the cost object, usually the cost is allocated!

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8
Q

CH 2

What is an Inventoriable product cost? What does it include?

A

The cost of buying or making the product.

—It includes what it takes to MAKE a product, Direct Materials, Direct Labor and Manuf. Overhead

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9
Q

CH 2

What is included in the Period Cost?

A

Everything in the Value Chain!

R&D, Marketing, Production/Purchases, Design, Distribution and Customer Service

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10
Q

CH 2

What is relevant information?

A

Relavent info always pertains to the future and differs among alternatives.

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11
Q

CH 2

Total Variable Cost– Does is change or stay the same? What about per unit?

A

Total Variable Cost changes with the volume of production.

Variable Cost per unit– Stays constant at any volume of production

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12
Q

CH 2

Total Fixed Cost– Does is change or stay the same? What about per unit fixed cost?

A

Total Fixed Cost– Stays constant over different activities and volumes production.

Fixed cost per Unit– Changes inversely to volume (As volume increases fixed cost per unit decreases)

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13
Q

CH 3

What is Job Costing? What are some characteristics?

A

Allocating Cost per Job. Typical of custom, unique or large items (building houses, unique furniture)

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14
Q

CH 3

What is Process Costing? What are some characteristics?

A

Allocating cost based on a cost driver (labor hours), total cost are averaged over total units. Typical of mass production or similar items.

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15
Q

CH 3

What is flow of Inventory? Put them in order.

A

In a manufacturing company, it is the flow of inventory from purchasing thru

Raw Material>Work In Progress>
>Finished Goods>Cost of Good Sold

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16
Q

CH 4

What are the 4 levels of the Cost Hierarchy?

A

Facility-Level
Product-Level
Batch-Level
Unit-Level

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17
Q

Ch 6

What is Cost Behavior?

A

How cost changes as volume (of production) changes

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18
Q

What are the three common types of cost behaviors?

A

Fixed Cost, Variable Cost and Mixed Cost

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19
Q

CH 6

What is the Cost Equation?

A

Y = f + vx

Total MC= FC + VC x Volume

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20
Q

CH 6

What is Variable Costing?

A

Assigns only variable manufacturing costs to products (DM, DL, and Variable MOH)

Fixed manufacturing overhead = period cost

CM Income Statement

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21
Q

CH 6

Break down the Contribution Income Statement

A 
Sales
- Variable Costs
= Contribution Margin
- Fixed Costs
=Operating Income
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22
Q

CH 6

Cost Behavior Analysis, What are the four types? `

What one should you know?

A

Account Analysis, Scatter Plot, Regression Analysis

–HIGH LOW METHOD–
=Change in Cost/ Change in Volume!

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23
Q

CH 7

What is the formula for Breakeven Units?

What is the formula for Breakeven Sales (Revenues)?

A

BE (Units)= (FC+ Op. Inc)/CM Unit

BE (Sales)= (FC+ Op. Inc)/ CM Ratio

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24
Q

CH 7

CM Formulas:

    • CM Unit
    • CM %
A

CM Unit: CM/ # Units Sold

CM %: CM/ Revenues

25
Q

CH 7

How do you reach target profit? And give the formula..

A

The CM must cover the FC but also the desired Profit.

Target Profit= (FC+ Profit)/ CM Unit

26
Q

CH 7

What is the margin of Safety? How do you calc. as a %?

A

Excess of expected sales over breakeven sales

MoS in Dollars/ Expected Sales in Dollars

27
Q

CH 7

What is the operating leverage factor? Give the formula..

what does a high OLF indicate?

A

How responsive a company’s operating income is to changes in sales volume.

Op. Leverage Factor: CM/ Op. Income

High OLF– High CM%, High Risk & Reward

28
Q

CH 7

How do you calculate % change in Profit?

A

% Change In Profits =

Operating Leverage Factor x % Change In Sales

29
Q

CH 8

New definition of relevant information

A

Expected future (cost and revenue) data
Differs among alternative courses of action
Is both quantitative and qualitative

30
Q

CH 8

New definition of Irrelevant Information?
What are sunk costs?

A

Costs that do not differ between alternatives

Sunk costs – incurred in past and cannot be changed

31
Q

CH 8

What is the Decisions approach ( aka Relevant Information Approach)

A

Focus on relevant revenues, costs, and profits

Use contribution margin approach that separates variable costs from fixed costs (changes in Op. Income)

32
Q

CH 8 Special Business Decisions

Do you accept a special order? 3 questions.

A

Do we have the excess capacity

(yes) >Is reduced sales price enough to cover cost
(yes) >Will it affect regular sales in the long run

33
Q

CH 8 Special Business Decisions

Do you drop/add a department/Line?

A

If total cost savings exceed the lost revenues from discontinuing a product, department, or store (Accept)

34
Q

CH 8 Special Business Decisions

Which Product to Emphasize?

A

Emphasize the product with the highest contribution margin per unit of constraint

35
Q

CH 8 Special Business Decisions

Sell as is or Process Further?

A

If extra revenue (from processing further) exceeds extra cost of processing further.
–Process Further–

If extra revenue (from processing further) is less than extra cost of processing further:
–Sell as Is–

36
Q

CH 9 Master Budget

What is in the Operating Budget?

A 
Sales Budget
Production Budget
(DM) (DL) (MOH)
Operating Expense Budget
Budgeted Income Statement
37
Q

CH 9 Master Budget

What is in the Financial Budget?

A

Budgeted Income Statement

Cap. Expenditures) (CASH) (Budgeted Bal. Sheet

38
Q

CH 9 Master Budget

How do you calculate Sales Budget?

A

Number of units to be sold
× Sales price per unit .
= Total sales revenue

39
Q

CH 9 Master Budget

How do you calculate the Production Budget?

A 
\+ Units needed for sales 
\+ Desired ending inventory
= Total units needed
- Units in beginning inventory
= Units to produce
40
Q

CH 9 Master Budget

How do you calculate the DM Budget?

A 
\+ Quantity of DM needed for production
\+ Desired DM ending inventory
= Total quantity of DM needed
-  DM beginning inventory
= Quantity of DM to purchase
41
Q

CH 9 Master Budget

How do you calculate the DL Budget?

A 
Units to be produced
× DLH per unit
= Total DLH needed
× Cost per DLH
= Total Direct Labor Cost
42
Q

CH 9 Master Budget

What is the final piece of the Operating Budget and the first piece of the Financial Budget?

A

BUDGETED INCOME STATEMENT!

43
Q

CH 9 Master Budget

What are the three types of Cash Budgets?

A

Cash collections budget
Cash payments budget
Combined cash budget

44
Q

CH 9 Master Budget

What is the Capital Expenditure Budget?

A

Shows the company’s plans to invest in new property, plant, or equipment (capital investments)

45
Q

CH 9 Master Budget

How do you calculate cash budgets?
–Self Definition–

A

Total Revenue- Credit Sales (%)

Take the Cash Revenue (%) and divide the collections among the previous and future months.

46
Q

CH 9 Master Budget

What type of company has a different Operating Budget Layout? What is different?

A

Merchandising Company

–Cost of Goods Sold, Inventory and Purchases is all one Budget– (in place of Production bud.)

47
Q

CH 10 Performance Evaluation

What is decentralization? What is Responsibility Center?

A

Splitting operations into different operating segments

RC: Part of an organization whose manager is accountable for planning and controlling activities, (Responsibility Accounting)

48
Q

CH 10 Performance Evaluation

What are the four types of Responsibility Centers?

A

Cost Center
Revenue Center
Profit Center
Investment Center

49
Q

CH 10 Performance Evaluation

What does a Performance Report compare? Explain favorable and unfavorable Variance?

A

Performance Report – compares actual revenues and expenses to budgeted figures

–FV : causes operating income to be higher than budgeted

–UFV: causes operating income to be lower than budgeted

50
Q

CH 10 Performance Evaluation

How do you asses the performance of an Investment Center?

A 
Return on Investment (ROI)
Residual Income (RI)
51
Q

CH 10 Performance Evaluation

What is ROI and how do you calculate it?

A

Measures the amount of income an investment center earns relative to the size of its assets

ROI = Operating Income/ Total Assets

Also,
(ROI = Sales Margin x Capital Turnover)

52
Q

CH 10 Performance Evaluation

What is RI and how do you calculate it?

A

Determines whether the division has created any excess (residual) income above management’s expectations

RI = Operating Income – (Target rate of return x Total assets)

53
Q

CH 10 Performance Evaluation

The Master Budget is sometime called the _____ Budget?

A

Static Budget!

54
Q

CH 10 Performance Evaluation

What is the flexible budget? What is it used for?

A

A budget prepared for a different level of volume than that which was originally anticipated

To determine volume variance– The difference between the master budget and the flexible budget– (only because of volume)

55
Q

CH 10 Performance Evaluation

What is a KPI?

A

Key Performance Indicator

56
Q

CH 15 Sustainability

What are the 4 reasons a company would pursue sustainability?

A

Cost Reduction, Regulatory Compliance, Competitive Strategy, Shareholder Influence

57
Q

CH 15 Sustainability

What is Environmental Management Accounting (EMA)?

A

EMA: is a system used for the identification, collection, analysis and use of two types of information for internal decision making: monetary and physical information.

58
Q

CH 15 Sustainability

Whats the difference between monetary and physical Information?

A

Monetary: Typical Accounting information, all kinds of costs (emissions control/ prevention cost)

Physical: Non-Typical Information about the physical effects of production (waste generated/ H2) consumed)

ACCT MD 1 (4 decks)

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