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Fall 24 > ACCTG 404 > Flashcards

ACCTG 404 Flashcards

1
Q

Break-Even Point

A

sales where profit is zero

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2
Q

Contribution Approach

A

Income statement

that separates costs into variable and fixed

first deducting all variable expenses from sales to obtain the contribution margin

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3
Q

Contribution Margin

A

portion of sales revenue not consumed by variable expenses, thus being fixed expenses

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3
Q

Cost-Volume-Profit (CVP) Graph

A

Shows relationship between an organizations revenues, costs, and profits on the one hand and its sales volume on the other hand

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4
Q

Degree of Operating Leverage

A

Measure of how a % change in sales volume will affect profits

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4
Q

Margin of Safety

A

Actual dollar sales or excess of budget / break-even dollar sales

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5
Q

Incremental Analysis

A

Focusing on costs and revenues that change as a result of a decision

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6
Q

Operating Leverage

A

Measure of how sensitive net operating income is to a change in unit sales

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7
Q

Sales Mix

A

Sales mix is sales of each product as a % of total sales

More high margin sales than low margin sales increase profits

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8
Q

Target Profit Analysis

A

Estimating level of sales needed to achieve a desired target profit

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9
Q

Absorption costing

A

Costing method that includes all manufacturing costs (direct materials, direct labor, variable and fixed manufacturing overhead) in unit product costs

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10
Q

Common Fixed Cost

A

Fixed cost supporting more than one business segment, but not traceable

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11
Q

Segment

A

Any part or activity of an organization about which managers seek cost, revenue, or profit data

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12
Q

Segment Margin

A

Segments contribution margin less its traceable fixed costs

Represents margin available after a segment has covered all of its own traceable costs

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13
Q

Traceable Fixed Cost

A

Fixed cost incurred because of the existence of a particular business segment that would be eliminated if the segment were eliminated

Easily traceable

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14
Q

Variable Costing

A

Costing method that includes only variable manufacturing costs (direct materials, direct labor, variable manufacturing overhead) in unit product costs

Not easily traceable

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15
Q

Activity Cost Pool

A

Accumulates cost related to a single activity measure in an activity-based costing system

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16
Q

Activity Measure

A

Allocation based in an activity-based costing system

Ideally is a measure of the amount of activity that drives the costs in an activity cost pool

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17
Q

Activity-Based Costing (ABC)

A

Based on activities that provides managers with cost information for strategic and other decisions potentially affecting capacity and therefore fixed and variable costs

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18
Q

Activity Based Management (ABM)

A

Management approach focusing on managing activities as a way of eliminating waste and reducing delays and defects

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19
Q

Batch-Level Activities

A

Activities performed each time a batch of goods is handled or processed, regardless of how many units are in the batch

Amount of resources consumed depends on the number of batches run rather than the number of units in the batch

20
Q

Benchmarking

A

identifying activities with the greatest potential for improvement

21
Q

Duration Driver

A

Measure of the time required to perform an activity

22
Q

First-Stage Allocation

A

overhead costs to activity cost pools in an activity-based costing system

23
Q

Organization-Sustaining Activities

A

Activities that are carried out regardless of which customers are served, which products are produced, how many batches are run, or how many units are made

23
Q

Product-Level Activities

A

Activities that are related to specific products that must be performed regardless of how many units are produced and sold or batches run

24
Q

Second-Stage Allocation

A

Using activity rates to apply costs to products and customers in activity based costing

25
Q

Transaction Driver

A

Count of the number of times an activity occurs

26
Q

Unit-Level Activities

A

Activities performed each time a unit is produced

27
Q

Budget

A

Plan for future expressed in quantitative terms

28
Q

Cash Budget

A

Schedule estimating how cash will be acquired and used over a specific time period

29
Q

Control

A

Process of gathering feedback to ensure a plan is being properly executed or modified as circumstances change

30
Q

Direct Labor Budget

A

Plan showing the direct labor-hours required to fulfill the production budget

31
Q

Direct Materials Budget

A

Plan showing the amount of raw materials that must be purchased to fulfill the production budget and provide adequate inventories

32
Q

Ending Finished Goods Inventory Budget

A

Budget showing the dollar amount of unsold finished goods inventory appearing on the ending balance sheet

33
Q

Manufacturing Overhead Budget

A

Plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period

34
Q

Master Budget

A

Number of separate but interdependent budgets quantifying the company’s sales, production, and financial goals and culminating in a cash budget, budgeted income statement, and budgeted balance sheet

35
Q

Merchandise Purchases Budget

A

Plan used by merchandising company showing the amount of goods to be purchased from supplies during the period

36
Q

Participative Budget

A
37
Q

Planning

A

Process of establishing goals and specifying how to achieve them

38
Q

Production Budget

A

Plan showing the number of units that must be produced during a period to satisfy both sales and inventory needs

39
Q

Sales Budget

A

Schedule showing expected sales in dollars and units

40
Q

Self-Imposed Budget

A

Method of preparing budgets in which managers prepare their own budgets

Budgets are then reviewed by higher-level managers, and any issues are resolved by mutual agreement

41
Q

Selling and Administrative Expense Budget

A

Schedule of planned nonmanufacturing expenses

42
Q

Activity Variance

A

Difference between the amount of revenue or expense in the flexible budget and the planning budget

Caused by the difference in actual and planned activities

43
Q

Flexible Budget

A

Budget showing what management costs and revenues should have been, given the actual level of activity

44
Q

Management by Exception

A

Management system that compares actual results to a budget so significant deviations can be flagged as exceptions

45
Q

Planning Budget

A

Budget created before the period begins that is valid only for the planned level of activity

46
Q

Revenue Variance

A

Difference between the actual amount of revenue and what is should have been, given the actual level of activity

A favorable (unfavorable) revenue variance occurs because the revenue is higher (lower) than expected, given the actual level of activity

47
Q

Spending Variance

A

Difference between the actual amount of a cost and how much it should have been, given the activity level

A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the activity level

Fall 24 (5 decks)

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