Active Based Costing Flashcards
Purpose of Management Accounting
To fulfill the competitive needs of the company.
Purpose of Financial Accounting
To help people outside the company make occasional decisions.
Management Process
Planning, controlling and Evaluatng
Capital Budgeting
Long run planning on the aquisition of an item.
Production Prioritization
Determination on how to best use those committed resources to maximize return on capital investment.
Operational Budgeting
Planning decisions regarding current operations and those of the immediate future.
Product Cost is also known as inventory cost and cost of goods sold.
Direct Cost, Direct Labor, and Manufacturing Overhead. The cost to produce the product
What in Manufacturing Overhead
Rent, Utilities, factory depriciation, indirect cost and indirect labor
Period Cost
All none factory costs. Like admin expenses and selling expenses.
Differential Costs
sometimes called avoidable costs, incremental costs, or relevant costs—are the future costs that change as a result of that decision.
Sunk Costs
on the other hand, are past costs that cannot be changed as the result of a future decision.
Out-of-Pocket Costs
require an outlay of cash or other resources.
Opportunity Costs
are the benefits lost or forfeited as a result of selecting one alternative course of action over another.
Activity-Based Costing
A company identifies business activities that will create overhead costs.
ABC Categories
Unit level, batch level, product line, and Facility Support.
