Chapter 1 Flashcards
Inventory Accounts for a Manufacturing Company
Raw Materials, Work in Process, Finished Goods
Direct Costs
Direct Materials and Direct Labor (can be directly traced to a cost object)
Indirect Costs
Indirect Materials, Indirect Labor
Manufacturing Materials Costs
Direct Materials, Direct Labor, Manufacturing Overhead
Prime Costs
Direct Materials and Direct Labor
Conversion Costs
Direct Labor + Manufacturing Overhead
Product Costs
All costs incurred in the manufacturing of a final product. Direct Materials, Direct Labor, Manufacturing Overhead.
Period Costs
Selling + Admin Expenses, Taxes + interests, Salaries + Wages of Acctg. staff, rent, sales commissions
Cost of Goods Manufactured
Beginning Work in Process + (DM Used + Direct Labor + Overhead) - Ending Work in Process
Total Manufacturing Costs
Direct Materials Used + Direct Labor + Overhead
Cost of Goods Sold
Beginning Finshed Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods
Factors that influence how managers used managerial accounting
Shift towards a service-based economy, global and time-based competition
Calculation of Unit Costs…
…can help managers determine the sales price to charge customers.U
Unit Cost Per Service
Total Operating Costs/Total number of services provided; helps manager set the price of each service.
Unit Cost per item
Total COGS/Total # of items sold; help managers determine product’s profitability
Line Position
Directly involved in providing goods or services to customers.
Raw Materials
Materials converted through the manufacturing process into a finished product.
Work in Process
Goods that have been started in the manufacturing process but are not yet complete.
Finished Goods
Completed goods that have not yet been sold.
Cost Object
Anything for which managers want a separate measurement of cost. ex: Tablets are a cost object w/ Processor, Screen, case being direct costs.
Direct Materials
Cost of raw materials that are converted into the finished product and easily traced to the product.
Direct Labor
Cost of wages and salaries of employees who convert raw materials into finished products.
Manufacutring Overhead
Costs that cannot be easily + cost-effectively traced to a cost object. ex: Manager Salaries, Maint. Costs, Depreciation of PPE, utilities, rent, taxes
Indirect Materials
Cost of raw materials that cannot be traced directly to specific finished products ex: Manu. Overhead, cost of glue used in assembling tablets
Indirect Labor
Cost of wages + salaries in factory for persons not directly producting the product ex: Production Supervisors, factory janitors, works who repair factory equipment, etc.
Enterprise Resource Planning
Software system that can integrate all of a company’s functions, depts and data into a single system
Just-in-time Management
Cost management system in hich a company produces products just in time to satisfy needs.
Total Quality Management
Philosophy designed to integrate all organizational areas in order to provide customers with superior products and services
Value Chain
includes all activities that add value to a company’s products and services. R+D>Design>Production>Marketing>Distribution>Customer Support
Triple Bottom Line
Evaluating a company’s performance by its profits, people and planet. Economic>Social>Environmental
