Chapter 2 Flashcards
system
set of interrelated parts that performs one or more processes to accomplish specific objectives
accounting information systems
consists of interrelated manual and computer parts and uses processes such as collecting, classifying, summarizing, analyzing, and managing data to provide information to users
The overall objective of an accounting information system is to provide info to users
Two key features of the accounting info system
first the inputs are economic events
two the operational model of an accounting info system is critically involved with the user
Accounting Info Systems subsystems
- the financial accounting info system
2. the cost management info system
Financial Accounting System
primarily concerned with giving outputs for external users
Cost Management Information System
concerned with producing outputs for internal users
provides
1. Costing Services, products, and other objects of interest management
2. Planning and control
3. Decision Making
value chain
the set of activities required to design, develop, produce, market, deliver, and provide post sales service for the products and services sold to customers
Cost Accounting Information Systems
cost management subsystem designed to assign costs to individual products and services and other objects of interest to managers
Operational Control Information System
a cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control of activities
Cost
the cash or cash equivalent value sacrificed for goods and services that are expected to bring a current or future benefit to the organization.
Expenses
Expired costs
Assets
Un-expired costs
Cost objects
anything for which costs are measured and assigned
Activity
basic unit of work performed within an organization
Indirect Costs
costs that cannot be traced easily and accurately to a cost object
Direct Costs
costs that can be traced easily and accurately to a cost object
Traceability
the ability to assign a cost directly to a cost object
Direct Tracing
the process of identifying and assigning costs to a cost object that are specifically or physically associated with the cost object
Drivers
factors that cause changes in resource usage, activity usage, costs, and revenues
Driver Tracing
the use of drivers to assign costs to cost objects
Allocation
assignment of indirect costs to cost objects
tangible products
goods produced by converting raw materials into finished goods
services
tasks or activities performed for a customer or an activity performed by a customer using an organizations product or facilities
production costs
are those costs associated with the functions of selling and administration
non-production costs
costs associated with the functions of selling and administration
direct materials
those materials traceable to the good or service being produced
direct labor
labor that is traceable to the goods or services being produced
overhead
all production costs other than direct materials and direct labor are lumped into one category called overhead
supplies
generally those materials necessary for production that do not become part of the finished product or are not used in providing a service
indirect materials
direct materials that form an insignificant part of the final product are usually lumped into the overhead category called indirect materials
prime cost
the sum of direct materials cost and direct labor cost
conversion cost
the sum of direct labor cost and overhead cost
period costs
are expensed in the period in which they occur
Marketing (selling) costs
costs necessary to market and distribute a product or service
administrative costs
all costs that cannot be reasonably assigned to either marketing or producttion
absorption costing income or full costing income
all manufacturing costs are fully assigned to the product
costs of goods sold
the cost of direct materials, direct labor, and overhead attached to the units sold
cost of goods manufactured
the total manufacturing cost of goods completed during the current period
work in process
consists of all partially completed units found in production at a given point in time
COGM
B Inv + Purchases - E Inv+ DL + MO +B WIP - E WIP = COGM
COGS
COGM + B Fin Goods=COG Available for sale-E Fin Goods=COGS
Traditional cost system
uses only unit based activity drivers to assign costs to a cost object
traditional operation control system
assigns costs to organizational units and then holds the organizational unit manager responsible for controlling the assigned costs
Activity based cost system
cost accounting system that uses both unit and non unit based activity drivers to assign activity costs to cost objects is called
Activity based management
focuses on the management of activities with the objective of improving the value received by the customer and the profit received by the company in providing this value
measurement costs
the costs associate with the measurements required by the cost management system
error costs
the costs associated with making poor decisions based on bad cost information
