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I ❤️ Accounting > Cost Accounting > Flashcards

Cost Accounting Flashcards

1
Q

Absorption Costing/Full Costing

A
  • DM, DL, VOH, FOH -> product costs.

- nonmanufacturing costs -> period costs.

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2
Q

Variable Costing/Direct Costing

A
  • DM, DL, VOH -> product cost.

- FOH, Selling and administrative expense-> period cost.

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3
Q

Functional Classification

A

A group of cost that were incurred for the same purpose.

Example of the cost: CGS, selling and administrative expenses

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4
Q

Activity Driver

A
  • measures the demands placed on activities.
  • measures resources consumed by products and services.
  • indicates an activity’s output.
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5
Q

Activity-Based Costing (ABC)

A

-gathered information to determine product/service cost accumulation and assess activity elimination.

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6
Q

Cost Driver Analysis

A

-explain the relationship of drivers to their related costs.

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7
Q

Unit-Level Costs

A

-production of a single unit of product/service.
Example: DM/DL (each product uses a specific amount of raw material and requires a specific quantity of labor time to manufacture.)

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8
Q

Activity-Based Management (ABM)

A

-focus on the control of production or performance activities so they can improve customer value and enhance profitability.

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9
Q

Activity

A

-any repetitive action that is performed in fulfillment of a business function.

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10
Q

Activity Analysis

A
  • a primary component of ABM.

- minimizing activities that increase costs but provide little or no customer value.

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11
Q

Value-Added (VA) Activity

A

-increased the worth of a product/service to customer and customer is willing to pay.

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12
Q

Non-Value-Added (NVA) Activity

A
  • increases the time spent on a product/service but do not increase its worth.
  • NVA activities can be reduced without affecting the product’s/service’s market value or quality.
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13
Q

Business-Valued Added (BVA) Activity

A

-essential to business operations but customers would not willingly choose to pay.
Example: company invoices for documenting sales.

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14
Q

Process

A

-a series of activities when performed together, satisfy a specific objective.
Example: a production process also affects purchases, accounting, human resources, and marketing.

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15
Q

Processing (service) Time

A
  • VA.

- the actual time spent performing all necessary functions to manufacture the product or perform the service.

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16
Q

Inspection Time

A
  • NVA, unless the customer would willing to pay for it (ex: pharmaceutical)
  • the time requird to proform quality control.
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17
Q

Transfer Time

A
  • NVA.

- the time consumed moving products from one place to another.

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18
Q

Idle Time

A
  • NVA.

- the time goods spend in storage or waiting at a production operation for processing.

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19
Q

Total Cycle (Lead) Time

A

= Value-Added (VA) Time + Non-Value-Added (NVA) Time

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20
Q

Manufacturing Cycle Efficiency (MCE)

A

= Total Value-Added (VA) Time ÷ Total Cycle Time

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21
Q

Service Cycle Efficiency (SCE)

A

= Total Actual Service Time ÷ Total Cycle Time

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22
Q

Value Chart

A

-trace a process from beginning to end.

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23
Q

Cost Driver

A
  • the factors that have direct cause-and-effect relationships to a cost.
  • classified as either volume-related (labor/machine hours) or non-volume-related (work orders/distance traveled) reflect the incurrence of specific transactions.
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24
Q

Batch-Level-Cost

A

-costs that are caused by a group of things being made at a single time.
Example: purchase order, machine setup, inspection, movement, scrap.

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25
Product-Level (process-level) Cost
-support a product type or a process. | Example: engineering change orders (ECO), equipment maintence, product development.
26
Organization-Level Cost
-support the overall production/service process. -this cost should not be assigned to products and services at all because such assignment would only be arbitrary. Example: building depreciation, plant or division manager's salary, organizational advertising.
27
Total Product Revenue
= Product Unit Selling Price × Product Unit Volume
28
Total Product Cost Per Unit
= Cost per unit + Cost per unit in batch + Cost per unit in product line
29
Total Product Cost
= Total Product Cost Per Unit × Product Unit Volume
30
Activity Center
-any part of the production/service process for which management wants a separate reporting of costs.
31
Activity Driver
- measures the demands placed on activities and the resources consumed by products and services. - often indicates an activity's output.
32
Product Variety
-the number of different types of products made.
33
Product Complexity
-the number of components included in a product.
34
Process Complexity
-the number of processes through which a product flows.
35
Management Accounting
-provide information to parties inside an organization so they can plan, control operations, make decisions, and evaluate performance.
36
Cost Accounting
- concerned with the determination and use of product/service costs. - addresses the informational demands of both financial and management accounting by providing product/service cost information to internal and external parties.
37
Upstream Costs
-research, development, product design, supply chain.
38
Downstream Costs
-marketing, distribution, customer service.
39
Product Cost
- for the manufacturing company. - consists the sum of all factory costs incurred to make one unit of product. - compliance with GAAP.
40
Service Cost
-for the nonmanufacturing company.
41
Mission Statement
-the purposes for which the organization exists, what the organization wants to accomplish, and how its products and services can uniquely meet its targeted customers' needs.
42
Core Competency
-a critical activity in which organization seeks a higher proficiency than its competitors, making that activity competitive advantage.
43
Cost Leadership
-a company's ability to maintain its competitive edge by undercutting competitor prices.
44
Product/Service Differentiation
-company's ability to offer superior quality products or unique service than competitors.
45
Organizational Structure
-
46
Authority
-the right of an individual to use resources to achieve an objective.
47
Responsibility
-the obligation of an individual to achieve an objective.
48
Line Personnel
- work directly toward attaining organizational goals. | ex: CFO who oversees all financial activities of an organization.
49
Staff Personnel
-give assistance and advice to line personnel.
50
Intellectual Capital
- encompasses all of an organization's intangible assets: knowledge, skills, and information. - companies rely on their intellectual capital to create ideas for products/services, to train and develop employees, and to attract and retain customers.
51
Environment Constraint
-any limitation caused by external cultural, fiscal, legal/regulatory, or political situations and by competitive market structures.
52
Value Chain
- a set of value-adding functions or process that convert inputs into products and services for company customers. ex: R&D, design, supply, production, marketing, distribution, customer service.
53
Lead Indicators
- project future outcomes and help assess strategic progress and guide decision making before lag indicators are known. ex: if training (lead) was provided to fewer employees than planned, future profits (lag) will decrease because some customers will be unhappy with sales order turnaround time.
54
Balanced Scorecard (BSC)
- a framework that translates an organization's strategy into clear and objective performance measures both leading and lagging that focus on customers, internal business processes, employees, and shareholders. - four perspectives: - learning and growth - internal business - customer value - financial performance
55
Learning and Growth Perspective
-focuses on using the intellectual capital to adapt to changing customer needs or to influence new customer's needs and expectations through product/service innovations.
56
Internal Business Perspective
- focuses on things that organization must do well to meet customer needs and expectations. - concentrates on employee satisfaction, product quality control, and cost management.
57
Customer Value Perspective
-addresses how well the organization is doing relative to important customer criteria such as speed (lead time), quality, service, and price (both purchase and after purchase).
58
Financial Performance Perspective
-addresses the concerns of stockholders about profitability and organizational growth.
59
Earnings Management
- method used by managers to deliberately adjust a company's profit to meet a predetermined internal or external target. - allow company to meet earnings estimates, preserve a specific earning trends, convert a loss to a profit, increase management compensation, or hide illegal transactions.
60
Statement of Ethical Professional Practice
- focused on competence, confidentiality, integrity, and credibility. - published by IMA.
61
Competence
-individual will develop and maintain the skills needed to practice their profession.
62
Confidentiality
-individual will refrain from disclosing company information to inappropriate parties.
63
Integrity
-individual will not practice in professionally discreditable actions.
64
Credibility
-individual will provide full, fair, and timely disclosure of all relevant information.
65
Cost
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I ❤️ Accounting (10 decks)

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