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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
Q

Product-Level (process-level) Cost

A

-support a product type or a process.

Example: engineering change orders (ECO), equipment maintence, product development.

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26
Q

Organization-Level Cost

A

-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.

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27
Q

Total Product Revenue

A

= Product Unit Selling Price × Product Unit Volume

28
Q

Total Product Cost Per Unit

A

= Cost per unit + Cost per unit in batch + Cost per unit in product line

29
Q

Total Product Cost

A

= Total Product Cost Per Unit × Product Unit Volume

30
Q

Activity Center

A

-any part of the production/service process for which management wants a separate reporting of costs.

31
Q

Activity Driver

A
  • measures the demands placed on activities and the resources consumed by products and services.
  • often indicates an activity’s output.
32
Q

Product Variety

A

-the number of different types of products made.

33
Q

Product Complexity

A

-the number of components included in a product.

34
Q

Process Complexity

A

-the number of processes through which a product flows.

35
Q

Management Accounting

A

-provide information to parties inside an organization so they can plan, control operations, make decisions, and evaluate performance.

36
Q

Cost Accounting

A
  • 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
Q

Upstream Costs

A

-research, development, product design, supply chain.

38
Q

Downstream Costs

A

-marketing, distribution, customer service.

39
Q

Product Cost

A
  • for the manufacturing company.
  • consists the sum of all factory costs incurred to make one unit of product.
  • compliance with GAAP.
40
Q

Service Cost

A

-for the nonmanufacturing company.

41
Q

Mission Statement

A

-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
Q

Core Competency

A

-a critical activity in which organization seeks a higher proficiency than its competitors, making that activity competitive advantage.

43
Q

Cost Leadership

A

-a company’s ability to maintain its competitive edge by undercutting competitor prices.

44
Q

Product/Service Differentiation

A

-company’s ability to offer superior quality products or unique service than competitors.

45
Q

Organizational Structure

A

-

46
Q

Authority

A

-the right of an individual to use resources to achieve an objective.

47
Q

Responsibility

A

-the obligation of an individual to achieve an objective.

48
Q

Line Personnel

A
  • work directly toward attaining organizational goals.

ex: CFO who oversees all financial activities of an organization.

49
Q

Staff Personnel

A

-give assistance and advice to line personnel.

50
Q

Intellectual Capital

A
  • 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
Q

Environment Constraint

A

-any limitation caused by external cultural, fiscal, legal/regulatory, or political situations and by competitive market structures.

52
Q

Value Chain

A
  • 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
Q

Lead Indicators

A
  • 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
Q

Balanced Scorecard (BSC)

A
  • 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
Q

Learning and Growth Perspective

A

-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
Q

Internal Business Perspective

A
  • 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
Q

Customer Value Perspective

A

-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
Q

Financial Performance Perspective

A

-addresses the concerns of stockholders about profitability and organizational growth.

59
Q

Earnings Management

A
  • 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
Q

Statement of Ethical Professional Practice

A
  • focused on competence, confidentiality, integrity, and credibility.
  • published by IMA.
61
Q

Competence

A

-individual will develop and maintain the skills needed to practice their profession.

62
Q

Confidentiality

A

-individual will refrain from disclosing company information to inappropriate parties.

63
Q

Integrity

A

-individual will not practice in professionally discreditable actions.

64
Q

Credibility

A

-individual will provide full, fair, and timely disclosure of all relevant information.

65
Q

Cost

A

-

I ❤️ Accounting (10 decks)

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