Cost&Revenues Flashcards
Semi-Variable costs are _____ _______ in total ___ constant ___ ____
Neither constant in total or per unit >> not constant
Cost accounting What’s missing: 1. 2.Valuing and controlling inventory 3. 4.Controlling costs 5. Proving information for decision making
- Determining costs and profits 3. Preparing budgets and forecast
Management accounting What’s missing: Planning, ……, Controlling, Communicating, Motivsting
Co-ordinating
Management accounting What’s missing: Controlling, coordinating, communicating, motivating
Planning
The 5 aims of management accounting
Planning Co-ordinating Controlling Communicating Motivating
Management accounting What’s missing: Planning, controlling, coordinating, communicating
Motivating
Management accounting What’s missing: Planning, controlling, coordinating, motivating
Communicating
Variable costs are constant ___ ____
Per Unit
Cost classification by behaviour
Fixed Variable Stepped Semi-Variable
What is the main reason for cost accounting?
To calculate the cost of a product and therefore sales price of an item
Fixed costs are constant in _____
In total
The _______ ____ managers are accountable for the performance of _____ _______ as well as _____.
Investment centre capital employed profits
5 aims of cost accounting:
Determining cost and profit Valuing and controlling inventory Preparing budgets and forecast Controlling costs Providing information for decision making
Controlling: Comparing ____ to ______ expenditure helps to identify ___, __________ the causes and acting upon that _________ helps to _____ the activities of the _____
Plans; actual gaps Investigating investigation control
The main responsibility centres:
Profit centre Investment centre Cost centre Revenue centre
What is the Prime Cost per unit?
Total of all direct costs
Attributes of management information
Fit for purpose Accurate Relevant Timely Cost effective
Can there be more than one cost and revenue centres in one profit centre?
Yes
Financial Accounts are an ______ record of ______ which are presented in a ______ format laid down by ___. Such accounts are normally produced ___ or _____ a year and are primarily used by _______ _____, e.g. shareholders
External transactions Standard law once; twice external groups
Cost accounting What’s missing: 1.Determining cost and profit 2.Valuing and controlling inventory 3.Preparing budgets and forecast 4. 5.Providing information for decision making
- Controlling costs
Cost classification by function?
Production costs (cost of sales) Non-Production costs (distribution, administrative expenses etc.)
What’s missing: 1. 2. Valuing and controlling inventory 3. Preparing budgets and forecast 4. Controlling costs 5.
- Determining costs and profits 5. Providing information for decision making
Direct costs (Prime costs) are costs that ___ be ______ related to the cost unit
Can directly
Are Prime costs direct or indirect costs?
Direct costs
Management accounts can be produced in ___ format that _____ __ ___ ________. They tend to be produced ____ _______ than financial accounts, usually ____ _ ____. They contain information required to run a business.
any useful to the organisation. More frequently, once a month
Indirect costs (Overheads) are costs that ____ be ______ to cost unit
Cannot be related
Cost classification by nature
Direct Indirect
Are overheads direct or indirect costs?
Indirect
High-Low Method for calculating Semi-variable costs
Variable cost per unit = Change in total Cost / Change in level of production Fixed costs = total costs - (v.c. x units produced)
Cost classification by element are:
Materials Labour Expenses
4 types of cost classification?
By element By function By nature By behaviour
Weighted Average Cost =
= total cost of items in inventory / number of items in inventory
Total cost of having inventory =
Purchase price + Holding costs + Re-order costs + Shortage costs + Inventory recording system costs
Inventory - Periodic Review System: Inventory levels are reviewed at _____ ____ __ ____, when _____ to be ordered is decided
Fixed points in time Quantity
Inventory: Two-bin system - a _________ order of _____ ___ (Q) is placed when inventory falls to fixed re-order level (R) >> fixed quantity is ordered at ______ intervals if time
Replenishment Fixed size Variable
Re-Order level?
Maximum usage x maximum lead time
Minimum inventory level
Re-order level - (Average usage x Average lead time)
EOQ Economic Order Quantity
_____________
V (2xCoxD)/Ch
Maximum Inventory level
Re-order level + Re-order quantity - (minimum usage x minimum lead time)
Material Cost Account -Dr? Dr_________________Cr | |
Dr: Opening bal Purchases Return to stores
Material Cost Account - Cr? Dr_________________Cr | |
Cr: Issues to production Return to suppliers Production overheads Statement of profit or loss (write-off) Closing Bsl
Contribution per unit = ___________ - _______
Selling price per unit Total variable cost per unit
Breakeven point (units) = _________ / _______
Fixed costs Contribution per unit
Margin of safety = _________ - _______
Budgeted sales units Breakeven sales units
Margin of safety (%) = ______ - ________ / budgeted sales units x 100
Budgeted sales units Breakeven sales units
PV ratio Breakeven point = ____ / ______
Total fixed costs PV ratio
PV ratio = ______ / _____
Contribution per Unit / Selling price per Unit Or Total contribution / Total Revenue
Sales value giving profit £X = _____ + _____ / ______
Total Fixed Costs + Required Profit / PV ratio
