Cost Shits (2) Flashcards
Differentiate Financial and Management Accountants
Financial meets external information needs
and has to comply with GAAP
Management has to meet internal information needs
and does not have to comply with GAAP
These are deliberate accounting adjustments to “hit” profit targets
Often adjustments involve?
Earnings Management, Involves Cost accounting
This act has CEOs and CFOs personally accountable for the accuracy of their organization’s financial reporting
Sarbanes-Oxley Act
This act has whistle-blower protection and penalties for failure to blow the whistle (disclose known financial frauds)
False Claims Act
What are the Standards of Ethical Conduct for Management Accountants
Competence
Confidentiality
Integrity
Credibility
What are the Five Factors in Organizational Strategy?
Core competencies
Organizational structure
Management style and organizational culture
Organizational constraints
Environmental constraints
This organizational strategy is a critical function or activity providing a competitive advantage
Core competency
This organizational strategy undercuts competitor prices
Cost leadership strategy
This organizational strategy has superior quality products or unique services sold at a premium
Product differentiation strategy
This is the right to use resources to accomplish a task or achieve an objective
Authority
This is the obligation to accomplish a task or achieve an objective
Responsibility
This person works directly toward attaining organizational goals
Line manager
These people give assistance and advice to line managers
Staff employees
(ex: Treasurer and Controller)
A set of value-adding functions and processes that converts inputs into products or services
Value Chain
This act prohibits bribes to obtain/retain business
Foreign Corrupt Practices Act
This thing is crime to offer, promise, give bribes to obtain/retain internal business deals
Organization of Economic Cooperation and Development Convention
What are the 3 cost categories?
Association with cost object
Reaction to changes in activity
Classification on the financial statements
This is anything for which management wants to collect or accumulate costs
Cost Object
What are the types of cost included in association with cost object?
Direct—traceable to a cost object
Indirect—not conveniently or practically traceable to a cost object
Treated as overhead
Allocated
What are the Reactions to Changes in Activity
Variable (Fluctuates
Fixed (remains constant)
Mixed (Is part variable, part fixed)
Step (Increases at certain activity levels)
Activity accompanied by consistent, observable changes in a cost item
Predicts but may not cause the cost to change
Cost Predictor
What is a total variable cost
Varies in direct
proportion to
changes in activity
What is a total fixed cost
Remains constant
throughout
the relevant range
What is a unit fixed cost?
Varies inversely
with changes in
activity throughout
the relevant range
This is an Activity that has a direct cause-effect relationship on cost
Directly causes the cost to change
Cost Driver
What is a unit variable cost
Remains constant
throughout the
relevant range
What are the Classifications on the following Financial Statements?
Unexpired
Expired
Product
Prime
Conversion
Overhead
Period
—balance sheet assets
—income statement expenses
—inventoriable costs
—direct material and direct labor
—direct labor and overhead
—Indirect production cost
Product costs are unexpired before sale
Product costs are expired when sold
—expensed in period incurred
This process Change inputs into outputs
The Conversion Process
What are examples of low, moderate, high levels of conversion?
Low:
Department stores
Gas stations
Moderate:
Florists
Meat markets
High:
Manufacturing
Construction
Agriculture
Architecture
What are the three inventory accounts for a manufacturing company?
Raw Material Inventory,
Work in Process Inventory,
Finished Goods Inventory
What are the three components of product cost?
Direct Labor
Direct Materials
Overhead
