EVERY MANAGERIAL ACCOUNTING CHAPTER Flashcards
[Note: Stopped at page 25 in the book ]
What is an Activity Base?
A measure of what causes a variable cost
What are Administrative Costs?
Costs associated with the general management of an organization
What are committed fixed costs?
Investments in facilities, equipment, and structure that can’t be reduced w/o significant change
What is a Common Cost?
costs that cannot be traced to a individual cost object
What is the Contribution approach?
An income statement format organizing costs by behavior.
What is a Contribution Margin?
How much remains from sales revenue after all variable expenses are deducted
What is the Conversion Cost Formula?
Direct labor + Manufacturing Overhead
What is cost behavior?
How costs react to changes in activity levels
What is a cost object?
Anything for which cost data is desired.
What are cost structures?
The proportion of fixed, variable and mixed costs in an organization
What is a differential cost?
costs that differ between two alternatives
What is differential revenue?
revenue that differs between alternative goods
What are direct costs?
costs that can be traced back to a specific cost object
What is direct labor?
factory labor costs related to a specific products creation
What are direct materials?
materials that become a part of a finished product; can be traced
Discretionary fixed costs are..
costs that come from advertising and research decisions
What is Financial Accounting?
Accounting that reports financial history to stockholders, creditors, and regulators.
What are finished goods?
products that have not been sold
What is a fixed cost?
constant costs that do not change with the level of activity
What is a Incremental cost?
a increase in cost between two alternative goods
What is a Indirect cost?
a cost that is difficult to trace back to a cost object
What is indirect labor?
the labor cost of janitors, supervisors, material handler, and other factory workers
What are indirect materials?
materials such as glue and nails that cannot be easily traced
What is managerial accounting?
accounting that provides information to managers
What is manufacturing overhead?
manufacturing costs outside of direct materials and labor
What is a mixed cost?
costs with both variable and fixed cost elements
What is an opportunity cost?
benefits given up for something else
What is a period cost?
cost taken directly to the income statement as expenses
What is the prime cost formula?
direct materials + direct labor
What are product costs?
costs involved in making a good
What are raw materials?
materials that go into making a good
What is a relevant benefit?
a benefit that should be considered when making a decision
What is a relevant cost?
cost that should be considered when making a decision
What is a relevant range?
the range of activity within which assumptions about variable and fixed cost behavior are valid
What are selling costs?
cost incurred to secure orders and send out a good
What is a sunk cost?
cost that cannot be changed by any decision
What is a variable cost?
a constant per unit cost, that changes in proportion to activity levels
What is a work in process?
partially complete units of product
What is absorption costing?
a costing method that includes all manufacturing costs in unit product costs
What is a bill of materials?
a document detailing how much material is needed to manufacture a product
What is a cost driver?
factors that cause overhead costs
What is an example of a cost driver?
machine-hours, flight-hours, and computer time
What is cost-plus pricing?
a pricing method where a predetermined price markup is applied to a cost base in order to determine the target selling price
What is a job cost sheet?
a document recording the direct materials, direct labor, and manufacturing overhead
What is Job-order costing?
a system used when several different goods are produced each period
What is the multiple predetermined overhead rate?
a system with multiple overhead cost pools that have a different overhead rate each
What is a normal cost system?
a system that applies overhead cost to jobs by multiplying a predetermined overhead rate by actual amount of allocation base
What is overhead application?
assigning overhead to a job
What is a plantwide overhead rate?
a single overhead rate used through a plant
What is the predetermined overhead rate?
a rate used to charge overhead to a job in advance
What is a time ticket?
a document recording how much time a employee spends on a task
What is a schedule of cost of goods manufactured?
A schedule summarizing the portion of product cost remaining in WIP and sent out to finished goods
What is a schedule cost of goods sold?
A schedule summarizing the portions of costs remaining in ending finished goods and transferred out to cost of goods sold
What is under-applied overhead?
occurs when overhead applied to WIP is less than the overhead actually incurred
What are equivalent units?
the number of complete units that could be obtained from the materials and labor in partially completed units
What are equivalent units of production?
units transferred to the next department (or finished goods) during the period + equivalent units in the department’s ending WIP inventory
What is the FIFO method?
A process costing method that calculates unit costs based solely on the costs and outputs from the current period
What is operation costing?
a hybrid costing system used when products have some common and some individual characteristics
What is process costing?
a costing method used when homogeneous products are produced on a continuous basis
What is the processing department?
where work is performed on a product
What is the weighted-average method?
a process costing method that calculates unit costs by combining costs and outputs from past a present periods
What is the Break-even point?
the level of sales where profit is zero
What is a contribution approach?
An income statement separating costs int variable and fixed categories
What is the contribution margin ratio?
contribution margin / sales
What is the cost-volume-profit graph?
a graph representing the relationships between an organization’s revenues, costs, profits, and its sales volume.
What is the degree of operating leverage?
a measure of how a percent change in sales volume affects profits
What is incremental analysis?
analysis focusing changes in cost and revenues caused by a decision
What is the margin of safety?
excess sales over the break-even dollar sales
What is operating leverage?
A measure of how sensitive net operating income with a percentage change in unit sales
What is the sales mix?
the proportion in which a company’s products are sold
What is target profit analysis?
an estimate of the level of sales needed to achieve a desired target profit
What is the variable expense ration formula?
variable expenses / sales
How are costs classified?
Either as direct or indirect
Examples of manufacturing overhead includes..
equipment depreciation, utility costs, property taxes, and insurance premiums
What are other names for manufacturing overhead?
indirect manufacturing cost, factory overhead, factory burden
What are other names for selling costs?
ordergetting, or order-filling costs
Examples of selling costs
Advertising, shipping, sales travel, commissions, sales salaries, and warehouses
Examples of administrative costs?
general accounting, legal counsel, public relations, and secretarial costs
