EXAM 1 Flashcards
What’s the goal of cost accounting?
- to assist 1) ___ in achieving the 2) m___ ____ for their 3) or___
1) managers
2) maximum value
3) organizations
Define the value chain
- Set of 1) ac____ that transforms 2) r___ r__ into the 3) g___ and s___ (ex. 4 _____) that end users 5) p___ and c___
it also includes the 6) tr__/di___ of any 7) w__ generated by end users
1) activities
2) raw resources
3) goods and services
4) households
5) purchase and consume
6) treatment/disposal
7) waste
1) M___the effects of 2) d__ on the 3) ___ of the organization is one of the fundamental services of cost accounting
1) measuring
2) decisions
3) value
In cost acct we will be concerned with the part of the value chain that comprises the activities of a 1) ___ organization
and the important objective is to ensure that the entire value chain is 2) ___ as possible
1) single
2) efficient
Define value-added activities
Those activities that 1) cu___ perceive as adding 2) u___ to the 3) ___ or ____ they purchase
1) customers
2) utility
3) goods/services
The value chain comprises activities from 1) r____ and d___ through the production process to 2) c___ service
Managers evaluate these activities to determine how they contribute to the final product’s 3) s___, ____, and ___
1) research and development
2) customer
3) service, quality, and cost
What are the 7 components of the value chain?
1) ____ and ___
2) D___
3) ____ing
4) Pro___
5) M___ and S__
6) ___ion
7) C___ Se___
1) Research and Development
2) Design
3) Purchasing
4) Production
5) Marketing and Sales
6) Distribution
7) Customer Service
Define the Supply Chain
Set of 1) f__ and i___ that 2) ___ goods and services to the firm
1) firms and individuals
2) sells
Firms buy resources from supplies (other companies, employees, etc)
Is this supply chain or distribution chain?
Supply chain
Define Distribution Chain
Set of firms and individuals that 1) b__ and 2) di___ goods and services from the firm.
1) buys
2) distributes
Firms that sell their products to distributors and customers
Supply Chain or Distribution Chain?
Distribution Chain
Define Financial Acct Information
- designed for 1) d____ who 2) a__ directly 3) in___ in the daily management of the firm
-these users of the information are often 4) ___ to the firm
1) decision makers
2) aren’t
3) involved
4) external
Financial Acct is info primarily used by
-cr___
-inv__
-go___ a__
- creditors
- investors
- government agencies
Does cost acct use any standards or follow GAAP or IFRS
no
What does standards does Financial acct info use?
Generally Accepted Accounting Principles (GAAP) in the US and International Financial Reporting Standards (IFRS)
An important characteristic of financial accounting data is that it be ____ across firms
- comparable
Cost accounting information is designed for ___
managers
Cost acct information is designed for managers because the managers are
- making decisions only for their 1) __ organization, there’s 2) __ need for the info to be 3) ____ to similar info in other organizations
1) own
2) no
3) comparable
An important characteristic for cost acct information is the information be to 1) ___ for the decisions that managers operating in a particular business environment with a particular strategy make
1) relevant
Cost accounting information is commonly used in developing 1) ____ ac_____ in__, but we are focused to use it for managers to make decisions
1) financial accounting information
The primary purpose of financial accounting is to provides 1) ___ (ex. 2) ___) or creditors (ex. banks) information regarding company/management 3) ___
1) investors
2) shareholders
3) performance
Financial Accounting: Users of the information (decison makers)
________
External (investors, creditors, etc.)
Cost Accounting: Users of the information (decison makers)
_____
Internal (managers)
Financial Accounting: Important Criteria
it has c_____, ____ relevance (for investors)
comparability, decision relevance
Cost Accounting: Important Criteria
de___ ____ (for managers), ti____
decision relevance, timeliness
Financial Accounting: Who establishes or defines the system?
_______ standard _____ group (____ in the US)
External standard setting group (FASB in the US)
Cost Accounting: Who establishes or defines the system?
managers
Financial Accounting: How to determine accounting treatment
sta____ (____)
standard (rules)
Cost Accounting: How to determine accounting treatment
re_____ for ______ making
relevance for decison making
Financial data prepared for financial accounting is governed by 1) __ in the US and 2) __ in other countries
1) Generally Accepted Accounting Principles (GAAP)
2) International Financial Reporting Standards (IFRS)
Cost data for managerial use (within the organization)
- is not designed for ___
- defined by ___
- focuses on __ costs
- doesn’t need to follow ___ and ___
- is not designed for shareholders
- defined by management
- focuses on future costs
- doesn’t need to follow GAAP and IFRS
Managers seek to identify and eliminate _____ activities
non-value added
Define Non-Value Added Activities
Activities that 1) ______ to the good or service
1) do not add value
Define Cost Benefit Analysis
- The concept of considering whether the 1) s___ or in___ profits of a proposed 2) c___ are 3) g___ than what is required to implement the change
1) savings or increased
2) change
3) greater
The most serious problems with accounting systems is when managers attempt to use accounting information that was developed for 1) _____ reporting for 2) d___ m___
1) external
2) decision making
Why is it important for managers to eliminate nonvalue added activities ?
- an important concept in cost accounting is that actitvies cause 1) __
and what are the benefits of doing it?
-2) __ advantage over 3) ___
-reducing 4) __ without 5) re___ v___ to customers
1) cost
2) cost
3) competitors
4) costs
5) reducing value
Managerial Decisions (What are the 4 things they do)
-1) _____ make 2) ____
-decisions 3) ____ the 4) ____ of the organization
-Managers use 5) ____ from the accounting system to make 6) ____
-7) ___ evaluate 8) ____ and 9) ___ performance with account information
1) individuals
2) decisions
3) determine
4) performance
5) information
6) decisions
7) owners
8) organizational
9) managerial
Cost Data for Managerial Decisions
-costs for 1) _____
-cost for 2) __ and ___
-different 3) ___ for different 4) ____
1) decision making
2) control and evaluation
3) data
4) decisions
Managers perform ____ analysis to assess whether proposed changes in an organization are worthwhile
cost benefit
Cakes by Jacki is considering adding a line of sugar-free cake options. Current sales revenue is $5,000 per month. With the new line added, revenues are estimated to be $6,500 per month. Ingredients and labor are currently $2,200 a month. Estimated total ingredient and labor costs with the new line are expected to be $3,000 per month. Jacki estimates that the utilities will increase from $500 to $575. Rent and other costs of $1,200 per month are not expected to change. Using differential analysis, the expected change in net profit from implementing the new line is __
625
Differential Revenues (6,500 - 5,000)
-Differential Costs (3,000 - 2,200) + (575 -500)
=625 Differential Net Profit
Define Differential Costs
With two or more 1) _____, costs that 2) ___ ____ or ___ alternatives.
-changes in response to a particular course of action
1) alternatives
2) differ among or between
Define Differential Revenues
Revenues that 1)____ in response to a 2) ____ of action
1) change
2) particular course
Define responsibility center
A 1) s___ unit of an organization assigned to a 2) ma___ who is held accountable for its 3) ope__ and res___
1) specific
2) manager
3) operations and resources
SB 2-1
Define cost
1) ___ of 2) r___
1) sacrifice
2) resources (ex cash)
