exam 1 Flashcards
Direct costs
Costs connected to a specific product
Indirect costs
Costs involved with maintaining and running a business
Product costs
Costs involved in creating a product
Direct Materials, Direct Labor, Manufacturing Overhead
Direct Materials
materials used to create a product
Direct Labor
labor (people’s times and talent) in creating a product
Manufacturing Overhead
Other costs incurred in creating a product that is not direct material or direct labor
Period costs
non-product related costs such as sales and marketing
Manufacturing Overhead Costs
Indirect materials, Indirect labor, supplies, depreciation on factory equipment, machine maintenance
Cost of Goods Manufactured
(Beginning WIP + Total Manufacturing Costs (DM+DL+MOH) - Ending WIP)
Cost of Goods Sold
(Beginning Inventory + Purchases - Ending Inventory)
Contribution margin
Sales - VC = CM
Breakeven (Units)
FC ÷ CM per unit
Breakeven (dollars)
FC ÷ CM ratio
operating leverage
CM ÷ income
Projected Sales
(target profit + fixed costs) ÷ contribution margin per unit
Margin of safety (units)
Sales Units - Break-even point units
Margin of safety (dollars)
Sales (dollars) - Break-even (dollars)
Operating income
CM - FC
Contribution margin ratio (or percentage)
Contribution margin per unit ÷ sales price per unit
Contribution margin per unit
sales price per unit - VC per unit
Weighted-average contribution margin
CM for each product X percentage of sales they contribute
hi low method y = a +bx
a = hi cost - (hi quantity x b)
b = (hi cost - low cost) ÷ (hi quantity - low quantity)
