Exam 1 Flashcards
Managerial Accounting
the process of providing financial and non-financial information to managers to aid in decision-making
Planning
setting goals and objectives, and how to achieve them
Directing
overseeing the company’s day-to-day operations
Controlling
evaluating the results of business operations and making adjustments as needed
Critical Thinking and Judgment
applying insight to improve decision-making
Valued Financial Advisors
providing expertise to drive business success
Assist in Business Decisions
key players in areas such as marketing, entrepreneurship, and sales
Institute of Management Accountants (IMA)
lead in developing, certifying, connecting, and supporting accountants and financial professionals within organizations
Unethical Behavior
may not be illegal but violates accepted moral principles
Illegal Behavior
always unethical, as it breaks laws
Knowledge Economy
the service sector dominates over traditional sectors like manufacturing, agriculture, and retail
Sustainability
the ability to meet present needs without compromising future generations
Triple Bottom Line
recognizes a company’s performance should be viewed in terms of people, planet, and profit
Sarbanes-Oxley Act of 2002 (SOX)
restores trust in publicly traded corporations and their financial statements after scandals like Enron and WorldCom
Service Company
sells intangible services
Merchandising Companies
resell tangible products bought from manufacturers and suppliers
Manufacturing Companies
use labor, plants, and equipment to onset raw materials into finished products
Research and Development
researching and developing new or improved products or services and the processes for producing them
Design
detailed engineering of products and services and the processes for producing them
Production or Purchases
resources used by manufacturers to produce a product or merchandising companies to purchase finished merchandise for resale
Marketing
promotion and advertising of products or services
Distribution
delivery of products or services to customers
Customer Service
support provided for customers after sale
Cost Objects
anything for which managers want to know the cost
Direct Costs
costs that can be easily and cost-effectively traced to the cost object; readily associate the cost with the cost object
Indirect Cost
costs that relate to the cost object but cannot be traced specifically to it
Overhead
costs that occur in the factory that are not direct labor or materials
Total Cost
all resources used throughout the value chain
Product Costs
incurred by manufacturers to produce their products or by merchandisers to purchase their products
Period Costs
do not get treated as inventory, immediately expensed
Direct Materials
primary materials that become the physical part of the finished product
Direct Labor
cost of compensating employees who physically convert raw materials into the company’s product
Indirect Materials
cost insignificant parts of the product
Indirect Labor
people in the plant who are not directly making the product
Prime Costs
direct materials + direct labor
Conversion Costs
manufacturing overhead + direct labor
Perpetual Inventory System
inventory labeled with a unique barcode that reflects sales price and product cost
Periodic Inventory System
calculated at the end of the period
Controllable Costs
management can influence or change
Uncontrollable Costs
costs companies are locked into in the short run
Relevant Costs
differential costs differ among alternatives
Irrelevant Costs
do not differ among alternatives
Sunk Costs
costs that have already been incurred and cannot be changed
Fixed Costs
stays constant in total over a wide range of activity levels
Variable Costs
change in total in direct proportion to changes in volume
Marginal Costs
the cost of making one more unit
Total Cost
total fixed cost + (variable cost per unit * number of units)
Average Cost
total cost/number of units
Process Costing
mass production of identical units
Job Costing
unique, custom-ordered products in relatively small batches
Stock Inventory
products sold regularly
Production Schedule
indicates quantity and types of inventory scheduled to be manufactured during the period
Bill of Materials
lists all raw materials needed to manufacture a job
Raw Materials Record
shows detailed information about each item in stock
Purchase Order
purchasing department issues to suppliers to order any parts not in stock
Receiving Report
incoming raw materials are counted and recorded on receiving report
Invoice
bill from the supplier
Job Cost Record
tracks all direct materials and direct labor used and manufacturing overhead allocated to each job
Material Requisition
internal documents sent to a warehouse manager to request materials needed for production
