Exam 1 Flashcards
5 goals of Managerial Accounting?
- Report to internal managers
- emphasize timeliness
- emphasize relevance
- emphasize decisions affecting the future
- emphasize segment reports
4 basic functions of Managerial Accounting?
- Planning
- Controlling
- Decision making
- Help managers carry out basic functions
3 types of Product costs for Manufacturers?
- Direct Labor
- Direct Materials
- Manufacturing Overhead
Manufacturing Overhead?
-is a product costs
- is all the INDIRECT costs that go into the final product
- indirect labor
- indirect material
How are Product costs expensed?
You Debit COGS when inventory is sold
How are Period costs expensed?
You expense them in the period INCURRED
3 classifications of Costs?
Variable Costs
Fixed Costs
Mixed Costs
Explain Cost Behavior
Is how a cost of something behaves in it’s “Relevant Range”
Ex: If I buy 5 cars from Mexico, my import costs go up 5%
3 ways to Analyze Cost Behavior?
Scattergraph Method
- plot points
- find linear line
Account Analysis
- look at each account Individually
- classify as Fixed Cost or Variable Cost
High-Low method
y=mx+b
What is the Contribution Margin?
Sales - Variable Costs
Contribution Margin Income Statement format
Sales -(Variable Costs) CONTRIBUTION MARGIN -(Fixed Costs) NET OPERATING INCOME
Income Statement Format?
Sales -(Product Costs) GROSS MARGIN -(Period Costs) NET OPERATING INCOME
What do you divide Total Manufacturing Costs by to get “average cost per EU”
End WIP units + Units Completed
What ratios do you look at to see if a company is paying it’s bills on time?
Liquity Ratio
- Current Ratio
- Acid quick-test
Debt Management
-Times interest earned
3 most important ratios to assess liquity?
Current Ratio
Acid quick-test ratio
Account Receivable Turnover (because of CA)
