Learning Unit 4 Flashcards
Explain the difference between managerial accounting and financial managing
Managerial accounting - provide information internal
Financial managing - provide information internal and external
What are the three elements of production costs?
1- direct material
2- direct labour
3- manufacturing overheads
Name the indirect costs
Indirect labour Indirect materials Rent paid Maintenance of machinery and equipment Depreciation of factory equipment Insurance Quality control costs Water and electricity
Product cost vs material costs
Product costs: direct materials, direct labour and manufacturing overheads
Period costs: all other costs
What are sunk costs
Costs that have already been incurred and that cannot be changed by any decisions now or in the future
What are semi-variable costs?
The fixed part is usually a minimum fee for a good or service
Marginal cost
The cost of producing one extra unit:
= change in cost of production / change in quantity produced
Marginal income
Difference between sales and variable costs
Marginal cost ratio
Expresses marginal cost as a fraction or percentage of sales
= ( marginal cost / sales) x 100
Marginal income ratio
Expresses marginal income as a fraction or percentage of sales
=( marginal income / sales) x 100
Net income/profit ratio
=(net profit/sales) x 100
Break even point
Break even point in units
= total fixed cost / marginal income per unit
Break even point in sales revenue
= tonal fixed cost / marginal income ratio
