Lesson 1-5 Flashcards
Process that allows decision makers to set and evaluate
business goals by determining what information they need to
make a particular decision and how to analyze and
communicate this information.
Managerial Accounting
The value foregone or sacrificed of resources to achieve some economic benefit
while promoting the profit-making ability of the firm.
Cost
Any product, services or organizational unit to which costs are assigned for some
management purpose. Any item to which costs can be traced, and that has a key
role in management strategy.
Cost Objective
Any factor that has an effect of changing the level of costs.
Cost Driver
Includes all costs necessary
to secure customer orders
and get the finished products
into the hands of the
customer.
Selling Costs
Includes all costs associated
with the general management
of the organization.
Administrative Costs
DM + DL
Prime Cost
DL + MOH
Conversion Cost
A cost that varies, in
total, in direct
proportion to
changes in the level
of activity.
Variable Cost
Constant, in total,
regardless of change
in activity.Unit cost varies
inversely with the
changes in activity.
Fixed Cost
A cost that contains
both a fixed and
variable component.
Mixed Costs
Costs that can be easily and
conveniently traced to a specified
cost object.
Direct Cost
Costs that cannot be easily and
conveniently traced to a specified
cost object.
Indirect Cost
A difference in cost
between any two
alternatives (a
difference in revenue
between two
alternatives is called
differential revenue)
Differential Costs
(Incremental
Costs)
The potential benefit
that is given up when
one alternative is
selected over
another.
Opportunity
Costs
