MA + FA Flashcards
absorption costing
fixed manufacturing OH costs are assigned to each unit of production
variable costing
fixed manufacturing OH costs are treated as period expenses, considered in the period they occurred
traditional cost allocation
allocates overhead costs to a product based on one cost driver (allocated per department with volume-based cost driver)
activity-based costing allocation (ABC)
focuses on activists performed and the resources consumed per activity
current
short-term asset/liability
non-current
long-term asset/liability (>12 months)
investing activity
acquisition and disposal of long term assets/investments
financing activity
transactions related to capital structure and funding
operating activity
day-to-day activities which are part of a firms core operations (depends on firms purpose)
direct method
Method of creating cash flow statement by reporting actual cash inflows/outflow from each operating activity and summing this up
indirect method
Method of creating cash flow statement by considering the net income and adjusting it to provide net income by operating activities
relevant costs
future costs that will be influenced by a decision
irrelevant costs
costs that do not matter for the decision
opportunity costs
relevant revenue - relevant costs
prime costs
direct labour + direct materials
conversion costs
direct labour + manufacturing OH
period costs
non-manufacturing costs
product costs
manufacturing costs including direct labour + direct material + manufacturing OH
direct costs
costs that are easily traced to the cost object
indirect costs
no easily identifiable to a specific cost item
