management accounting Flashcards
classification of costs (types)
-direct material (raw materials)
-direct labour
-manufacturing overhead (manufacturing costs without labour)
-prime costs and conversion costs
(prime-material and labour, conversion-labour and manufacturing overhead)
-non manufacturing costs (selling, administrative)
-product (costs involved in acquiring and making product)
transfer of costs
materials used: raw material become work in process costs
work in process+direct labour+manufacturing overhead become finished good
sold finished good costs become cogs
cost classification for predicting cost behaviour
how cost reacts to change in level of activity
-variable costs :
varies in total in proportion to change in activity, per unit is constant
-fixed costs
constant in total regardless of activity, varies inversely with change in activity
cost classification for decision making
-differential costs
incremental costs, difference in costs between two alternatives
-opportunity costs
potential benefit given up if one alternative is selected over another
-sunk costs
costs that already are incurred and cannot be changed
tradtional and contribution format
traditional for external exporting
- sales
- cogs
- gross margin
- administrative expense
- net operating income
contribution used by management
- sales
- variable expense
- contribution margin
- fixed expenses
- net operating income
job order costing
tracing costs to each job
charge material and cost to esch job and overhead manufacturing to all jobs
allocation base (labour jours, labour dollars, machine hours)
POHR (predetermined overhead rate)
-apply overhead costs to job
differences job order costing and process costing
job order
-many different jobs, costs accumulated by each job
process costing
- single product, all units identical
- costs accumulated by department
equivalent units
partially complete units x % completion of units
-usually partially completed units in beginning and ending inventory which makes it complicated to determine output and unit costs
cost volume profit analysis
estimate profits at a particular sames volume
contribution margin ratio
contribution margin: (revenue-variable costs)
-ratio: contribution margin/ sales
unit contribution margin:
selling price - variable expense per unit
variable expense ratio
variable expense/sales
break even analysis
unit sales to break even
-fixed expenses/unit cm
dollar sales to break even
-fixed expenses/ cm ratio
target profit
(target profit +fixed expenses)/
- unit cm für units sales to attain profit
- cm ratio für dollar sales
margin of safety
excess of budgeted or actual sales dollars to break eben volume of sales dollars
dollar:
total sales-break even sales
percentage:
margin of safety in dollars/sales
in units
-mof in dollars/ unit selling price
cost structure
proportion of fixed and variable costs
-low fixed costs is great stability and income across good and bad years
