Management Accounting Flashcards
Product Cost
Manufacturing Costs consisting of direct labour, direct materials and overhead
Period Cost
Non-manufacturing costs (selling, general and administrative costs)
Direct Cost
Cost that can be physically traced to a cost object
Indirect Cost
Cost that must be allocated in order to be assigned to a cost object
Prime Cost
Direct Materials + Direct Labour
Conversion Costs
Direct Labour + Overhead
Total Manufacturing Costs = ?
Total Manufacturing Costs = Direct Materials (DM) + Direct Labour (DL) + Manufacturing Overhead (MOH)
Cost of Goods Manufactured (COGM) = ?
Cost of Goods Manufactured (COGM) = Total Manufacturing Costs + Beginning WIP - Ending WIP
Process Costing is used for which type of products?
Mass-produced products that are identical
Absorption Costing doesn’t include what costs?
Selling and Administration
Return on Investment (ROI) Formula
ROI = Net Income / Total Assets
Residual Income (RI) Formula
RI - Net Income - (Total Assets x Required Rate of Return)
Costs that cannot be directly traced to the production of a product
Period Costs
Costs related to production
Product Costs
Profitability Index Formula
Pv of cash inflows / PV of cash outflows
