Management Accounting Flashcards
Explain the dupont model
ROA = Operating margin * ATO = (operating income+financial revenue)/sales * sales/assets
What are the six main purposes of a budget
Planning, coordinating, communicating, controlling, motivating and evaluating
What is capital employed
Assets - liabilities
What is process costing
Total cost/ number of products, to use when all products are the same
What is over or under recovery of costs
Over is when the amount allocated to costs in the budget is to large and under recovery is when the amount allocated to costs is to small
Four reasons why knowing costs is useful
Pricing, Decision making, Efficiency and Valuing the inventory
What is the difference between direct and indirect costs
Direct costs can specifically and exclusively be identified with a given cost object while indirect costs cannot. F.ex direct costs would be the cost of a lid on a jar while an indirect cost could be the cost to transport a batch of jars to the store.
What is another word for indirect costs
Overhead
What is prime cost a sum of
Direct material and labor cost
What is total manufacturing cost a sum of
Manufacturing overhead and prime cost
What is total cost a sum of
Total manufacturing cost and non manufacturing overhead
What are ABC systems
Absorption based costing systems that allocate overhead to individual cost objects in addition to the direct costs in contrast to direct costing systems that only allocate the direct costs to the cost objects.
What is contribution margin
sales revenue - variable cost
Where is the break even point
Fixed costs = contribution margin & sales revenue = total cost
What is the margin of safety in units and money
In money: sales revenue - break even; In units: units sold - break even in units
