Managerial Accounting Flashcards
Define Administrative Costs
All executive, organizational and clerical costs accociated with the general management of an organization rather than with manufacturing, marketing, or selling.
Common Costs
Incurred to support a number of cost objects but cannot be traced to them individually. Example: wage of airline pilot
Conversion Cost
DL+MOH
Cost Behavior
The way in which a cost reacts to changes in the level of activity
Cost object
Anything for which cost data are desired
Cost of Goods Manufactured (COGM)
Manufacturing costs associated with goods that were finished during the period
Differential Cost
A difference in cost between two alternatives
Differential Revenue
The difference in revenue between two alternatives
Direct Cost
A cost that can be easily and conveniently traced to a specific cost object
Direct Labor
Factory labor costs that can be easily traced to individual units of a product. Also called Touch Labor
Direct materials
Materials that become an integral part of a finished product and whose costs can be conveniently traced to it
Finished goods
units of a product that have been completed but not yet sold to customers
Fixed Cost
A cost that remains constant regardless of changes in the level of activity w/in the relevant range
Incremental Costs
An increase in cost between two alternatives
Indirect Cost
A cost that cannot be easily and conveniently traced to a specified cost object
Indirect Materials
Small Items of material such as glue and nails. Their costs cannot be conveniently traced to it
Inventoriable Costs
Product Costs
Manufacturing Overhead (MOH)
All costs associated with manufacturing except direct materials and direct labor
Marketing or selling costs
All costs necessary to secure customer orders and get the finished product or service into the hands of the customer
Period Cost
Taken directly to the income statement as expenses in the period in which they are incurred
Prime Cost
DM + DL
Product Costs
All costs that are involved in the purchase or manufacture of goods.
Raw Materials
Any materials that go into the final product
Relevant Range
The range of activity within which assumptions about variable and fixed cost behavior are valid
Schedule of cost of goods manufactured
Shows the direct materials, direct labor, and MOH costs incurred for a period and that are assigned to WIP and completed goods
Variable Cost
A cost that varies in direct proportion to changes in the level of activity. It is constant per unit
What is the formula for COGS?
COGS=Beg. inventory +Purchases or COGM - ending inventory
What costs make up manufacturing overhead?
MIIRUSDP
- Maintenance
- Insurance
- Indirect Labor
- Rentals
- Utilities
- . Supplies
- Depreciation
- Property Taxes
What is the formula for schedule of COGM?
DM+DL+ MOH + (Beg. WIP -End WIP)
What costs would be associated with wood used to build a table?
Variable
DM
What costs would be associated with labor to assemble a table?
Variable
DL
What costs would be associated with the salary of a factory supervisor?
Fixed
MOH
What costs would be associated with cost of electricity to product tables ($2/machine hour)
Variable
MOH
What costs would be associated with depreciation of machines used to produce tables?
Fixed
MOH
Sunk
What costs would be associated with the salary of the company president?
Fixed
Period (Selling and Admin Costs)
What costs would be associated with advertising expenses? ($250k/year)
Fixed
Period (Selling and Admin Costs)
What costs would be associated with commissions paid to salespersons?
Variable
Period (Selling and Admin Costs)
What costs would be associated with Rental income forgone on factory space?
Opportunity cost
what is the formula for direct materials cost on a schedule of COGM?
Beg. inventory + purchases or COGS - Ending inventory
Advertising, shipping, sales travel, sales commissions, and sales salaries are examples of what type of cost?
marketing costs
Executive comp, accounting,secretary, and PR are examples of what type of cost?
admin costs
What is the formula for COGS?
finished goods inventory + COGM + goods available - end finished goods inventory
