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BSAD.223 - Managerial Accounting > Midterm 1 Review > Flashcards

Midterm 1 Review Flashcards

1
Q

on what type of user does managerial accounting focus on?

A

internal users to support planning, controlling, and decision-making

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2
Q

what type of data does managerial accounting emphasize?

A

future-oriented data

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3
Q

what are the key functions of managerial accounting?

A
  1. planning
  2. controlling
  3. decision-making
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4
Q

what is the planning function on managerial accounting?

A

establishing goals and determining strategies

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5
Q

what is the controlling function of managerial accounting?

A

monitoring performance, comparing actual results with budgets

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6
Q

what is the decision-making function of managerial accounting?

A

choosing between alternatives based on relevant costs

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7
Q

what are the the ethical considerations of managerial accounting?

A
  • competence
  • confidentiality
  • integrity
  • credibility
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8
Q

what does the competence consideration of managerial accounting refer to?

A

maintaining professional knowledge

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9
Q

what does the confidentiality consideration of managerial accounting refer to?

A

keeping information secure

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10
Q

what does the integrity consideration of managerial accounting refer to?

A

avoiding conflicts of interest

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11
Q

what does the credibility consideration of managerial accounting refer to?

A

providing accurate, fair, and timely reports

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12
Q

what are the types of costs?

A
  • indirect
  • direct
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13
Q

what are direct costs?

A

costs that can be directly traced to a product (eg. direct materials, direct labor)

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14
Q

what are indirect costs?

A

costs that cannot be easily traced (eg. factory rent, supervisor salaries)

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15
Q

what are the types of manufacturing costs?

A
  • direct materials (DM)
  • direct labor (DL)
  • manufacturing overhead (MOH)
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16
Q

what are direct materials?

A

raw materials used in production

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17
Q

what is direct labor?

A

labor costs of workers who directly manufacture the product

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18
Q

what is manufacturing overhead?

A

indirect costs such as factory utilities, depreciation

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19
Q

what are the types of non-manufacturing costs?

A
  • selling costs
  • administrative costs
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20
Q

what are selling costs?

A

costs to market, distribute, and service products

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21
Q

what are administrative costs?

A

costs related to general business operations

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22
Q

what are product (inventoriable) costs?

A

costs reported as inventory until sold (eg. direct materials, direct labor, manufacturing overhead)

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23
Q

what are period costs?

A

costs expensed immediately in the period incurred (eg. office rent)

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24
Q

what are variable costs?

A

costs that change in total activity (eg. sales commissions, raw materials)

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25
Q

what are fixed costs?

A

remain constant in total (eg. rent, salaries)

26
Q

what are the types of fixed costs?

A
  • committed fixed costs
  • discretionary fixed costs
27
Q

what are committed fixed costs?

A

cannot be changed short-term (lease payments)

28
Q

what are discretionary costs?

A

can be adjusted (eg. advertising expenses)

29
Q

what are mixed costs?

A

costs that contain both variable and fixed components

30
Q

what is the formula to solve for mixed cost?

A

Y = a + bX

Where:
- y = total mixed cost
- a = total fixed cost
- b = variable cost per unit
- X = level of activity

31
Q

what are the types of cost behavior analysis?

A
  • high-low method
  • scattergraph plot
  • regression analysis
32
Q

how does the high-low method work?

A

estimates variable and fixed components using the highest and lowest activity levels

33
Q

what are cost drivers?

A

activity base that causes variable costs to change (eg. units produced, machine hours)

34
Q

what are step-variable costs?

A

costs that remain fixed over a range of activity but jump to a higher level when a threshold is reached (eg. maintenance staff salaries)

35
Q

what is the formula to solve for variable cost per unit using the high-low method?

A

variable cost per unit = change in total cost / change in activity

36
Q

what is the contribution format income statement?

A

separates costs into variable and fixed instead of functions

37
Q

what is the formula to solve for net operating income using the contribution margin?

A

net operating income = contribution margin - fixed expenses

38
Q

what are the key elements of cost-volume-profit?

A
  • selling price
  • volume/activity level
  • variable costs per unit
  • total fixed costs
  • sales mix (for multiple products)
39
Q

what is the formula to solve for the contribution margin?

A

CM = sales revenue - variable costs

40
Q

what is the formula to solve for the contribution margin ratio?

A

CM = total CM / total sales revenue

41
Q

what is the formula to solve for break-even in units?

A

break-even sales (units) = total fixed costs / unit CM

42
Q

what is the formula to solve for break-even in dollars?

A

break-even sales ($) = total fixed costs / CM ratio

43
Q

what is the formula to solve for target profit required sales in units?

A

required sales (units) = (total fixed costs + target profit) / unit CM

44
Q

what is the formula to solve for target profit required sales in dollars?

A

required sales ($) = (total fixed costs + target profit) / CM ratio

45
Q

what is the margin of safety?

A

the excess of actual or budgeted sales over break-even sales

46
Q

what is the formula to solve for the margin of safety in dollars?

A

margin of safety ($) = total sales - breakeven sales

47
Q

what is the formula to solve for the margin of safety percent?

A

margin of safety (%) = margin of safety ($) / total sales

48
Q

what is operating leverage?

A

measures the sensitivity of net income to sales changes

49
Q

what is the formula to solve for operating leverage?

A

degree of operating leverage = contribution margin / net operating income

50
Q

what costs are considered product costs under absorption costing?

A
  • direct materials
  • direct labor
  • variable manufacturing overhead
  • fixed manufacturing overhead
51
Q

what costs are considered period costs under absorption costing?

A
  • selling expenses
  • administrative expenses
52
Q

what costs are considered product costs under variable costing?

A
  • direct materials
  • direct labor
  • variable manufacturing overhead
53
Q

what costs are considered period costs under absorption costing?

A
  • fixed manufacturing overhead
  • selling expenses
  • administrative expenses
54
Q

what is the function of absorption costing?

A

required for external financial reporting

55
Q

what is the function of variable costing?

A

preferred for internal decision-making

56
Q

if production > sales…

A

absorption net income is higher (fixed MOH is deferred in inventory)

57
Q

if production < sales…

A

variable net income is higher (fixed MOH is expensed immediately)

58
Q

what is the impact of absorption costing on decision making?

A

absorption costing can distort pricing and profitability decisions by spreading fixed costs across units

59
Q

what are the advantages of variable costing?

A
  • more accurate profit measurement
  • easier to perform CVP analysis
  • consistent with cash flow
60
Q
A

BSAD.223 - Managerial Accounting (1 decks)

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