Midterm Deck Flashcards
Direct vs Indirect costs
direct costs are linked to specific cost objects and can be traced in an economically feasible way.
What is a cost object?
A product, service, project, customer, brand, activity, department, anything for which separate measurement of costs are desired.
Cost Driver
level of activity of volume that eventually affects overall totals costs in the long run.
relevant range
band of normal activity or volume where there is a specific relationship between the level of activity or volume and the cost in the equation.
manufacturing overhead costs
manufacturing costs that cannot be linked to specific cost objects feasibly.
3 common features of cost accounting
- calculating costs of product/service/cost objects
- obtaining info for planning/control/performance evaluation
- analyzing the relevant info for decision making
basic income statement (non Gaap)
Sales -Variable costs = contributed capital -Fixed costs =Operating income
break even point
in quantity– Fixed cost/Contribution per unit
in $s – Fixed cost/CPU x Selling price per unit
*in $s – FC/CPU x Fixed cost/ contribution margin %
Economic Value Added
After Tax Op income - [WACC%(Total assets- current liabilities)]
if depreciation is present, how does this change variable cost per unit?
if straight line depreciation, take the remaining %value of asset x original variable cost to get new total variable cost (CH2 solutions)
Break Even point
profits= sales - (variable + fixed costs)
break even equation
cost x quantity = (VC x quantity) + FC + 0(zero profits)
how to set a flex budget
take unit costs. (total cost / hrs) across all VC and measure these against the actual costs.
Management by exception
practice of focusing on areas not operating as budgeted
Static budget
Master Budget is based on the output planned at the start if the budget period.
