Operations Management Flashcards
Cost Objects
resources activities that serve as the basis for management decisions
Prime cost
direct material + direct labor
Conversion Cost
Direct Labor+ Mftrg Overhead applied
Cycle of Inventory- All on the B/S. Part of Inventory
RM–WIP–FG
Product costs
Inventoriable costs. sit on the b/s they are not expensed until the product is sold
Product vs. Period
Period costs do not go on the b/s they are expensed and do not go on the b/s. Admin expenses etc
Nonmanufacturing Costs
costs that do not relate to the manufacturing of a product. These costs are expensed in the period incurred. This is treated as a period cost
Cost accounting measures PIE
- Product costing
- Income
- Efficiency
Tracing costs to cost object
- Product
- Department
- Geographic Area
Product cost
has to be in the factory
Cost drivers can be
dollars
hours
When traditional accounting used, application of overhead is accomplished in 2 steps
Step 1: Calculate Overhead rate : Budgeted overhead costs/ Estimated cost driver
Step 2: Applied overhead= Actual cost driver X Overhead rate
Variable Cost
Constant per unit. Total costs varies with the number
Fixed Cost
- Total fixed costs does not change
- FC vary per unit
Fixed Cost & Variable- Long-Run Characteristic
Any cost can be considered variable
Semi-Variable Cost
a little bit mixed with fixed and variable
Cost of Goods Manufactured Formula
Beg WIP \+ DM \+DL \+Manufacturing Overhead -WIP Ending = COG Manufactured
Materials used
Beg. RM \+Purchases (Including freight in) = RM Available -End. RM = Raw Materials used
Cost of Goods Sold
Beg. FG \+Cog Manufactured = Cost of Goods available for sale -FG Inventory Ending =Cost of Goods sold
Product cost is the sum of
DM
+DL
+Mftg Overhead
Job Order costing
used when there are relatively few units produced and when each unit is unique or easily identifiable
Overhead Applied
Rate X Actual $
Process Costing
We average the cost bc we are mass producing homogeneous units. Every unit is exactly the same
Goal of production report
to keep track of the physical units and the costs associated with all the units
