Quiz 1 Flashcards
7 value chain components
R&D, Design, Purchasing, Production, Marketing, Distribution, Customer Service
Financial Accounting & Reporting
External users,
Investors and creditors,
GAAP/IFRS,
Financial position of Co.,
Accuracy and compliance
Cost Accounting & Reporting
Internal users
Management decision making
Non-GAAP or GAAP
Information on costs/customers
Efficiency and effectiveness, usefulness & timely
Cost Drivers
factor that causes or “drives” costs; e.g., increase number of cookies made, must increase labor
Differential revenues
revenues that change in response to a particular course of action
Differential costs
costs that change in response to a particular course of actions
Responsibility center
specific unit of an organization assigned to a manager who is held accountable for its operations and resources
Budget
Financial plan of the revenues and the resources (expenses) needed to carry out activities and meet financial goals
Key Financial players in an organization
CFO
Treasurer
Controller
Internal Auditor
Cost Accountant
Sarbanes/Oxley
CEO/CFO sign off on financials - “do not omit material information”
CEO/CFO sign off on evaluation of internal controls… are they operating effectively?
Cost
a sacrifice of resources
Expense
cost that is charged against revenue in an accounting period (hits the Income Statement)
Charged to P&L in period it’s incurred
Outlay
past, present, or future cash outflow
Opportunity
foregone benefit from the best alternative course of action
Product Cost
“Manufacturing”/”Inventory” - expense as COGS when product is sold
Direct Materials (includes freight-in)
Direct Labor
Factory Overload
- Indirect material
- Indirect labor
- Other Indirect costs (factory depreciation, lights, heat, etc.)
Period Cost
“Non-Manufacturing” - expense when incurred (regardless of product sales)
Selling, General & Administrative - includes freight-out
Abnormal spoilage
Prime Cost
direct material + direct labor
Conversion Cost
direct labor + manufacturing overhead (costs to convert raw materials)
Allocating non-manufacturing costs to Cost Accounting reporting
Cost pool
Cost allocation
Cost objects
Product Costs allocated to one of 3 Inventory Accountant
Raw material inventory (ready to go into the production cycle)
Work in process (WIP) inventory (in the production cycle)
Finished goods inventory (out of the production and available for sale)
Cost Behavior
Fixed costs = fixed in total/variable per unit
Variable costs = fixed per unit/variable in total
Full cost
all manufacturing and selling costs
Full Absorption Cost
all fixed and variable manufacturing costs (GAAP) - “gross margin”
Variable Cost
all variable manufacturing and selling costs (Cost Acct) - “contribution margin”
