Relevant Costing Flashcards
Supply chain
Raw materials
Intermediate goods
Manufacturing
Wholesalers
Retailers
Gross profit (income statement)
Sales - COGS
Balance sheet things
DM + DL + MOH
WIP
FG
Value engineering
A systematic evaluation of all aspects of the value chain, to reduce costs and achieve a quality level that satisfies customers
Value added costs
Costs that are added to products/services that the customer would miss if they were left out
Non value added costs
Costs that are added to products/services that the customers would not miss if they were left out
Decision making steps:
Identify the problem
Obtain information
Make predictions about the future
Make decisions by choosing among alternatives
Implement the decisions, value performance, and learn
Decision making steps:
Identify the problem
Obtain information
Make predictions about the future
Make decisions by choosing among alternatives
Implement the decisions, value performance, and learn
Learning curves
Function that shows how labour hrs/unit decrease as unit of production increases
Cumulative average time learning model (CAT)
Incremental unit time learning model (IUT)
CAT:
Definition and X and Q
CAT decreases by a percentage each time the cumulative quantity of units produced doubles
X = cumulative number of units produced
Q = index of learning
CAT template
See paper
IUT definition + X + Q
IUT decreases by a constant percentage each time the cumulative quantity of units is doubled.
X = cumulative number of units produced
Q = index of learning
IUT template
See paper
Absorption costing definition
All variable and fixed manufacturing costs are included as inventorial costs (inventory absorbed all manufacturing costs)
Absorption costing split
DM + DL + FMOH + VMOH = product costs
Sales variance and administration + fixed sales and administration = period costs
