Unit 1 and 2 Flashcards
Prime costs
direct material + direct labor
Conversion costs
direct labor + o/h
non-manufacturing costs
selling
admin
both direct/indirect
product cost
recorded on [BS], attached to unit as it is purchased/manu + stay attached until sale [income st]
period costs
selling and admin costs [IS]
activity base/cost driver
measure o what causes the incurrence o variable cost
committed v discretionary fixed costs
- X be adjusted in ST
2. can be altered in ST
Differential costs and revenues
those that change between alternative plans
Contribution format used by
management
contribution format
sales - VC = CM - FC = NI
5 qualities of job order costing
diff products e period manufactured to order costs traced/allocated to jobs cost records f each distinct product/job o/h est + allocated @ predetermined rate
3 qualities of process costs
single product f long periods
costs accumulated in dep
unit product cost = total cost/units
predetermined overhead rate eq
est total manu o/h cost for next period/est total units in allocation base
overhead applied eq
predetermined rate x actual activity
single v multiple predetermined o/h bases
- factory wide 2. dep
absorption costing
inclusion o all manu costs (DM, DL, M O/H) in cost o product
normal costing
application o o/h using predetermined o/h rate x actual # o allocation base incurred by job
WIP inventory incl
raw mat inventory, direct labor, manu o/h
(job order) [is] incl
COGS and period cost/selling+admin exp
end o year inventory eq
raw material beginning + purchased = available - end of year = used
cost of goods manufactured eq
WIP beginning + manu costs = WIP this period - WIP end = COG manu
manu costs
DM + DL + manu O/H
COGS eq
fin goods beginning + COG manu this period = COG avail - fin goods end = COGS
over/underapplied o/h closed to
COGS
underapplied/overapplied
under applied = o/h applied less than amount actual, added to COGS
break even
NI = 0 CM = FC
CM ratio eq (2)
total CM/total sales
unit CM/ unit selling price
Break even analysis (3, but 2, lets be honest)
sales = VC + FC
CM method:
units sold = FC/unit CM
total sales$ = FC/CM ratio
BE point eq (considering target profit)
(FC + profit)/ unit CM
margin o safety
Amount that current sales can decrease before losses occur
operating leverage
Measures the sensitivity of net operating income to percentage change in sales
degrees of operating leverage
CM/net operating income
sales mix
Relative proportions in which a company’s products are sold
Multip product BE analysis assumptions (4)
sales $ constant
costs - linear
sales mix - constant
inventories X change
Responsibility accounting def
- Managers should only be accountable for those items they can actually control to a significant extent
participative budget systems
info down and up
activity variances
differences between planning budget and flexible budget
spending variances
diff between flexible budget and actual cost
standard costs (4 qualities)
predetermined
used f planning
benchmarks f measuring perf
simplifiy acct sys
management by exception
focus on Q and costs that exceed standards
total quality management
concept o 0 defects/waste
price variance
AQpurch x AP
- (AQpurch x SP)
quantity variance
AQused x SP
- SQ x SP
total labor variance =
rate variance + efficiency variance
labor rate variance
(AH x AP)
AH x SP
labor efficiency variance
AH x SP
SH x SP
