Managerial Accounting Cards – Flashcards
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costs that vary in total in direct proportion to changes in an activity level
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variable costs
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electricity per KWH to operate factory equipment, direct materials cost, wages of assembly worker
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Example of a cost that varies in total as the number of units change
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mixed cost
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a cost that has characteristics of both a variable cost and a fixed cost
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rental costs of 5000 per month plus .3 per machine hour of use
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Example of a mixed cost
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when production increases what should happen to the variable costs per unit
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stay the same
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the excess of sales revenue over variable cost
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contribution margin
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If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would
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increase
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budget allows for adjustments in activity levels
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flexible budget
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the process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operation data as though operations were being initiated for the first time.
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zero-based budgeting
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a variant of fiscal year budgeting whereby a twelve-month projection into the future is maintained at all times
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continuous budgeting
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the first budget customarily prepared as part of an entity's master budget
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sales budget
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the cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis
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process
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direct labor, factory overhead, indirect labor
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conversion costs
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a form prepared periodically for each processing department summarizing the units for which the department is accountable and the units to be assigned cost and the costs charged to the department and the allocation of these costs.
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cost of production report
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single plantwide rate, multiple departmental rates, activity based costing
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factory overhead allocation method
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is prepared according to management needs
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managerial accounting
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principle reason for preparing managerial accounting reports
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usefulness to management
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direct labor cost, direct materials cost, and factory overhead cost
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manufactured product
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costs other than direct materials cost and direct labor cost incurred in the manufacturing process
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factory overhead cost
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direct labor cost and factory overhead cost
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conversion costs
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a swimming pool installer
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job order costing system example
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direct labor, factory overhead, direct materials
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finished goods inventory costs
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salary of telephone receptionist in the sales office
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period cost example
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drill bits for a drill press used in the plant assembly area
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product cost example
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direct materials inventory, work in progress inventory, and finished goods inventory
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manufacturing business inventory report
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selling expenses or administrative expenses
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period cost
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how much a product should cost to manufacture
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standard cost
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standard costs are more than actual costs
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favorable cost variance
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actual quantity of direct materials used in producing a commodity differs from the standard quantity
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quantity variance
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malfunction equipment, purchasing of inferior raw materials, spoilage of materials
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direct materials quantity variance
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failure to maintain an even flow of work, machine breakdowns, failure to obtain enough sales orders
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unfavorable volume variance
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variances from standard costs are usually reported to
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management
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businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations
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decentralized
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in the cost center the manager has responsibility and authority for making decisions that affect
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costs
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the costs of services charged to a profit center on the basis of its use of those services
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service department charges
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internal centralized service department
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manufacturing department
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financial and non financial information
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balance scorecard
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the transfer price that is less than the market price but greater than the supplying division's variable cost per unit
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negotiated price approach
