What Is The Primary Criterion For The Preparation Of Managerial Accounting Reports? – Flashcards
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Managerial Accounting
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Provides accounting information for a companies internal users. Is not bound by generally accepted accounting principles(GAAP)
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The management process
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Provide information for Planning the organizations actions. Provide information for Controlling the organizations actions. Provide information for Making effective decisions.
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Financial accounting provides information for
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External Users Investors, creditors, customers, suppliers, government agencies, and labor unions.
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Financial Accounting is historical
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Investment decisions, stewardship evaluation, monitoring activity, and regulatory measures.
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Managerial Accounting produces information for
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Internal users such as managers, executives, and workers.
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Direct cost
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cost that can be easily and accurately traced. *Ex. Direct materials and Direct labor.
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Indirect cost
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cost that cannot be easily traced to cost object so it has to be allocated. *Ex. Overhead
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Prime Cost
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Raw Materials+ Direct Labor
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Conversion Cost
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Direct Labor+ Manufacturing Overhead
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Product Cost
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Raw Materials+ Direct Labor+ Manufacturing Overhead
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Selling Expense Percent
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Selling expenses/ Sales Revenue
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A manufacturer normally has
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3 inventory accounts
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What would not be found on the income statement of a manufacturer
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Work in Process
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Relevant Range
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The range of output over which the assumed cost relationship is valid for the normal operations of a firm.
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Fixed Cost
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In total, are constant within the relevant range as the level of output increases or decreases.
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Discretionary Fixed Costs
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Fixed costs that can be changed or avoided relatively easily at management discretion.
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Committed Fixed Costs
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cannot be easily changed
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Variable Costs
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costs that in total vary in directs proportion to changes in output within the relevant range.
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Total Variable Costs
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=Variable rate * units of output
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Mixed Costs
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costs that have both a fixed and a variable component.
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Total Mixed Cost
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= Total Fixed Cost + Total Variable Cost
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Total Cost
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= Total Fixed Cost + (Variable Rate * Units of Output)
