A100- Managerial Accounting – Flashcards
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Product Differentiation
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producing a product that is different in one or more key dimensions from the competitors product ex: Apple
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Price-based competition
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competing on price as opposed to product qualities ex: Walmart
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Characteristics of Financial Accounting
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external governed by GAAP historical currency (quantified)
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Characteristics of Managerial Accounting
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internal governed by mgmt needs future-oriented qualitative info
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Cost of Inventory
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DM+DL+MOH=Product Costs
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DM
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Direct Materials
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DL
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Direct Labor
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MOH
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Manufacturing overhead
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What does MOH include?
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Indirect materials indirect labor all other manufacturing costs
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What is the cost flow of inventory?
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Raw materials work in progress finished goods
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Two types of product costing
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Job order costing Process costing
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job order costing
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costs accumulated by jobs
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Process costing
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costs averaged over all units accumulated by department
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similarities between job order costing and process costing
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purpose of both is to determine the cost per unit both systems use DM, DL and MOH both systems have the same cost flow
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Fixed Costs
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depends on how many units (Rent)
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Variable costs
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costs that vary in direct relationship with the volume produced
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Examples of Fixed Costs
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fixed manufacturing overhead fixed selling and administrative costs
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Examples of Variable costs
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direct materials direct labor variable manufacturing overhead variable selling and administrative costs
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Contribution Margin
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Sales -Variable costs =contribution margin -fixed costs =profit
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Break even point
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total revenue = total costs
