Acct 116b SD Mesa College
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3 pillars of managerial accounting
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Planning, controlling, decision making
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Differences between managerial vs financial accounting
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Managerial; Internal users, Future, forward focus, not mandatory and doesn't conform to GAAP Financial; External Users, External, Investors, Creditors
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Explain the idea JIT
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manufacturing based on planned elimination of waste and on continuous improvement of productivity.
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What is lean production? What does it involve
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production that emphasizes the minimization of the amount of resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-added activities in design, production, supply chain management, and dealing with customers.
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Product Costs(Manufacturing Costs)
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-DM -DL -MOH
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Period Costs(Non-Manufacturing Costs)
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-non manufacturing costs -SG&A
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Prime Cost
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DM+DL
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Product Cost
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DM+DL+MOH
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Conversion Costs
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Dl+MOH
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fixed costs:
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total cost does not change with changes in the volume of activity (within the relevant range). -the cost per unit WILL change as volume (number of units) changes. total (the total amount may be different than expected; however, this will not be due to changes in the volume of units made or sold).(Pizza example) -rent -salaries -property tax
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variable costs:
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Changes in total, in direct proportion to changes in the level of activity. The total cost increases/decreases as units made increases/decreases.(popcorn example) -direct materials -direct labor -variable overhead -sales commissions -shipping.
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Fixed cost formula
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y= a+bx a=y-bx
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Types of Fixed cost
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Committed, Discretionary
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mixed costs (semi-variable):
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one that contains both fixed and variable elements: Fixed - minimum cost of having a service ready and available for use Variable - cost incurred for actual consumption of the service Example: charges for a cell phone is $39.99 plus $.40 for each minute used for 400 minutes
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Opportunity cost
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potential benefit that is given up when a choice is made
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sunk cost
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cost that already been incurred and can not be changed
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indirect material
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can be traced back to product (glue and nails, etc.)
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cost behavior
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the way cost react to the level of activity
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POHR
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estimated manufacturing overhead cost/ Estimated amount of the allocation base
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allocation base
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measure of direct labor hours or machine hours that is used to assign overhead cost
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Work in Process
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units of production that are only partially complete
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Finished goods
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completed unit of products that have not been sold yet
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Differential Cost
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the amount of increase or decrease in cost that is expected from a course of action as compared to an alternative
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Differential Revenue
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the amount of increase or decrease in revenue that is expected from a course of action compared to an alternative
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Types of inventories for a manufacturing company
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raw material , work in process, and finished goods
