Managerial Accounting Exam 1 Study Guide – Flashcards
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Financial Accounting traits
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-Required by GAAP -External Users -Company as a whole -Based on Past events
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Managerial Accounting traits
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-Not required by GAAP -Internal Users (management/CFO/CEO) -Segment Oriented -Future Focused
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3 Pillars
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Planning - Create budgets/goals Control - gathering feedback Decision Making
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Management Processes
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-Lean Production -TOC (Theory of Constraints)
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Lean Production
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JIT (Just in Time) or the theory of producing only what you need. Units produced = Units sold -Inventory levels decrease -reduces waste/defects -cost under control -reduces spoilage
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TOC (Theory of Constraints)
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Focus (put pressure) on the constraint. *bottleneck*
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Direct Cost
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conveniently/easily traced back to the product. (traceable)
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Indirect Cost
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cannot be easily traced back to the product
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Common Cost
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supports more than one cost object
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Manufacturing costs (Product costs)
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Inventoriable costs, cling to product -Direct Material -Direct Labor -MOH (Manufacturing Overload)
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Direct Material
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generally an integral part of a finished product
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Direct Labor (Touch labor)
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Assembly line workers
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MOH (Manufacturing Overload)
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Indirect materials and indirect labor
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Non-manufacturing costs (Period costs)
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Expensed when incurred -SG+A
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SG+A (Selling, General, and Administrative)
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Selling- advertising, shipping, sales comission G+A- legal, accounting, CFO/President
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Cost Behavior
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How costs react to changes in level of activity
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Variable costs
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constant or fixed costs per unit that changes in total in direct proportion to the level of activity.
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Other names for "level of activity"
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Cost Driver. Activity base.
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Fixed costs
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remains constant in total but reacts inversely to the level of activity
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Mixed costs
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Contains both fixed and a variable component.
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Equation for Mixed costs
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Y= a + b(x) Y= total mixed costs a= fixed costs b= variable costs x= level of activity
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Differential costs
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-Differential revenue -Differential cost
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Differential Revenue
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the difference in revenue between two alternatives
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Differential Cost
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the difference in cost between two alternatives
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Decision making analysis
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-must have alternatives -relevant information
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Types of Fixed costs
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Committed and Discretionary
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Committed cost
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Long term, cannot be significantly reduced in the short term. ex. Depreciation on buildings
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Discretionary cost
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May be altered in the short run by current management discretion
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Traditional I/S
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Sales + (COGS)/GM + (SG+A) = NOI
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Contribution I/S
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Sales + (Variable Exp)/CM + (Fixed Exp) = NOI
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Opportunity Cost
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The of selecting one alternative over another
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Sunk Cost
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costs that have already been incurred and cannot be changed now or in the future. These costs should be ignored. Depr. Exp is a sunk cost.
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Job order costing
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costs accumulated by job. every job is unique
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MRF (Material Requisition Form)- DM
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Type and quantity of materials charged to the job
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Time Ticket- DL
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Amount and cost of labor on the job
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POHR (Predetermined overhead rate)
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Total Estimated MOH/ Total estimated allocation base
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Raw materials
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Materials that go into the product itself
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WIP (Work in Process)
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partially completed units of product. (all direct)
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FG (Finished Goods)
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completed units of product
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OH applied
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POHR * Actaul activity
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COGS method
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quick and dirty.
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Allocation method
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more precise.
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Actual
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left
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Applied
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right
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Under applied
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left
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Over applied
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right
