Flashcards About Managerial Accounting Final
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Planning
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Involves setting goals and objectives for the company and determining how to achieve them
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Budgets
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The quantitative expression of a plan
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Directing
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Overseeing the company's day-to-day operations
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Controlling
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Evaluating the results of business operations against the plan and making adjustments to keep the company pressing towards its goals
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Which responsibility - Management conducts variance analysis by computing budget to actual
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Controlling
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Which responsibility - Management uses information on product costs to determine sales price
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Directing
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Which responsibility - Management decides to increase sales growth by 10% next year
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Planning
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Which responsibility - To lower product costs, management moves production to Mexico
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Controlling/Directing
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Which responsibility - Management reviews hourly sales reports to determine the level of staffing needed to service customers
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Directing
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Which type of accounting - Main characteristics of data is that it must be reliable and objective
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Financial
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Which type of accounting - Reports are prepared as needed
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Managerial
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Which type of accounting - Not governed by legal requirements
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Managerial
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Which type of accounting - Primary users are external (i.e., creditors, investors)
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Financial
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Which type of accounting - Focused on the future
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Managerial
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Which type of accounting - Reporting is based mainly on the company as a whole
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Financial
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Which type of accounting - Reports are prepared usually quarterly and annually
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Financial
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Which type of accounting - Information is verified by external auditors
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Financial
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Which type of accounting - Focused on the past
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Financial
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Which type of accounting - Main characteristic of data is that it must be relevant
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Managerial
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Which type of accounting - Reports tend to be prepared for the parts of the organization rather than the organization
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Managerial
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Which type of accounting - Primary users are internal (for example, company managers)
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Managerial
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Which type of accounting - Governed by Generally Accepted Accounting Principles (GAAP)
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Financial
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Raw Materials Inventory
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All materials used in manufacturing
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Work In Process Inventory (WIP)
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Goods that are partway through the manufacturing process but not yet complete
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Finished Goods Inventory
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Completed goods that have not yet been sold
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Which job - Invest company funds
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Treasurer
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Which job - Report to the audit committee of the board of directors and to a senior executive, such as the CFO or CEO
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Internal Auditing Department
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Which job - Prepares company tax returns
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Controller
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Which job - Performing cash counts at branch offices
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Controller
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Which job - Preparing journal entries for month-end closing
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Controller
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Which job - Issuing company stock
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Treasurer
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Which job - Ensuring that the company's internal controls are functioning properly
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Internal Auditing Department
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Which job - Creating an analysis about whether to lease or buy a delivery truck
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Controlling
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Which job - Calculate cost of a product
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Controller
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Which job - Issuing company bonds
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Treasurer
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Which job - Check to make sure that company risk management procedures are being followed
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Internal Auditing Department
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Which job - Work with various departments in preparing operating budgets for the upcoming year
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Controller
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Which job - Oversee accounts payable activities
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Controller
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Credibility
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Believability, trustworthiness
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Competence
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Having the qualities and the skills needed to perfom a task or participate fully in an activity
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Confidentiality
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The act of holding information in confidence, not to be released to unauthorized individuals
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Integrity
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Following a strict code of conduct or standard of values
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Cost of Goods Sold
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The total cost of buying raw materials and paying for all the factors that go into producing finished goods
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Cost of Goods Manufactured
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The manufacturing costs associated with the goods that were finished during the period
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Period Costs
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Costs that are expensed in the period in which they are incurred; often called operating expenses or selling, general, and administrative expenses
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Inventoriable Product Costs
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Include only the costs incurred during the "production or purchases" stage of the value chain
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Which type of cost - Cost of tv ads promoting environmental awareness
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Period cost
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Which type of cost - Purchase of lumber to be cut into boards
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Product cost
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Which type of cost - Salaries of scientists studying ways to speed up forest growth
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Period cost
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Which type of cost - Cost of a new software to track inventory during production
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Product cost
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Which type of cost - Salaries of the company's top executives
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Period cost
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Which type of cost - Cost of electricity at one of the company's paper mills
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Product cost
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Which type of cost - Cost of chemical applied to lumber inhibit mold from developing
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Product cost
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Which type of cost - Life insurance on the CEO
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Period cost
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Which type of cost - Depreciation on the gypsum board plant
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Product cost
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Manufacturing Overhead (MOH)
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All manufacturing costs other than direct materials and direct labor; also called factory overhead and indirect manufacturing cost - Includes ALL indirect manufacturing costs
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Fixed Costs
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Costs that stay constant in total despite wide changes in volume
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Variable Costs
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Costs that change in total in direct proportion to changes in volume
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Activity-Based Costing (ABC)
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Focuses on activities as the fundamental cost objects - the costs of those activities become building blocks for compiling in the indirect costs of products, services, and customers
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Absorption Costing
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The costing method where products "absorb" both fixed and variable manufacturing costs
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Research and Development (R&D)
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Researching and developing new or improved products or services and the processes for producing them
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Design
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Detailed engineering of products and services and the processes for producing them
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Production or Purchases
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Resources used to produce a product or service or to purchase finished merchandise intended for resale
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Marketing
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Promotion and advertising of products and services
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Distribution
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Delivery of products or services to customers
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Customer Service
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Support provided for customers after the sale
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Which function of the value chain - Cost of a prime-time tv ad featuring the new logo
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Marketing
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Which function of the value chain - Salary of engineers who are redesigning the printers on/off switch
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Designing
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Which function of the value chain - Depreciation on California Plant
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Production
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Which function of the value chain - Depreciation on delivery vehicles
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Distribution
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Which function of the value chain - Transportation cost to deliver laser printers to retailers such as best buy
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Distribution
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Which function of the value chain - Cost of a customer support center website
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Customer service
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Which function of the value chain - Plant managers salary
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Production
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Which function of the value chain - Purchases of plastic used in printing casings
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Production
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Which function of the value chain - Depreciation on research lab
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Research and development (R&D)
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Job Costing
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A system for assigning costs to products or services that differ in the amount of materials, labor, and overhead required. Typically used by manufacturers that produce unique, or custom-ordered products in small batches; also used by professional service firms
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Process Costing
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A system for assigning costs to a large number of identical units that typically pass through a series of uniform production steps - costs are averaged over the units produced such that each unit bears the same unit cost
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Which type of costing - An automobile repair shop
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Job costing
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Which type of costing - A chemical manufacturer
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Process costing
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Which type of costing - A custom furniture builder
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Job costing
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Which type of costing - A movie producer studio
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Job costing
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Which type of costing - A paint manufacturer
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Process costing
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F/V cost - Depreciation on equipment used to stitch the shoe together
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Fixed
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F/V cost - Shoelaces
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Variable
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F/V cost - Patents on the process used to create the materials used in the shoe
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Fixed
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F/V cost - Rice husk filler (used to make the rubber-like outsole)
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Variable
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F/V cost - Recycled polyester fibers (used to make the synthetic suede in the shoe upper)
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Variable
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F/V cost - Glue
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Variable
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F/V cost - Quality inspector's salary
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Fixed
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Contribution Margin
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Sales revenue minus variable expenses
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Margin of Safety
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Excess of expected sales over breakeven sales; the drop in sales a company can absorb without incurring an operating loss
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Operating Leverage
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The relative amount of fixed and variable cost that make up a firm's total costs
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Three Elements of Product Cost
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Direct material, direct labor, MOH
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Total Cost
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Every cost within the value chain
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Contribution Margin Ratio
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Contribution margin / Sales revenue
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Operating Leverage Factor
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Contribution margin / Operating income
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Operating income
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Contribution margin - Fixed costs
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Margin of Safety Equation
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Expected sales units - Breakeven units
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Cost-Plus Pricing
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Adding a fixed mark-up for profit to the unit price of a product - (have control over prices)
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Target Pricing
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Pricing goods according to what customers are willing to pay
