Card Set Information

2010-03-28 17:17:00

Test Terms
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  1. managerial accounting
    information is designed to meet the specific needs of a company's management (sometimes called cost accounting)
  2. Manufacturing Costs (three types)
    • Direct Materials
    • Direct Labor
    • Factory Overhead
  3. Direct Materials
    materials used to make a product
  4. Direct labor
    people who work directly on the product
  5. Factory Overhead includes:
    • indirect materials
    • indirect labor
    • factory depreciation
    • factory rent
    • factory utilities
    • factory maintainence
  6. Indirect Materials
    • materials used in the factory but do not become a part of the product
    • i.e. small tools with a useful life of less than one year
  7. Indirect Labor
    • labor of people who don't work directly on the product
    • i.e. shift managers, security, janitors, etc
  8. Non-factory Costs (two types)
    • administrative expenses
    • marketing expenses
  9. Administrative Expenses
    • cost of doing business
    • corporate headquarters, interest on long-term debt, salaries of higher-ups
  10. Marketing Expenses
    advertising, public relations, shipping to customers, maintaining inventory warehouses, maintaining retail stores
  11. Prime Cost
    Direct Materials + Direct Labor
  12. Conversion Cost
    Direct Labor + Factory Overhead
  13. Variable Cost
    a cost which changes with changes in production
  14. Fixed Cost
    • a cost that is constant
    • i.e. rent, depreciation, indirect labor)
  15. Mixed Cost (aka Semi-Variable Cost)
    • partially variable and partially fixed
    • i.e. electricity, telephone, maintainence, etc.
    • these costs could change depending on varying factors, and are therefor mixed costs
  16. Product Cost
    • a cost that is capitalized and charged to an asset
    • factory costs
    • i.e. Ann Taylor, Inc. would have the following product costs: fabric used during production, factory janitorial supplies
  17. Period Cost
    • a cost that will be expensed immediately
    • non-factory costs
  18. Inventory Accounts (3)
    • Materials
    • Work in Process
    • Finished Goods
  19. Cost Accounting Systems
    • measure, record, and report product costs
    • used to set prices, control operations, and develop financial statements
  20. Two types of cost accounting systems
    • Job-order costing
    • Process-cost system
  21. Job-order costing
    • used to determine the cost of each job
    • used when one has separate, distinct jobs
    • i.e. swimming pool business, accounting firms, law firms, repair shops
  22. Work in Process Ledger
    contains all job cost sheets
  23. Process-cost system
    • accumulate costs by producing department
    • used when one cannot divide jobs into separate, distinct jobs
    • i.e. Mayfield, Tyson, anything mass produced, etc
  24. Journal entry for materials requisition
    debit Materials, credit Accounts Payable
  25. Journal entry for labor
    debit WIP, credit wages payable
  26. Factory Overhead Rate
    • estimated FOH/estimated level of activity
    • estimated level of activity can be direct labor or machine hours
    • done throughout the year as new jobs are completed
  27. Factory overhead variance
    • the difference between actual cost and estimated amount
    • credit balance- favorable/overapplied
    • debit balance- unfavorable/underapplied