ACC Ch 1-5

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  1. Financial Accounting
    • reports to outside of the organization
    • -owners
    • -creditors
    • -tax authorties

    Must follow GAAP
  2. Managerial Accounting
    • -reports to the organization
    • -planning
    • -direct and motivation
    • -controlling
    • -performance evaluation
    • -Decisions affecting future
    • -Relevance
    • -Timeless
    • -Detailed segment reports about departments, products, & customers
    • -Does not need to follow GAAP
  3. Period Costs
    Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accured

    Ex. selling and administrative expenses
  4. Direct Materials
    Materials that become an integral part of a finished product and whose cost can be conveniently traced to it.

    Ex. tires
  5. Indirect Materials
    Small items of material such as glue and nails that maybe an integral part of the finished product, but whose costs cannot be easily or conveniently traced to it

    ex. lugnuts
  6. Direct Labor
    Factory labor costs that can be easily traced to individual units of product

    Ex. Touch Labor
  7. Indirect Labor
    The factor labor costs of janitors, supervisors, material handlers, and other factory workers that cannot be conveniently traced to particular products
  8. Manufacturing Overhead
    all manufacturing costs except direct materials and direct alabor

    Ex. electricty, maintenance, building
  9. Product Costs
    All costs that are involved in acquiring/making products.

    Direct Materials, direct labor, and manufacturing overhead
  10. Income Statements
    • Sales
    • Cost of Goods Sold
    • Beginning Inventory
    • +Purchases
    • = Goods Available
    • -End Invtory
    • Gross Margin
    • Selling and Expenses
    • Net Income
  11. Big Three Costs of Making Things
    • Raw Materials
    • Direct Labor
    • Manufacturing Overhead
  12. Process Costing
    used in compaines that produce many units of a single product for long periods of time
  13. Unit Product Cost Equation
    =Total manufacturing cost/ total units produced
  14. Job Order Costing
    Many different products are produced each period
  15. Job Cost Sheet
    A form prepared for a job that records materials, labor, and manufacturing overhead costs
  16. Measuring Direct Labor Costs
    Labor changes that are easily traced directly to any job
  17. Indirect Labor Costs
    Include maintenance, supervision, clean up
  18. Predetermined Overhead Rate Equation
    = estimated total MOH Cost/ Est. Amount og the allocation base
  19. Predetermined OH Rate
    Is applied to OH cost to jobs
  20. Overhead applied to a particular job =
    Predetermined OH rate x amount of the allocation base incurred by the job
  21. Cost Driver
    A factor that causes overhead costs

    Ex. machine hours, beds occupied, computer times, flight hours
  22. Activity-Based Costing (ABC)
    A technique that attempts to assign overhead costs more accurately to products than the simpler methods
  23. Activity
    In activity-based costing is an event that causes the consumption of Over Head resources

    • Ex. -setting up machines
    • -admitting patients
    • -billing customers
  24. Activity Cost Pool
    A "cost bucket' in which costs related to a particular activity measure are accumulated
  25. Activity Measure
    How much of the activity is carried out and it is used as the allocation base for applying O.H. costs to products and services
  26. Activity Rate
    is a predetermined OH rate in an activity-based costing system
  27. Unit-Level Activities
    Are preformed each time a unit is produced. The costs of the unit-level activities should be proportional to the number of units produced
  28. Batch-Level Activities
    Consist of taks that are preformed each time a batch is processed

    Ex. Processing purchase orders, setting up equipment, packaging shipments to customers

    Cost at the batch level depends on the number of batches processed rather than on the numer of units produced
  29. Product-Level Activities
    Relate to specific products and typically must be carried out regarless of how many batchs or units of the products are manufactured
  30. Facility-Level Activities
    Activities that are carried out regardless of which products are produced, how many batches or units of the products are manufactured
  31. Activity Rate=
    • total cost in the production ordered account cost pool /
    • anticipated number of orders for upcoming year
  32. Activity Based Management
    Focusing on activites to eliminate waste, decrease processing time, and reduce defects
  33. Benchmarking
    a systematic approach to identifying the activitied with the greatest room for improvement
  34. Cost Structure
    the relative porportion of each type of cost in an organization
  35. Activity Base
    • A measure of whatever causes the incurrence of variable cost
    • aka. cost driver

    direct labor hours, machine hours, units produced, and units sold
  36. Step-Variable Cost
    The cost of a resource that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity
  37. Relevant Range
    That range of actibity within which the assumptions made about cost behavior are reasonably valid
  38. Committed Fixed Costs
    Investments in facilities, equipment, and the basic organization often cant be signicantly reduced even for short periods of time without making fundamental changes

    Ex. Insurance, taxes, building and equipment
  39. Discretionary Fixed Costs
    arise from annual decision by management to spen on certain fixed cost items

    Ex. advertising, public relations, internships for students
  40. Mixed Cost
    Contains both variable and fixed cost elements
Card Set:
ACC Ch 1-5
2012-02-20 00:24:48
Managerial Accounting

Managerial Accounting Ch 1-5 1st Exam
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