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35 Cards in this Set

  • Front
  • Back
Managerial Accounting
1. Internally focused
2. No mandatory rules
3. Financial and nonfinancial info, subjective info possible
4. Emphasis on the future
5. Internal evaluations and decisions based on very detailed info
6. Broad, multidisciplinary
Financial Accounting
1. Externally focused
2. Must follow externally imposed rules
3. Objective financial info
4. Historical orientation
5. Info about firm as a whole
6. More self-contained
Direct Costs
Can be easily and accurately traced to a cost object
Indirect Costs
Can’t be easily and accurately traced to a cost object
Info included in Managerial Accounting
1. To provide info for costing out services, products, and other objects of interest to management
2. To provide info for planning, controlling, evaluation, and continuous improvement
3. To provide info for decision making
Detailed formulation of action to achieve a particular end
Monitoring a plan’s implementation and taking corrective action as needed
Compares actual performance w/ expected performance
The process of choosing among competing alternatives
Strategic Positioning
Company chooses from 2 strategies to increase customer value:
1. Cost leadership:
To provide the same/better value to customers at a lower cost than competitors
Increases customer value by reducing sacrifice
2. Superior products through differentiation
Value Chain
The set of activities required to design, develop, produce, market, and deliver products and services to customers
Cross-Functional Perspective
In order to manage the value chain, a management accountant must understand many functions of the business
b/c a decision affecting one aspect affects the others
Certified Management Accountant (CMA)
Has passed a qualifying examination, met an experience requirement, and participates in continuing education
Cost Object
Any item for which costs are measured and assigned
An indirect cost is assigned to a cost object by using a reasonable and convenient method
Tangible Products
Goods produced by converting raw materials through the use of labor and capital inputs (such as plant, land, and machinery)
Tasks/activities performed for a customer/activity performed by a customer using an organization's products/facilities
Product Cost
DM+DL+MOH=Total Product Cost
Prime Cost
DM+DL=Prime Cost
Conversion Cost
DL+MOH=Conversion Cost
Direct Materials
Materials Inventory 1+Purchases-Materials Inventory 2=Direct Materials
Cost of Goods Manufactured
DM+DL+MOH=Total Manufacturing Cost
Total Manufacturing Cost+WIP 1-WIP 2=COGM
Cost of Goods Sold
Income Statement for Manufacturing Firm
Sales Revenue
=Gross Margin
=Operating Income
Income Statement for Service Organization
=Gross Margin
=Operating Income
Product Costs
Costs associated w/ the manufacture of goods/provision of services
*Can be inventoried
Period Costs
Expensed in the period in which they are incurred
*Not inventoried
(Marketing costs)
Contains wide variety of items
Includes indirect materials and indirect labor
Difficult to determine b/c it can include direct materials of insignificant amounts
Unit Product Cost
Total Product Cost/# of units
Job-Order Costing
Produce unique goods and services (customized)
Costs accumulated by job
Cost of 1 job differs from that of another and must be tracked separately
Process Costing
Mass-produce large quantities of similar products
Accumulate production costs by process/department for a given period of time
Normal Costing
Determines unit cost by adding actual DM, actual DL, and estimated MOH
*Used by most companies
Applied Overhead
PDOR*Actual Activity Level
Predetermined Overhead Rate
Estimated MOH/Estimated activity level
Underapplied Overhead
Actual overhead>Applied overhead
Overapplied Overhead
Actual overhead<Applied overhead