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39 Cards in this Set
- Front
- Back
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managerial accounting activities
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a. plan
b. control c. decision making |
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managerial accounting
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emphasize relevance, timeliness, segment reports
DONT follow GAAP/IFERS reports to managers in business |
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Customer Intimacy Strategy
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company strives to understand and respond to needs of customers
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Operational Excellence Strategy
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company strives to deliver products faster/cheaper than competitors
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Product Leadership Strategy
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company strives to offer better quality than competitors
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Decentralization
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delegation of decision making thru organization
TRUST |
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Chief Financial Officer (CFO)
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-member of top management team
-controller reports to CFO -responsible for financial data |
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Business Process
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series of steps followed to carry out some task in a business
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Value Chain
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major business functions that add value to a company's product
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Lead Production Model
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5 step approach!!! organizes resources around flow of business process
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Result of Lean production model?
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lower inventories, less defects, reduced waste
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Theory of Constraint
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-4 step approach to process improvement
-effectively manage constraint is key to success |
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Six Sigma
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relies on customer feedback and fact based data gathering to drive process improvement
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ETHICS importance in business
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-IMA's statement of ethical practice
-guidelines for ethical behavior |
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Direct vs. Indirect Materials
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Direct= raw materials become part of finished product
Indirect= can't be easily traced to finished product |
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Direct vs. Indirect Labor
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Direct=labor easily traced to product
Indirect= can't be easily traced to creating products |
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Manufacturing Overhead
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costs can't be easily traced to specific products
(Selling and administrative costs) |
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Product vs. Period Costs
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product= all costs in making a product (DM, DL, MOH)
period= all selling and admin costs |
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Prime vs. Conversion Costs
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Prime=direct materials+direct labor
Conversion= direct labor+MOH costs |
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Cost behavior
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how a cost will react to changes in level of activity
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Variable Cost
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cost that varies in total in direct proportion to changes in level of activity
(Constant) |
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Fixed Cost
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cost that remains constant, regardless of diff activity!
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Opportunity Cost
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potential benefit that's given up when an alternative is chosen
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Sunk Cost
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a cost already incurred and can't be changed now or in future
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Cost-Volume Profit (CVP)
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helps managers understand relationship among cost, volume, profit by using prices of product, volume of activity, mix of products sold!!
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Contribution Income Statement
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helpful to managers in judging impact on profits of change in cost, volume, selling price
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Parts of income statement
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1. emphasis on cost behavior
2. contribution margin (sales-VC) 3. then add FC to get NOI |
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Contribution Margin Ratio
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calculated by: total CM/total sales
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Variable Expense ratio
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change in FC and sales volume
VC and sales volume regular sale price |
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Target Profit Analysis
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# of units that must be sold to get a target profit by using: equation method or formula method
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Equation vs Formula Method
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Equation= solve for unknown Q (quantity of units sold)
Formula= compute quantity of units to be sold for target profit |
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Break Even Analysis
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get target profit of 0
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Margin of Safety
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excess of actual sales over the break-even volume of sales
(% of sales or units sold) |
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Operating Leverage
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measure of how sensitive net operating income is to % change in sales
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Sales Mix
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proportions where companies products are sold
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4 assumptions about CVP
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1. selling price CONSTANT
2. costs are linear 3. sales mix constant 4. in manuf, inventories don't even change |
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When are JOB ORDER costing systems used?
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-many diff products are produced
-products are manufactured to order -trace or allocate costs to each job |
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Predetermined OH Costs
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est. amount of MOH/ est. cost driver of OH cost
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Degree of Operating Leverage (DOL)
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measure, at given level of sales, of how a % change in sales volume will affect profits
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