Cia Mangerial Acctg 1

Front 1

What's a static budget

Back 1

A static budget plans for only one level of activity and does not provide for changed levels of activity.

Front 2

Absorption cost

Back 2

Under the absorption cost, inventories include all direct manufacturing costs and both variable and fixed manufacturing overhead (indirect) costs.

Front 3

Variable costing

Back 3

Variable costing includes variable manufacturing costs only: direct materials, direct labor, and variable manufacturing overhead.

Front 4

Financial budget

Back 4

In the financial budget, the emphasis is on obtaining the funds needed to purchase operating assets. It contains the capital budget, projected cash disbursement schedule, projected cash collection schedule, cash budget, pro forma balance sheet, and pro forma statement of cash flow.

Front 5

Contribution margin

Back 5

Contribution margin equals revenue minus variable costs.

(Sales + other revenue) - direct materials - direct labor - variable overhead - other variables

Front 6

Operating budget

Back 6

The components of the operating budget are prepared in the following order:

Sales (revenue budget)

Production budget

Direct materials budget

Direct labor budget

Manufacturing overhead budget

Ending FG inventory budget

COGS budget

Non manufacturing budget

Front 7

Zero-based budgeting

Back 7

ZBB is a planning process in which in manager must justify his/her department's full budget for each period. The purpose is to encourage periodic reexamination of all costs in the hope that some can be reduced or eliminated.

Front 8

Contribution margin ratio (CMR)

Back 8

CMR = CM/Sales

Front 9

Break Even Point (BEP)

Back 9

BEP = Fixed cost/ unit contribution margin (UCM)

UCM = unit selling price - variable cost per unit

Front 10

Process costing system

Back 10

A process system is used when a company mass produces a standardized product on a continuous basis. The production department becomes the cost center.