Cost Accounting Midterm

Front 1

financial accounting system

Back 1

follow established rules and conventions to provide information to external users such as investors, goverment agencies and banks

Front 2

cost management system

Back 2

identifies, collects, measures, and classifies, and reports information that is useful to managers in costing, planning, controlling, and decisions making.

Front 3

cost accounting system

Back 3

assigns costs to individual products and services and other cost objects as specified by management; satisfies financial reporting and mangement decision making needs

Front 4

operational control system

Back 4

provides accurate and timely feeback concerning performance; concerned with what activities should be performed and assessing those activities.

Front 5

just in time manufacturing

Back 5

a demand pull system that strives to produce a product only when it is needed and only in quantities demanded by customers.

Front 6

growth of service industry:global comeptition

Back 6

increased demand for more cost information, and more accurate information

Front 7

factors affecting cost management: growth of service industry

Back 7

service sector of economy has increased in importance.deregulation of many services has increased competition in the service industry.

Front 8

factors affecting cost management: advances in info technology

Back 8

increased ability to accurately cost products due to advances in available tools
emergence of electronic commerce
computer are used to continuously monitor and control system wide operations

Front 9

value chain

Back 9

set of activities required to design develop produce market and deliver products and services to customers.
firms compete in speed of delivery and response to deliver value to the customer

Front 10

factors affecting cost management: new product development

Back 10

high proportion of product costs are committed during the development and design stage of a new product.
encourages the use of target costing and activity based management.

Front 11

role of cost and management accountant:

Back 11

responsible for generating financial information required by the firm for internal and external reporting. used by management to plan, control, and make decisions.

Front 12

role of cost and management accountant: planning

Back 12

detailed formulation of future actions to achieve a particular end.
requires setting objectives and identifying methods to achieve those objectives

Front 13

role of cost and management accountant:controlling

Back 13

monitoring a plans implementation and taking corrective action as needed. feedback as information that can be used to evaluate or correct steps being taken to implement of a plan

Front 14

role of cost and management accoutant: decision making

Back 14

process of choosing among competing alternative. based on info provided by the accounting system.

Front 15

benefits of ethical behavior

Back 15

create customer and employee loyalty
avoid litigation costs
increase likelihood of commercial success

Front 16

certified public accountant

Back 16

to provide assurance concerning the reliability of financial statements

Front 17

certified internal auditor

Back 17

to recognize competency in internal auditing rather than external auditing.

Front 18

certified managerial accountant

Back 18

to establish management accounting as a recognized professional discipline separate from the profession of public accounting.

Front 19

four areas emphasized on cma exam

Back 19

business analysis
management accounting and reporting
strategic mangement
business application

Front 20

cost object

Back 20

any item, such as products, customers, departments projects activities and so on for which costs are measured and assigned

Front 21

activity

Back 21

basic unit of work performed within an organization.
ie. setting up equipment, moving materials.

Front 22

direct tracing

Back 22

relies on physical observance of casual relationships to assigns costs to cost objects

Front 23

drive tracing

Back 23

relies on drivers as casual factors to assigns costs to cost objects

Front 24

direct materials/ direct labor
overhead

Back 24

materials directly traceable to the goods or services being produced
all other manufacturing costs

Front 25

non production costs

Back 25

amount and timing of benefit cannot be reasonably estimated

Front 26

period costs

Back 26

not inventoried. expensed as incurred

Front 27

income statement

Back 27

sales
less cogs =
gross margin
less operating expenses =
operating income

Front 28

prime cost

Back 28

DM + DL = prime cost

Front 29

conversion costs

Back 29

DL + OH = conversion costs

Front 30

cost management systems: functional based

Back 30

assumes linear production cost behavior
assigns costs to organizational units
unit based drivers
allocation intensive
narrow and rigid product costing
focus on managing costs
sparse activity information
maximization of individual performance
uses financial measures of performance

Front 31

cost management systems: activity based

Back 31

emphasized tracing over allocation
identifies non unity based activity drivers
unit and non unit based drivers
tracing intensive
board flexible product costing
focus on managing activities
detailed activity information
system wide performance maximization
uses both financial and non financial measures of performance

Front 32

cost of goods manufactured

Back 32

DM + DL+ OH = total manufacturing cost + beg. WIP - end WIP = cost of goods manufactured.

Front 33

non unit related costs

Back 33

the use of either plant wide or departmental rates assumes that the number of units produced causes overhead costs to increase. some OH costs are not driven by the number of units produced.

Front 34

transaction drivers

Back 34

measure demand by quantity of events

Front 35

duration drivers

Back 35

measure demand by elapsed time

Front 36

reducing side and complexity of an ABC system

Back 36

aproximately relevant abc system: use only most expensive activities for abc assignment. assign using cause and effect drivers
all other activities are added to cost pools o the expensive activities.

Front 37

reducing size and complexity of an abc system: time driven

Back 37

time-driven: overcomes the drawback of traditional abc systems. few people report idle of unused time.
1. managers estimate practical capacity as a percentage of theoretical capacity
2. determine per time unit rate
3. determine time required for one unit of activity
4. multiply rate by time.

Front 38

manufacturing firms

Back 38

involves joining together dm dl oh to produce a new product. It is tangible and can be inventoried.

Front 39

service firms

Back 39

service in intangible and cannot be separated from the customer and cannot be inventoried. must be able to track costs of service rendered just as precisley as COGM.

Front 40

job order costing system

Back 40

produce unique products in small batches that incur different product costs must track the costs of each product or batch seperatly ex. home builders, dental, medical services, cabinet makers.

Front 41

process costing system

Back 41

produce identical units of the same product. costs of each unit are the same also ie. food cement, chemicals, petroleum

Front 42

cost accumulation

Back 42

recognition and recording of costs

Front 43

source documents

Back 43

describes a transaction. recorded into a dababase and captured in the general ledger. can be designed to supply information that can be used for multiple purposes.

Front 44

cost measurement

Back 44

classifying the costs and determining the dollar amounts for dm, dl and oh

Front 45

actual costing

Back 45

uses actual costs for dm dl and oh

Front 46

normal costing

Back 46

uses actual costs and dm and dl but measures oh costs on predetermined basis.

Front 47

cost assignment

Back 47

occurs after costs have been accumulated and measured.

total product cost/number of units produced

Front 48

unit cost =

Back 48

total product cost/number of units produced.
used in manufacturing firms to value inventory, determine income, and inform decision making
made up of dm, dl and oh

Front 49

over head

Back 49

applied using predetermined rate based on budgeted oh costs and budgeted amount of driver. ie units produced, dl hours, dl dollars
should be a cause and effect relationship

Front 50

activity level

Back 50

must be predicted for the coming year to calculate predetermined oh rate.
reflective of consumer demand, and reflective of production capabilities.

Front 51

theoretical activity level

Back 51

operating at top of relative range, assuming perfection. no downtime, no inventory shortages

Front 52

practical capacity

Back 52

allows for some imperfections and shortages. more realistic