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15 Cards in this Set

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The Need for Cost Accounting
Cost accounting provides the detailed cost data that management needs to control current operations and plan for the future
The Need for Cost Accounting
Companies must control costs in order to keep prices competitive
The Need for Cost Accounting
In today’s global environment, cost information is more crucial than ever in remaining competitive.
Types of Businesses That Use Cost Accounting
Manufacturers (Ford, General Motors)
Merchandisers (WalMart, Kmart)
Wholesalers (Beverage Distributors)
For-profit Service Businesses (CPAs, Attorneys)
Not-for-profit Service Agencies (United Way, Red Cross)
The Manufacturing Process
This process involves the conversion of raw materials, direct labor, and factory overhead into finished goods.
Product quality is an important competitive weapon in manufacturing.
Many companies require their suppliers to be ISO 9000 certified
ISO 9000 Certification
The International Organization for Standardization created a set of five international standards for quality management, ISO 9000-9004.
These standards require that manufacturers have a well-defined quality control system and they consistently maintain a high level of quality.
Determining Product Costs and Pricing
Cost accounting is used to determine product costs and help with marketing decisions.
Determining the selling price of a product.
Meeting competition.
Bidding on contracts.
Analyzing profitability
Planning is the . . .
process of establishing objectives or goals for the firm and determining the means by which the firm will attain them.
Planning is effective if facilitated by . . .
Clearly defined objectives of the manufacturing operation.
A production plan that will assist and guide the company in reaching its objectives.
Control is the . . .
process of monitoring the company’s operations and determining whether the objectives identified in the planning process are being accomplished
Effective control is achieved . . .
through the following:
Assigning responsibility.
Periodically measuring and comparing results.
Taking necessary corrective action
Responsibility accounting is the . . .
assignment of accountability for costs or production results to those individuals who have the most authority to influence them.
Cost of Goods Sold

Merchandiser is . . .
Beginning merchandise inventory
Plus purchases
Merchandise available for sale
Less ending merchandise inventory
Cost of good sold
Cost of Goods Sold

Manufacturer is . . .
Beginning finished goods inventory
Plus cost of goods manufactured
Finished goods available for sale
Less ending finished goods inventory
Cost of good sold
Inventories for
Merchandiser is . .
Merchandiser
Current assets:
Cash
Accounts receivable
Mdse. inventory