Gb 212 Exam 2

Front 1

Managerial Accounting (purposes)

Back 1

Internal and External transactions for future, planning directing and deciding, rules set by management and IMA, not required, reported only as needed, cost-benefits

Front 2

Financial Accounting (purposes)

Back 2

Externally reported to investors/stakeholders/SEC, based on historical info, rules set by GAAP and SEC, required by SEC, annually and quarterly reported, determines worth of investment

Front 3

Managerial Ethics (4 Necessary parts and info)

Back 3

Managers must follow IMA, must avoid and report fraud to directors, avoid and stop any padding in the budget
COMPETENCE
CONFIDENTIALITY
INTEGRITY
CREDIBILITY

Front 4

Cost-Benefit Analysis

Back 4

HELPS MAKE A DECISION! PV of FV benefits to determine compare costs, outcomes can be different. QUANTITATIVE and QUALITATIVE.

Front 5

Quantitative Benefits

Back 5

$$$$ and more inventory sold

Front 6

Qualitative

Back 6

Customer service increased and loyalty gained

Front 7

Cost Object

Back 7

the object being measured ie) materials, hours, units, etc.

Front 8

Cost Driver

Back 8

(Price)/(cost rate)

Front 9

Direct Costs

Back 9

Measurable and traceable to a cost object

Front 10

Indirect Costs

Back 10

untraceable to a cost object, but have an affect on VC or mixed costs

Front 11

Relevant Costs

Back 11

future oriented and can be changed

Front 12

Irrelevant Costs

Back 12

focuses on past costs that were paid off and will not recur

Front 13

Period Costs

Back 13

not related to the manufacturing of a cost object, but rather is considered overhead

Front 14

Product Costs

Back 14

related directly to the manufacturing of a product. factory costs, direct material costs, direct labor, electricity in factory, depreciation of the building, factory janitor. NOT: corporate building, corporate salaries, sales commissions, etc.

Front 15

Cost of Goods Sold (Calculation steps)

Back 15

Beginning inventory
+purchases
=Cost of goods available
-ending inventory
=COGS

Front 16

The importance of Overhead Allocation

Back 16

decision-making advice
efficiency w/ resources

identify indirect costs and measure them in order to eliminate waste and reduce use of resources; allows managers to allocate funds not only to the direct, traceable costs BUT ALSO to the indirect costs that have been incurred historically and will be incurred again

Front 17

Plantwide Overhead

Back 17

(total estimated cost of managerial overhead)/(allocation base)

Front 18

Departmental Overhead

Back 18

(est dept cost)/(allocation base)

Front 19

ABC Costing

Back 19

1. Identify Activities and MOH of each
2. Select allocation bases for activities and estimate a total for the activity
3. (Estimated total indirect cost of activity)/(Estimated total quantity of cost allocation base)

Front 20

Contribution Margin Income Statement

Back 20

Sales Revenue
-total Variable Costs
=CONTRIBUTION MARGIN
-total Fixed Costs
=Operating Income

Front 21

Contribution Margin in $

Back 21

Sales Revenues - Total VC

Front 22

Unit Contribution Margin

Back 22

Sales Price per unit - cost per unit
OR (sales revenue)/(Total Units sold) - (Total VC)/(UNITS PRODUCED)

Front 23

Contribution Margin (purpose)

Back 23

to show how much revenue is remaining to pay off fixed costs; (for ratio) to determine what percent of revenue contributes towards paying for variable costs

Front 24

Contribution Margin Ratio

Back 24

(CM in $)/(Revenues)

shows how much $ is remaining to pay off Fixed Costs

Front 25

Break-Even Point (purpose)

Back 25

the number of units necessary to break-even

revenues and costs are EQUAL
profits are 0

Front 26

Break-Even Point (units)

Back 26

Fixed Expenses=(Sales Price per unit - Cost per Unit)

(Fixed Expenses)/(CM)

Front 27

Break-Even Point ($)

Back 27

(Total Fixed Expenses in $)/(CM Ratio)

Front 28

Margin of Safety (calculation and purpose)

Back 28

(expected sales) - (break-even point)

tells managers how much sales can drop before reaching the break-even point

Front 29

Operating Leverage (calculation and purpose)

Back 29

(CM)/(Operating Income)

tells how much more revenue is available in relation to operating income, shows how much revenue as a % is being spent on fixed costs