Managerial Accounting

Front 1

Balanced Scorecard

Back 1

• Includes financial and nonfinancial performance measures (Standard costs, income measures, ROI, and residual income are financial) (Defect rates, cycle time, on-time deliveries)

Front 2

Controllability Concept

Back 2

• Crucial to responsibility accounting system. Managers should be evaluated based on revenues or costs they control

Front 3

Cost-based transfer price

Back 3

• Least desirable, removes profit motives. Some companies base the transfer price on variable costs, others use full cost (variable + allocation rate of FC)

Front 4

Cost Center

Back 4

• an organization unit that incurs expenses but does not generate revenue

Front 5

Decentralization

Back 5

• delegating authority and responsibility

Front 6

Investment Center

Back 6

• Managers are responsible for revenues, expenses, and the investment of capital

Front 7

Management by Exception

Back 7

• Concentrating funds to areas that are lacking

Front 8

Margin

Back 8

• A measure of management’s ability to control operating expenses relative to the level of sales

Front 9

Market-based transfer prices

Back 9

• Are preferable because they promote efficiency and fairness (motivate managers to use their resources efficiently)

Front 10

Negotiated transfer price

Back 10

• Can be more beneficial, preserves the notion of fairness, should be the first alternative to market transfer pricing

Front 11

Profit Center

Back 11

• Incurs both costs but also generates revenue

Front 12

Residual Income (RI)

Back 12

• Measures a manger’s ability to maximize earnings above some targeted level

Front 13

Responsibility Accounting

Back 13

• Focuses on evaluating the performance of individual managers

Front 14

Responsibility Center

Back 14

• An organization unit that controls identifiable revenue or expense items

Front 15

Responsibility Report

Back 15

• Is prepared for each manger who controls a responsibility center. The report compares the expectations for the manager’s responsibility center with the center’s actual performance

Front 16

Return on Investment (ROI)

Back 16

• The ratio of wealth generated (operating income) to the amount invested (operating assets) to generate wealth

Front 17

Suboptimization

Back 17

• Managers that choose to benefit themselves at the expense of their corporations

Front 18

Transfer Price

Back 18

• Will increase the selling division’s earnings and decrease the purchasing division’s earnings

Front 19

Turnover

Back 19

• A measure of the amount of operating assets employed to support the achieved level of sales

Front 20

Absorption (Full) Costing

Back 20

• Require that all product costs, both variable and fixed , be reported as inventory until the products are sold, when the product costs are expensed as COGS.

Front 21

Applied Overhead

Back 21

• Require that all product costs, both variable and fixed , be reported as inventory until the product s are sold, when the product costs are expensed as COGS.

Front 22

Finished Good Inventory

Back 22

• Includes completed products that are ready for sale

Front 23

Manufacturing Overhead Account

Back 23

• Temporary asset account

Front 24

Overapplied Overhead

Back 24

• If more overhead has been applied than was actually incurred

Front 25

Predetermined Overhead Rate

Back 25

• Overhead allocation that is before the actual overhead costs are known

Front 26

Raw Materials Inventory

Back 26

• Lumber, Metals, Paints, and Chemical that will be used to make the companies product

Front 27

Schedule of Cost of Goods Manufactured and Sold

Back 27

• Shows the overall cost of goods manufactured and sold, the final total on the schedule (COGS) is disclosed

Front 28

Underapplied Overhead

Back 28

• Less overhead was applied than was incurred

Front 29

Variable Costing

Back 29

• Inventory includes only variable product costs, the income statement is presented using the contribution margin approach, with variable product costs subtracted from sales revenue to determine the contribution margin

Front 30

Work in Process Inventory

Back 30

• Includes partially completed products

Front 31

Cost Per Equivalent Unit

Back 31

• Used to allocate the total cost incurred
• CPEU = Total Cost / Number of Equivalent Whole Units

Front 32

Equivalent Whole Units

Back 32

• A rational allocation requires converting partially finished into equivalent “whole” products

Front 33

First-In, First-Out (FIFO) Method

Back 33

• Accounts for the degree of completion of both beginning and ending inventory, but it is more complex to apply

Front 34

Hybrid Costing System

Back 34

• Combine features of both process and job-order costing systems

Front 35

Job Cost Sheet

Back 35

• Product costs for each individual job are accumulated on this. AS each job moves through production, detailed cost information for materials, labor, and overhead is recorded on the job cost sheet

Front 36

Job-Order Costing System

Back 36

• Accumulate costs by individual products

Front 37

Material Requisition Form

Back 37

• Before starting a job, the job supervisor fills this out, which lists materials needed to begin work, authorization of raw materials to be release form storage to production

Front 38

Process Costing System

Back 38

• Allocate costs evenly to homogenous products

Front 39

Transferred-In Costs

Back 39

• Costs that are transferred to one department to another. They are combined with the additional materials, labor, and overhead costs

Front 40

Weighted Average Method

Back 40

• Does not account for the state of completion of units in beginning inventory, equivalent units are computed for ending inventory only

Front 41

Work Ticket

Back 41

• “Time Card” provides space for a job number, employee id, and work description. Records the amount of time spent on each project