Managerial Accounting

Front 1

Sales minus Cost of Goods Sold =Gross Profit

Back 1

Beginning Inventory of Finished Goods +Cost of goods Manufactured minus Ending Inventory of Finished Goods =Cost of goods sold

Front 2

Beginning Inventory of Raw Materials +Raw Materials Purchases minus Ending Inventory of Raw Materials equals Raw Materials Used

Back 2

Predetermined Overhead Rate times Actual Units of Cost Driver =Applied Overhead

Front 3

Beginning Work in Progress Inventory +Raw Materials Used +Direct Labor minus Ending Work In Progress Inventory = Cost of goods Manufactured

Back 3

Estimated Overhead Cost (Total) divided by Estimated Units of Cost Driver =Predetermined overhead

Front 4

Fixed Costs + (Variable Cost times Units) =Total Overhead Cost

Back 4

When using high/low method, Variable costs = change in cost over change in volume

Front 5

sales minus cost of goods sold = gross profit minus s,g&a= net operating income is the Traditional Income Statement

Back 5

sales minus total variable costs = contribution margin contribution margin minus fixed costs = net operating income is the Contribution margin Income Statement

Front 6

Sales Price minus Total Variable Costs (selling, general, administrative and manufacturing) =Contribution margin

Back 6

Contribution margin divided by sales =contribution margin ratio

Front 7

fixed cost divided by contribution margin =break even

Back 7

contribution margin divided by net operating income =Operating Leverage

Front 8

present value of cash inflows minus present value of cash outflows=Net Present Value

Back 8

Projected sales +desired ending inventory minus beginning inventory =required production

Front 9

(actual sales price minus expected sales price) times actual volume =Sales Price Variance

Back 9

actual quantity times (actual price – standard price) =price variance

Front 10

actual fixed overhead minus budgeted fixed overhead = fixed overhead budget (spending) variance

Back 10

standard price times the difference between (actual quantity minus standard quantity) is the direct materials usage variance

Front 11

actual quantity times the difference between (standard price minus standard price) is the direct materials price variance

Back 11

direct labor efficiency variance = standard rate times the difference between actual hours minus standard hours)

Front 12

revenue minus variable costs minus traceable fixed costs = segment margin

Back 12

net operating income minus the result of (avg operating assets times minimum required rate of return) =residual income

Front 13

segment margin divided by sales is the

Back 13

sales revenue minus variable costs minus fixed costs = net operating income

Front 14

net operating income divided by average operating assets = return on investment

Back 14

value added time divided by manufacturing cycle time =manufacturing cycle efficiency

Front 15

current assets minus current liabilities =working capital

Back 15

current assets divided by current liabilities =current ratio

Front 16

current assets minus inventories minus prepaid assets = quick assets

Back 16

quick assets divided by current liabilities is the quick ratio (acid–test)

Front 17

net credit sales divided by average accounts receivable = accounts receivable turnover ratio

Back 17

total liabilities divided by stockholder's equity = debt to equity ratio

Front 18

cogs divided by avg inventory = inventory turnover ratio

Back 18

net cash provided by operating divided by avg current liabilities = ratio of cash flow from operations to current liabilities

Front 19

(net income plus interest expense plus income tax) all divided interest expense = times–interest–earned ratio

Back 19

net income minus preferred dividends all divided by avg number of common shares outstanding = earnings per share

Front 20

(cash flow from ops minus total dividends paid) divided by cash paid for acquisitions =ratio cash flow from operations to capital expenditures

Back 20

(net income + interest expense (net of tax)) all divided by avg total assets is the return on assets (ROA) ratio

Front 21

current market price divided by EPS = price earnings ratio

Back 21

Sales plus the Decrease or minus the increase in accounts receivable is cash collections from customers

Front 22

sales revenue plus beginning accounts receivable minus ending accounts receivable is cash collections from customers

Back 22

excess capacity must always be considered in special order decisions

Front 23

in the business environment knowledge is not the same as data or information

Back 23

ERP systems capture both qualitative and quantitative data

Front 24

decision makers should consider both quantitative and qualitative data

Back 24

the main focus of managerial accounting is decision making

Front 25

financial accounting is less flexible than managerial accounting

Back 25

managerial accounting is future oriented

Front 26

a company's strategic plan, like where to locate a new factory, looks at long term goals.

Back 26

operating deals with short term objectives like scheduling overtime and accepting custom orders

Front 27

relevant costs differ among alternatives and include opportunity costs

Back 27

irrelevant costs are future costs that do not differ among alternatives and include sunk costs

Front 28

manufacturing overhead is the cost of indirect expenses that can not be traced directly to a single product

Back 28

product costs are attach to products as they move through production

Front 29

period costs are non manufacturing costs expensed in the period they are incurred

Back 29

job costing accumulates, tracks and assigns costs for each job and is used for custom products.

Front 30

process costing accumulates, tracks and assigns costs for each process. assigns cost equally to each unit, best used for homogeneous products

Back 30

operations costing is a hybrid of job and process costing for jobs produced in batches

Front 31

product costing is accumulating, tracking and assigning production costs

Back 31

fringe benefits for direct labor are to be included in direct labor costs

Front 32

allocation looks for the cause and effect relationship is most often used for manufacturing overhead and is the process of logicallyassigning labor costs

Back 32

cost drivers are factors that cause debt

Front 33

absorption or full costing is required by GAAP, direct materials, direct labor and overhead equal product cost

Back 33

variable costing treats only variable costs as product costs. fixed and manufacturing costs are treated as period costs.

Front 34

a constraint is a production capacity that is limited

Back 34

resource utilization deals with how best to use a limited resource in the short term

Front 35

time value of money says that a dollar today is worth more than a dollar in the future. focus is on cash flows.

Back 35

excess capacity will always be considered in special order decisions.

Front 36

for special orders, managers must chose a price that accounts for qualitative and quantitative consequences as well as relevant costs

Back 36

vertical integration is accomplished when a company is involved in multiple steps in the value chain.

Front 37

discount rate is the minimum required rate of return for the investment to be considered profitable.

Back 37

Internal rate of return makes NPV = 0

Front 38

budgets are future oriented and is not a book keeping task

Back 38

zero based budgets are built from the ground up each year

Front 39

budgeting involves the input from a broad range of managers

Back 39

control includes ensuring the objectives and goals developed by the organization are being attained

Front 40

the usual starting place for developing a sales forecast are last year's sales. Before a sales budget is made, a sales forecast must be made

Back 40

The sales budget is the first step in the budgeting process

Front 41

production budget

Back 41

projected sales plus desired ending inventory minus beginning inventory

Front 42

a budget for a single unit of product or service is called a standard cost

Back 42

decentralized organizations grant managers buying desicions

Front 43

centralized organizations have a few people at the top making desicions

Back 43

responsibility accounting says managers should be responsible only for what they control

Front 44

revenue center mangers control revenue but not costs

Back 44

profit center managers control costs and revenue but not capital investments

Front 45

investment centers are also known as strategic business units and their managers are responsible for costs, revenue and investments

Back 45

common fixed costs cannot easily be traced to one segment.

Front 46

segment margin is the profit margin of a segment. indicates long term profitability.

Back 46

residual income is income earned in excess of predetermined minimum rate of return

Front 47

productivity is relationship of inputs and outputs

Back 47

manufacturing cycle time is the time it takes to produce a defect free product.

Front 48

analyzing financial statement balances over time is horizontal analysis

Back 48

financial analysis provides supplemental information not provided directly by financial statements

Front 49

financial statements prepared in accordance with GAAP use historical costs and are not adjusted for the effects of increasing products

Back 49

on common size income statements, net income should be stated as a percentage of sales revenue

Front 50

working capital is a measure of liquidity

Back 50

quick ratio is the best measure of liquidity

Front 51

solvency measures a company's ability to pay obligations as the come due

Back 51

on common size income statements all asset balances are shown as a percent of total assets

Front 52

the main purpose of the statement of cash flows is to provide information about a company's cash inflows and outflows over a period of time

Back 52

cash received from customers is classified in the operating portion of the statement of cash flows