Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/40

Click to flip

40 Cards in this Set

  • Front
  • Back
Differences between managerial and financial accounting:

users
insiders vs. outsiders
Differences between managerial and financial accounting:

info type
economic and physical data vs. financial data
Differences between managerial and financial accounting:

level of organization
local info vs. global info
Differences between managerial and financial accounting:

regulation
none vs. SEC, FASB, and GAAP
Differences between managerial and financial accounting:

Info. Char.
Estimates vs. factual data
Differences between managerial and financial accounting:

time horizon/reporting frequency
continuous vs. past only
product costs
overhead
materials
labor

not expensed till good is sold
period costs
general operating costs
selling and administrative
interest
cost of income taxes
material costs
raw materials: inventory, CGS
direct: easily traced to raw materials
labor costs
selling and admin.
production wages (inventory then expensed) - direct labor
indirect costs
manufacturing overhead: indirect materials, labor, factory utilities, rent on facilities, depreciation on assets
cost allocation
TC/cost object
If expense is misclassified as an asset, then:
assets and NI are overstated, and income taxes are overpaid
Stadards of ethical conduct
competance
confidentiality
objectivity
upstream costs
before manufacturing process
downstream costs
transportation
advertising
sales commision
bad debts
Total Quality Management
Achieve zero defectects and achieve customer's satisfaction
Continuous improvement
Inventory Holding Costs
financing
warehouse space
supervision
theft
damage
Just In Time
Reduces inventory holding costs and increases customer satisfaction
Fixed costs:
When activity increases:
Total:
per/unit
constant
increases
Fixed costs:
When activity decreases:
Total:
per/unit
constant
decreases
Variable costs:
When activity increases:
Total:
per/unit
increased proportion
constant
Variable costs:
When activity decreases:
Total:
per/unit
decreased proportion
constant
Operating leverage
small change in revenue leads to BIG change in profit
once sales cover FC, each additional $ rep. pure profit
Calculation for % Change:
% change = (alternative measure - base measure)/base measure
Shift from FC to VC:

Expect:
rev to increase
rev to decrease
reduces risk and pot. for profit

use FC
use VC
Contribution Margin

Magnitude of Op. Leverage
amount available to cover FC and therefore provide profits

CM=Rev-VC

MofOL=CM/NI
X% change in rev will produce X%xOp. Leverage increase in profit
Affect of change in activity level on:
FC
VC
TC: constant
C/unit: changes in proportion

TC: changes inversely
C/unit: constant
relevant range
specific range of activity for FC
High/Low method of est. FC and VC:
1. assemble sales vol. and cost history
2. select high/low pts. in data set
3. det. est. VC/unit

VC/unit=change in TC/change in Vol

4. det est. TFC
FC=TC-VC
scattergraph method
draw visual fit line
slope: est. VC/unit
y-int: FC
Cost-volume profit analysis
changes in sales vol. are relevant to changes in sale price
Break-even vol/units
FC/CM per unit
Sales vol/units
FC+Desired profit/CM per unit
Decrease in profit leads to:
decrease in CM and increase in sales volume
Target pricing
det. market price at which the product will sell
margin of safety
cushion btwn budgeted sales and the break-even point
amount actual sales can fall before losses are incurred

MOS=Budgeted-BE/Budgeted
prestige pricing
pay more for a new product
profit =

CM ratio =
CM-FC

CM/sales
use to find BE in $=FC/CM ratio
Equation Method
selling price x # units = VC/unit x # units + FC + [desired profit]