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

1/30

Click to flip

30 Cards in this Set

  • Front
  • Back
Relevant Information
1. differs among the alternatives under consideration
2. is future oriented
sunk cost
incurred in past transactions; not relevant for current decisions
Relevent (differential) revenues
1. future oriented
2. differ for alternatives under consideration
relevant (avoidable) costs
Unit-level activities (avoid by elim. 1 u of product)
Batch-level activities (elim 1 batch)
Product-level (elim product line)
Facility-level (avoid some costs if production line is elim.)
Unit-level costs
direct mat. and labor
inspections
packaging
ship and handling
Product-level costs
Quality inspection costs
engineering design costs
costs of obtaining and defending patents
regulation compliance
inventory holding costs
Facility-level costs
rent/depreciation
administrative and training
property tax
insurance
maintenance
CGS

Segment and corporate level: unavoidable
opportunity costs
not cumulative; relevant
Special order
accept/reject
1. det amount rel. rev. earn by accepting
2. det. amt. rel. cost incurred by accepting
3. accept if rel. rev > rel. cost

*should come from outside normal sales; not apply to repeat business; reject if at full capacity
Outsourcing
1. det prod. costs avoid if outsource (not facility-lvl)
2. compare avoidable prod. costs w/cost of buying product and selecting lower lvl cost option
Negatives of outsourcing
decreases vertical integration
may use lowball pricing
quality
delivery
displease employees; lower productivity and loyalty
segment elimination
1. det amount rel. rev. that pertains to elim. division
2. det amt. cost avoid if elim division
3. if rel. rev is <= avoid cost, elim division

*disrupts employees lives
accept:
Special order
Outsource
Elimination
if affects:
unit, batch
u, b, p
u, b, p, f
Equipment replacement
1. det rel costs if keep
2. det costs incurred if purchase new
cost objects
products
processes
departments
activities
cost of accumulation
determines cost of objects
cost driver
cause/effect relationship
cost allocation

allocation rate
TC/cost driver x weight of driver = per/cost object
cost pool
accumulate many individual costs and then allocate to cost objects
joint costs

split off point
materials
labor
overhead

become separate
$ allocated based on rel. sales value at split-off point; positive gross margin
cost allocation of machinery use
allocate utility using machine hours
activity based cost driver (ABC)
1. costs assigned to pools based on activities that cause them to be incurred
2. costs allocated using a variety of drivers
Budgeting
planning of financial matters
Strategic planning
long –term planning/overall objectives
o Which products to manufacture and sell and which market niches to pursue
Capital budgeting
intermediate investment planning
Operations budgeting
short-term, used to create master budget
Master budget
detailed objectives; one year
Supports planning, coordination, performance, measurement, and corrective action
Participative budgeting
subordinate participation in process; encourages more realistic goals
Operating budget
detailed schedules and budgets
-Sales budget and schedule of cash receipts
1: Projected sales/month: cash sales + sales on account = total budgeted sales
2: Schedule of cash receipts for projected sales: Current cash sales + collection of accounts receivable = total budgeted collections
Pro forma financial statement data: Total accounts receivable balance and total budgeted sales (revenue; sum of total monthly amounts)
Inventory purchases budget
1: projected purchases: budgeted C/GS + desired ending inventory (x% times following month’s C/GS) = total inventory needed less beginning inventory (EI of previous month) = Required purchases (on account)
• 2: schedule of cash payments for inventory purchases: Pay x% of current month acct. pay. + x% of prior month acct. pay. = total budgeted disbursements for inventory
• Pro forma: Total C/GS (Sum of monthly C/GS), EI as of final date (EI in final month), Acct. Pay (remaining x% to be paid in following month)
1: projected purchases: budgeted C/GS + desired ending inventory (x% times following month’s C/GS) = total inventory needed less beginning inventory (EI of previous month) = Required purchases (on account)
2: schedule of cash payments for inventory purchases: Pay x% of current month acct. pay. + x% of prior month acct. pay. = total budgeted disbursements for inventory
Pro forma: Total C/GS (Sum of monthly C/GS), EI as of final date (EI in final month), Acct. Pay (remaining x% to be paid in following month)