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9 Cards in this Set
- Front
- Back
Cost Measurement Concepts:
Typically associated with internal reporting / managerial accounting (not GAAP / external). Financial accounting statements are typified by ______ and ______, managerial reports are typified by _______ and ______. Managerial reports directed towards internal users. Types of theoretical cost drivers: 1. ________ - dynamic factors that are helpful in managing short term costs (______, involvement of staff) 2. _______ - dynamic factors that are helpful in managing longterm costs (______, available technology) Types of Operational Cost Drivers: 1. _______ - based on a aggregate level of output (DL hours). Used in more _____ cost accounting systems 2. ______ - based on an activity that adds value to output (packing, inspection, etc). Used in more _____ cost accounting systems |
conservatism; historical cost
usefulness; future orientation 1. Executional; relationships with suppliers 2. Structural; experience 1. Volume based; traditional 2. Activity based; contemporary; |
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OH allocation:
While direct costs and cost drivers (DL hours, etc.) are obvious, OH costs are indirect and must be applied on some basis. OH can be allocated based on certain _______ (called _______) or with different cost drivers for different ______ (ABC). Cost objects - activities that serve as basis for management's decision making. First want to ______ the product/inventory. Then _____ to budget/standards (known as cost ____) Prime Costs = _____ Conversion Costs = ____ Product Costs = All Costs associated with manufacture. Not expensed until sold (______ cost). Components are: DM, DL & _______ Period Costs: _______ - these are expensed (______, ______). The rent on the office building, NOT the factory. |
cost drivers; allocation bases;
production departments; inventoriable cost; OH applied; non-manufacturing; SG&A; interest costs Value; compare; control; DM/DL DL/OHD |
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Objectives of Cost Accounting Systems:
a. _______ b. _______ (compared to standards) c. _______ (profitability) Tracing Costs to Cost Objects: Direct Costs - _____ Traceable (DM - materials purchased less freight-in, scrap, etc. DL - salary plus reasonable down time) Indirect Costs: ______ Traceable. (Indirect M - replacement machine parts, cleaning supplies. Indirect L - Engineers, Janitors, etc - supports the manufacturing process. OTHER Indirect Costs - Insurance, Depreciation, Property Taxes, etc related to the FACTORY). These Indirect Costs - as long as related to factory - are applied to OHD, not period costs Indirect Costs are allocated to cost objects (final product) using cost drivers that are considered to have strong relationship. |
a. Product Costing
b. Efficiency Measurements c. Income determination; Easily Not Easily; |
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Direct relationship b/w prime costs and _____ (ie these are ______). Manufacturing OH - the Indirect Costs and both _____ and ______ costs
_______ costs - 'step' costs - variable with incremental changes in capacity. |
volume; variable costs;
fixed; variable; semi-variable; |
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Standard Costs - should be based on attainable performance
A. Stand. Cost unit - as ____ as possible. B. # of units - as ____ as possible (get average FC/unit down) Standard Direct Costs = Standard Price x Standard Q Standard Indirect Costs = Standard Application Rate x Standard Q Purposes for Standard Costing A. Cost Control B. Performance Evaluation C. |
low; high;
C. Improve Processes |
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Joint Product Costing (start off the same for 2 products then differentiate).
__________ - point in which the products can be recognized as individual. _________ - costs incurred up to the split off point _______ - minor products of small value that result from main products (generally only allocated joint product costs to main products) _______ - Costs after the split off point How to allocate joint costs? 1. Unit Volume method. Based on number of each product made - simple 2. _______ method. ___ is sales price less ______ & ______. Allocate based on this. If prices not available, work backwards to find the NRV at split off. (do examples) By-product revenue accounting can take 1 of 2 forms: 1. Decrease __________ (either at time of production or sale) 2. Increase __________ |
split off point
joint product costs; by-products; separable costs; 2. NRV method; NRV; costs to completion; disposal costs; 1. Joint Product Costs 2. Misc. Income; |
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Cost Accumulation Systems:
1. _______ - custom products - cost allocated to each specific job ('sequential'). Use docs that show materials requested (______) and timecards. Requires limited WIP accounts 2. _______ - homogeneous products SEE PAGE 20 for examples + know 5 steps! 3. _______ - uses both 1&2 4. _______ - accounts for costs at the end of the process |
1. job costing; materials requisition;
2. process costing 3. operations costing 4. back-flush costing |
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I. Raw Mat. BI
+ _______ = _______ - ________ = _______ II. DM + ____ + ____ = Total Manufacturing Costs III. Begin Inv - WIP + _________ = Total Manufacturing Costs Available - _______ = _______ V. Finished Goods - BI + _______ = _________ - ________ = _______ *Retailers add net purchases on last one |
Raw Materials Purchases
=RM Available for use - EI - Raw Materials = DM Used DL OHD applied Total Manufacturing Costs WIP - EI COGM CoGM Goods available for sale FG - EI CoGS |
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Application of OHD:
Step 1. _______ = _______ / Estimated ________ Step 2. _______ = ________ x _______ |
1. Calculate OHD rate = Budgeted OHD Costs / Est. Cost Driver
2. Apply OHD = OHD rate x Actual Cost Driver |