Accounting 202

Acct

75 cards·by cecloud13

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Financial Accounting

External Users, Historical Perspective, Emphasis on objectivity and verfiability, emphasis on precision, Companywide, GAAP, external reports

Managerial Accounting

Internal Users, Future Emphasis, Relevance, Timeliness, Segment reports, No GAAP, not mandatory

Nonmanufacturing Costs

All out-of-pockets costs of the company that are not manufacturing costs. S Costs, R Costs

Direct Materials

Materials that become physically embodied in the products being manufactured, whose cost is sufficiently large to justify the expenses

Indirect Materials

Materials used in the manufacturing process that are not direct materials

Direct Labor

Employee time that is physically traceable to the products being manufactured,whose cost is sufficiently large to justify the expenses

Indirect Labor

Employee time used in the manufacturing process that is not direct labor

Overhead

All of the manufacturing costs other than direct labor and direct materials; this it includes indirect materials, indirect labors, and OH

Selling Costs

Costs incurred in getting orders from customers and providing customers with the finished product

Administrative Costs

Executive, organizational, and clerical that cannot logically be considered manufacturing or marketing costs

Product Costs

Costs assigned to products, which were either purchased for resale or manufacture for sale

Period Costs

Costs associated with the period in which they occur( not a particular product manufactured or acquired for resale during that period).

Prime Costs

Direct Materials and Direct Labor

Conversion Costs

Direct Labor and Overhead

Activity

A measure of an organization's output of goods or services

Variable Costs

Costs that vary,in total, directly and proportionately with the activity level, given a relevant range of activity

Fixed Costs

Costs that in total, do not change with the activity level, given a relevant range of activity

Mixed Costs

Costs that include a combination of variable costs and fixed costs items

Activity Base

A measure of what causes the incurrence of a variable cost e.g.) units produced, DLH, machine hours, miles driven

Job Order Costing System

A product costing system in which costs are assigned to batched,lots, job orders, or single units of production

Process Costing System

A product costing system in which production costs are averaged over a large number of identical product units

Predetermined OH Rate

Estimated total OH costs/ Estimated total amount of allocation base

Overhead applied to a job

OH Rate * Actual Use of allocation base

Underapplied Overhead

When overhead applied is less than actual overhead incurred during the period

Overapplied Overhead

When over head applied is greater than actual overhead incurred during the period

Equivalent Units of Output for a given input

The number of units of completed output that could have been produced using the same amount of the input

Weighted Average Method

Cost in BB + Costs added during the period/ Units finished + EU for unfinished units in ending WIP

Unit Related Activities

(Volume-Driven) Costs incurred, or activities used, every time the company makes one more unit of product (e.g. MH and DLH)

Batch Related Activities

Costs incurred, or activities used every time the company makes one more batch of the product

Product Sustaining Activities

Costs incurred, or activities used every time the company develops a new product

Organization-Sustaining Activities

Costs or activities that are necessary to be in business, but not costs associated with developing or making a particular product

Customer Level

Costs or activities related to a specific customers and are not tied to any specific product

Unit Related

EX Act. Every item inspection,Supervision of DL, Power and oil to run machines. Cost Driver: Number of units,DLH, MH

Batch Related

EX.Act. Machine Setup, First Item inspection, Purchase ordering, material, handling, production scheduling.

Batch Related Cost Drivers

Setup hours, inspection hours, number of orders, number of material moves, number of production runs

Product Sustaining

Ex Act. Product Design, Part Admin, Product testing. Cost Drivers: Number of products, number of parts, number of test

Organization Sustaining

Ex Act. Plant Management, training, Factory building depreciation. Cost Drivers: Square feet of space, number of workers, square ft of area

Customer Level

Act Ex. Sales Calls, Catalog Mailings. Cost Drivers: Number of sales calls,number of catalogs mailed out

Profit (NI)

Total revenues - total costs

Total Revenue

P * Q

Total Costs

VC * Q + F

Net Income

(P-V)*Q-F

Breakeven Analysis

Qb = $0 + F/ (P-V)

CVP Model With Two Products

NI = (Ps - Vs) * Qs+ (Pc- Vc) * Qc - F

Sales CVP Model

NI = (CM Ratio)(Sales) - F

CM Per Unit

P - V

CM Ratio

(P- V) / P = Total CM / Sales

Weighted Average CM per Unit

(CM/unit for good 1) * % for good 1 + (CM/units for good 2) * % for good 2

Operating Budget

Ordinarily Covers a one year period corresponding to a company's fiscal year. Many companies divide their annual budget into four quarters

Continuous or Perpetual Budget

A 12 month budget that rolls forward one month as the current month is completed

Sales Budget

Use predictions of sales quantities and selling prices to determine the expected sales revenue for the firm

Production Budget

For each of the firm's products, an estimate of the number of units that the firm plans to produce

Manufacturing Costs Budget

Predictions of the amounts and costs of the inputs necessary to manufacture predicted production quantities

SQI / Unit

The standard/budgeted/estimated amount of an input that is necessary to make one unit of output (e.g. yds of materials,DLH, MH for Variable

SPI / Unit

The standard/budgeted/estimatedprice/cost to acquire one unit of the input (e.g. price of one yd of material, wage rate per DLH, VOH / MH

Direct Materials Budget

Prediction of the amounts and costs of the direct materials the firm plans to purchase to manufacture predicted production quantities

Direct Labor Budget

Prediction of the number of hours and cost of the direct labor required to manufacture estimated production

Manufacturing OH Budget

Prediction of the manufacturing overhead costs required to manufacture the estimated level of production

S Expense Budget

Prediction of all costs required to get the product sold and delivered to the customer and costs of running central admin unit

Budgeted Income Budget

An estimate of earnings based on all of the numbers used in the above budgets

Flexible Budget

An estimate of what revenues and costs should have been,given the actual level of activity for the period

Activity Variances

The differences between the budget amounts (master budget revenues + expenses vs. flexible budgets revenues + expenses)

Revenue Variances

The difference between revenue based on actual level of activity and actual revenue (flexible budget revenue vs. actual revenue)

Spending Variance

The difference between cost based on actual level of activity and actual of activity and actual amount of cost (flexible Bud. Cost vs Act.)

Standard Cost

A measure of how much cost should be incurred to produce a unit of production

SQ / Unit

The estimated/budgeted amount of an input that is necessary to make one unit of output

Standard Price of Input

The estimated price to acquire an input

SQ for AO

Standard/Estimated amount of input required to make the actual units of output produced

Joint Products

Products that must, by the nature of the process, be produced or acquired together

Split-off Point

Point in the production process where the product becomes distinct or separate items

Joint Costs

All costs of processing the joint products up to the split-off point

Typical Cash Outflows

Initial Investment, Repairs and Maintenance, Working Capital, Incremental Operating Costs

Typical Cash Inflows

Incremental Revenues, Salvage Value, Release of working capital, reduction of costs

Payback Years

Net initial cash investment / Annual net cash inflow

Simple Rate of Return

Change in accounting income due to investment / initial net investment in the project