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Accounting 202 FINAL!
Terms in this set (39)
what is total cost
fixed cost+ variable cost
what is financial accounting
- financial statements that will be used by investors and creditors investment and lending decisions
- GAAP external parties during the previous period
-SEC audited by independent certified public accountants
what is managerial accounting
- there are no GAAP- type standards or audits required for it
- most reports focus on the future, providing relevant information that helps managers make profitable business decisions
Stuff taken from earth, completed products from other people. Ex: radio put in a car
Work on the shop floor but isn't completed; stages of completeness
All resources used to add value to a product or service
How many inventories does a manufacturers have?
1. raw materials
2. work in process
3. finished goods
How many inventories does a service company have?
How many inventories do merchandising company have?
1= finished goods
Costs that can be traced to individual items (labor and materials)
costs at a manufacturing plant that doesn't affect the products
Usually non- factory overhead
Ex: accountant working from home for a factory
the primary materials that become a physical part of a finished product
Direct Materials: work in process> finished goods> cost of goods sold
method of assigning costs to various products/ projects.
Determine full costing
an allocation rate that is used to apply the estimated cost of manufacturing overhead to cost objects for a specific reporting period.
Predetermined Manufacturing Overhead rate
Over allocated= decrease in COGS expense
Under allocated= increase COGS expense
tells managers whether more or less was spent on variable overhead than expected given the actual machine hrs run
variable overhead spending variance
measures the difference between the actual ___ costs incurred and the ____
Specifically looks at whether the company spent more or less than anticipated on ___
fixed overhead spending variance
tells managers how much of the total variance is due to using a larger or smaller quantity of direct materials than expected
Direct Materials Quantity Variance
tells managers how much of the total labor variance is due to greater or lesser amount of time than anticipated
Direct Labor efficiency variance
the difference between the actual variable MOH cost incurred during the period & the amount of variable MOH expected considering the actual hrs worked
Variance overhead rate variance
when it is ___ than anticipated, the variance will be ___
When production volume is ___ than anticipated the fixed overhead volume variable will be ____
a ratio that compares your company's contribution margin, or gross margin, to sales
contribution margin percentage
How variable costs change as volume changes
Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units
How do variable costs change as volume changes
total variable costs change in direct proportion to changes in volume, but the variable costs per unit remains unchanged.
What is a breakeven point?
To determine the amount of remaining capacity after the breakeven point is reached, which tells you the maximum amount of profit that can be generated.
To determine the impact on profit if automation (a fixed cost) replaces labor (a variable cost)
To determine the change in profits if product prices are altered
To determine the amount of losses that could be sustained if the business suffers a sales downturn
costs that have already been incurred, nothing you do now can change the fact that you already bought something
the profit lost when one alternative is selected over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision.
a managerial accounting term that describes avoidable costs that are incurred when making business decisions
is used to eliminate unnecessary data that could complicate the decision-making process.
A ______ is a subunit of a company that is responsible only for its costs.
A ______ is a budget that adjusts or flexes for changes in the volume of activity. The ____ t is more sophisticated and useful than a _______, which remains at one amount regardless of the volume of activity.
Method for analyzing capital investments
post investments- future cash flow
payback, net present value, IRR
Management by exception
comparing budgets/ look at largest or smallest variances
Cash Flow Statement
1. operating--> most important
based on the idea that what has happened in the past gives traders an idea of what will happen in the future. There are three main types of trends: short-, intermediate- and long-term.
compares income statements to net sales
% of total assets and debts
looks at amounts on the financial statements over the past years
What is benchmark
a process for improving some activity within an organization
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