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Cost Test 14

Terms in this set (32)

(Management Accounting and Control Systems)

Includes:
-control
-management accounting and control sustem
-operational control
-short term financial control
-variances
(Management Accounting and Control Systems)

Control: a set of procedures, tools, and systems organizations used to ___________ activities and reach their goals.
-monitor
(Management Accounting and Control Systems)

Management accounting and control system: is an organization core _____________________.
-performance measurement system
(Management Accounting and Control Systems)

Operational Control: is part of the control system that focuses on ________________. Relates to the control of basic business processes (or activities)
-short term operational performance
(Management Accounting and Control Systems)

Short Term Financial Control: shows the comparison between ________________.
-actual and budgeted financial results
(Management Accounting and Control Systems)

Short Term Financial Control: creates a
-Flexible Budget Schedule
(Management Accounting and Control Systems)

Variances are the
-differences between budgeted amounts and actual financial results.
(Short Term Financial Control)
Involves:
-actual results
-Master (static budget)
(Short-Term Financial Control)

Actual Results are prepared at the __________ of the period. (After actual activity is known)
-end
(Short Term Financial Control)
Actual Results consists of
-actual sales volume is used, along with actual selling price per unit, actual variable cost per unit and actual total fixed cost.
(Short Term Financial Control)

Master (static) budget is prepared __________ the start of the period.
-before
(Short Term Financial Control)

Master (static) Budget contains:
-budgeted sale volumes, price, variable cost (DM, DL), fixed costs
(Short Term Financial Control)

Master (static) budget variance =
master budgeting operating income-actual operating income.
(Short Term Financial Control)

The master (static) budget variance can be subdivided into the following component variances.
-flexible budget variance
-sale volume variance
(Short Term Financial Control)

The master (static) budget variance key tool is:
-use of standard cost and flexible budgets.
(Short Term Financial Control)

Flexible Budget is prepared ____________ of the period (actual activity is known)
-at the end
(Short Term Financial Control)

Flexible Budget uses
-actual sales volume
(Short Term Financial Control)

Flexible Budget uses actual sales volume, but with
-budgeted selling price per unit
-budgeted variable cost per unit
-budgeted total fixes costa
(Short Term Financial Control)

Flexible Budget is key to performing _____________ at the end of the period.
-variance analysis.
(Common Causes of DM variances)
-price and usage variances
(Common Causes of DM variances)

Price Variances can include
-purchase of materials of a different grade
-quantity discounts
-freight/delivery expediting cost( rush orders)
(Common Causes of DM variances)

Usage variances can include
-purchase of nonstandard quality material
-poorly trained or pools supervised workers
-poorly maintained machinery
(Common Causes of DL Variances)
Consists of
-rate and efficiency variances
(Common Causes of DL Variances)

Rate variances include:
-labor substitution
-out of date standards (new labor contract)
(Common Causes of DL Variances)

Efficiently variances includes
-poorly trained workers
-poor quality raw materials used in production
-poorly maintained equipment
-poor supervision of workers
-out of date standards
(Standard Cost)

Costa that should be ____________ under efficient operating conditions.
-incurred
(Standard Cost)

Standard Cost system- an accounting system in which _______ not actual, cost flow through the formal accounting records
-standard
(Standard Cost)

Regardless if standard cost are used, standard cost can be useful at the end of the period for
-financial control purposes (conducting variance analysis)
(Standard Cost)

Types of standards
-ideal (perfection) standard
-continuous improvement standard
-currently attainable standards
(Standard Cost)

Standards setting procedures:
-authoritative standards
-participative standards
(Standard Cost)

Standard cost sheet contains both __________\.
price and quantity component of each cost
The difference between actual operating income and master budgeted operating income =
Master budget variance
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