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Accounting Final Definitions

Accounting Final Definitions - revenue expenses evaluate...

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Response Accounting An info. System that classifies data according to areas or responsibility and reports each areas activities by only including revenue, cost and resource categories that the assigned manager can control Response Centers Is an organizational unit whose manager has been assigned the responsibility of managing a portion of the organizations resources. The activity of a responsibility center dictates the extend of a manger’s responsibility. Cost Centers Do not generate revenue, objective to control costs, costs that are incurred are clear and well defined according to activities (manufacture/production), evaluate using DM + DL cost variants Discretionary Cost Center Do not generate revenue, objective to control costs, relationship between activities + cost incurred are not clear and well defined Revenue Center Job is to generate revenue, evaluate based on revenue generates- sales fleet- budget to actual sales Profit Center Generates revenue and incurs cost, evaluate
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Unformatted text preview: revenue- expenses, evaluate using variable costing income statement (cm income stmt) Investment Center Generates revenue, incurs cost and makes capital expenditures, evaluate using return on investment, residual income, economic value added Economic Value-added Shareholder wealth value added Residual Income Operating income earn about return on investment Cost of Capital Minimum cash amount that we are will to take Formulas: Actual AC=AQ X AP Standard SC=SQ X SP Price Variance PV=AQ(AP-SP) Qty Variance QV=SP(AQ-SQ) Total Variance PV+- QV=TV ROI Operating Income/((Beg Inv + End Inv/2)) Residual Income Sales-Oper Exp Oper Inc-(Desired ROI)((Beg Inv + End Inv/2)) =RI Economic Value Added Sales-Oper Exp Oper Incc-(Cost Capital)(Total End Assets-Current Liab) =EVA Flexible Budget Sales-DM DL VFO = CM –FC = Oper Inc Variable Costing Income Statement Sales-Variable COGS-Variable Sales/Sell =CM-Fixed Factory Overhead-Fixed Selling =Operating Income...
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