Managerial Accounting Exam 2 Flashcards

Terms Definitions
NOI / Sales
Informal Approaches to Pricing
Trial and Error
All fail to consider cost
Predatory pricing on international markets
Just-In-Time (JIT)
An inventory philosophy first pioneered by Toyota in which a product is manufactured just in time to fill customer orders. Companies adopting JIT are able to substantially reduce the quantity of raw materials and finished product kept on hand.
Product costs are also called inventoriable costs.
Product Cost or Period Cost ?

depreciation of cars used by sales people
receiving report
a written or electronic document listing the quantity and type of raw materials received in an incoming shipment; and the report is typically a duplicate of the purchase order without the quantity pre-listed on the form
subjective measures
less quantifiable and more judgmental in nature
Actual Costing
product costing using hte actual overhead costs occured
Direct Costs
Costs that can be identified specifically and exclusively with a given cost objective in an economically feasible way
practical standards
standards that allow for normal machine downtime and other work interruptions and that can be attained through reasonable, through highly efficient, efforts by the average worker.
Investing Activities
acquisition and disposal of noncurrent assets especially property, equipment, and investments
conversion cost
the cost of converting raw materials into finished goods
Direct Materials
Raw materials that can be physically and directly associated with manufacturing the finished product
sensitivity analysis
changes the assumptions on which the capital investment analysis relies and asses the effect on the cash flow patten (also called the what-if analysis)
flexible manufacturing system
A series of manufacturing machines, controlled and integrated by a computer, which is designed to perform a series of manufacturing operations automatically.
overapplied overhead
the amount of applied overhead in excess of actual units.
Product cost
all costs that are incolved in acquiring or making a product
The drive for some selected goal that creates effort and action toward that goal
material quantity variance =
(AQ-SQ) x SP

([actual quantity used]-[standard quantity allowed for the units produced]) x (standard price per unit)
the phase of accounting concerned with providing information to stockholders, creditors, and others outside the organization.
financial accounting
variable costs
cost that change in total in direct proportion to changes in volume
Period Cost
An expenditure or loss that is charged to the current period rather than as a cost of the products produced in that period.
observable quality costs
costs that are available from an organizations accounting records
target costing
The design of a product, and the processes used to produce it, so that ultimately the product can be manufactured at a cost that will enable a firm to make a profit when the product is sold at an estimated market-driven price. This estimated price is called the target price, the desired profit margin is called the target profit, and the cost at which the product must be manufactured is called the target cost.
fringe benefits
payroll costs in addition to the basic hourly wage
Normal cost system
A costing system in which overhead costs are applie to a job by multiplying a predetemined overhead rate by that actual amount of the allocation base incured by the job
management by exception
a system of management in which standards are set for various operating activities, with actual results compared to these standards. any differences that are deemed significant are brought to the attention of managment as "exceptions".
master budget
a summary of a company's plans in which specific targets are set for sales, production, distribution, and financing activities and that generally culminates in a cash budget, budgeted income statement, and budgeted balance sheet.
Process Costing
many units of a single product, same average cost per unit

DM + Conversion Costs
Traceable fixed cost
a fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated
residual income
net op. income - [(avg. op. assets) x (min. rate of return)]
What is the journal entry for materials requisition to the factory?
Work-in-Process Inventory xx
--------------Raw Materials     xx
Direct-Labor Costs
The wages of all labor that a company can trace specifically and exclusively to the manufactured goods in an economically feasible way
what is assigned in ABC costing?
manufacturing as well as non-manufacturing costs
variable costs, fixed costs, mixed costs
3 types of linear cost functions
Which of the following is a product cost: Depreciation on office equipment, insurance on corporate HQ, insurance on factory building, or hourly wages paid to office workers?
Insurance on Factory Building
Nature, Benefits, and Limitations of Forecasting
contributes to efficiency of an operation
better scheduling of staff
better stocking of inventory
better planning for renovations
the farther ahead the more uncertain
What are some examples of Operating Activities?
Depreciation Expense
Gain on sale of investment
Accounts Receivable
Prepaid rent
Accounts Payable
Salaries Payable
unearned revenue
income tax payable
loss on sale of equipment
Average Cost per unit = ?
     Total Product Costs
# of Equivalent Units Produced
the financial impact of operating at a level other than planned capacity is measured by
multiplying the difference in units by the unit contribution margin
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