Vocab
Cost that had already been paid and cannot change
Sunk cost
(Give me an example)
Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued
Period costs
The primary goal of Managerial accounting is to provide measurement skills that management use to support _____________, ______________, and ______________
planning, controlling, and decision making
If I have an increase in volume (LoA), what impact will that have on my per unit fixed cost and per unit variable cost
Per unit fixed cost: decrease
Per unit variable cost: constant
A contribution format IS is organized based on _______________, while a traditional format IS is organized based on _____________
contribution format= Behavior
traditional format= function
(What does it mean that the contribution format is organized based on behavior?)
The way in which a cost changes based on a change in the Level of Activity (LoA/volume)
Cost behavior
(What are the 2 parts?)
A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs
Cost Driver (aka allocation base)
(What equation have we learned that uses # of cost driver units?)
The 3 parts of the 3 legged stool are ______________, ________________, and ________________
direct material, direct labor, and manufacturing overhead
If I have an increase in volume (LoA), what impact will that have on my total fixed cost and total variable cost
Total fixed cost: constant
Total variable cost: increase
To prepare for an exam I pull an all nighter. The sleep I did not get is an example of an __________________
Opportunity Cost
(What differentiates an opportunity cost from a sunk cost?)
A cost that can be easily and conveniently traced to a specified cost object.
Direct cost
(what are examples of direct costs?)
A costing system used in situations where many different products, jobs, or services are produced each period
Job Costing
(What are examples of products created through job costing?)
Selling, General, and Administrative costs are considered ___________ costs
Period costs
(Period costs = SG&A, where do all other costs fall?)
Why do we need to calculate a PDOHR?
We won't know the actual OH until the end of the period, so we need to estimate
If the applied OH was 100,000 but the actual OH was 120,000 OH, what impact will that have on our ending NI?
NI decreases by 20,000
(Did we over or under apply OH to the job?)
A cost that cannot be easily and conveniently traced to a specified cost object.
Indirect cost
(what part of product cost is this? Give me an example)
A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period
Predetermined Overhead Rate (PDOHR)
(What is the PDOHR equation?)
What is the difference between a plantwide and departmental approach to OH?
Plantwide = single PDOHR
Departmental = Multiple PDOHR
(What do y'all think this would look like?)
The costs of prescription drugs administered to patients by nurses in a hospital is an example of what cost?
Direct Material
(What is the nurse?)
What is the equation to calculate applied OH?
PDOHR * ACTUAL # of cost driver units
(What are 2 common cost driver units?)
All manufacturing costs other than direct materials and direct labor
Manufacturing overhead
The amount remaining from sales revenues after all variable expenses have been deducted.
Contribution Margin
(What type of income statement will show CM? Can you write it out?)
What part of product costs is an indirect cost?
Manufacturing overhead
Draw out the 2 graphs showing cost behavior on a per unit and total basis (with labels).
Per Unit: FE \ , VE --
Total: FE -- , VE /
What type of accounting is for internal use and is not required?
Managerial Accounting
(What are other characteristics that differentiate managerial from financial accounting?)