Course Vocabulary
This is the process that allows decision makers to set and evaluate business goals determining what information they need to make a particular decision and how to analyze and communicate this information.
What is Managerial Accounting
Dollar amount or production level at which the company has recovered all variable and fixed costs.
What is break-even point?
The three categories of manufacturing costs listed on a Job Order Cost Sheet.
What are direct materials, direct labor and manufacturing overhead?
What is Manufacturing Overhead?
This term describes costs that change in total in direct proportion to changes in the level of activity.
What are variable costs?
This is the act of using another company to provide goods or services that your company requires.
What is outsourcing?
Amount by which a product's selling price exceeds its total variable cost per unit.
What is contribution margin?
An asset account that captures the costs of units of production that are not yet finished or completed.
What Inventory - WIP?
This is when the pre-determined overhead rate(s) are typical determined.
What is before the period starts?
This type of cost remains constant in total regardless of changes in the level of activity.
What are fixed costs?
This is the process of setting goals and objectives.
What is Planning?
Difference between current sales and break-even sales.
What is margin of safety?
This is a cost that is tied to a specific time period, such as a month, quarter, or year, instead of being associated with a particular job order.
What is a period cost?
At the end of a period, the manufacturing overhead account is closed out and the amount of over/under applied overhead is moved to this account.
What is Cost of Goods Sold?
This type of cost is directly traceable to a cost object, such as a product or department.
What are direct costs?
Activity that is the reason for the increase or decrease of another cost; examples include labor hours incurred, labor costs paid, or any other activity that has a cause-and-effect relationship with incurred costs.
What is a cost driver?
Quantitative range of units that can be produced based on the company's current productive assets; for example, if a company has sufficient fixed assets to produce up to 10,000 units of product, this would be between o and 10,000 units.
What is the relevant range?
What is Inventory - Finished Goods?
This cost is a systematic allocation of a capital asset's cost over its estimated useful life and it is included in manufacturing overhead.
What is depreciation?
This is the group of people that might benefit from understanding managerial accounting topics.
What is everyone?
These are products sold at a price that is often less than the cost of producing it in order to entice customers to buy accessories that are necessary for its use.
What is a loss leader?
This is the relative proportions of the products that a company sells.
What is the sales mix?
This is calculated by taking the estimated/budgeted overhead cost and dividing it by the expected/budgeted level of activity.
What is the predetermined overhead rate?
Many industries have reduced their use of this and replaced it with technology, which is why ABC costing is usually a preferred method of allocating overhead.
What is direct labor.
This term describes the other information that is important to evaluate along with the quantitative results from managerial accounting calculations.
What is qualitative information?