Term
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Definition
field of accounting that provides economic and financial information for managers and other internal users for planning, controlling, and decision making purposes. |
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Term
Manufacturing Costs (Product Costs) |
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Definition
Direct materials: materials that can be conveniently traced to a product (wood in a table
Direct Labor: Labor costs that can be physically and conveniently traced to a product (assembly line workers in a plant)
Manufacturing Overhead: All costs of manufacturing a product other than direct materials and labor (factory utilities, indirect labor and materials) |
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Term
Non-Manufacturing Costs (Period Costs) |
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Definition
Selling Costs: All costs necessary to secure customer orders and get the finished product or service to their customer. (Sales commission, advertising, depreciation of goods)
Administrative Costs:All costs associated with the general management of the company as a whole (executive compensation, secretary salaries, depreciation of office building) |
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Term
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Definition
In total: Total variable cost increase and decrease in proportion to changes in the activity level
Per Unit: remains constant |
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Term
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Definition
In Total: Total fixed cost is not affected by changes in the activity level within the relevant range
Per Unit: decreases as the activity level rises and increases as the activity level falls |
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Term
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Definition
Mixed Cost = Fixed Cost + (Variable Cost X Level of Activity) |
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Term
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Definition
CM = Sales Revenue - Variable Expenses
(first used to cover fixed expenses) |
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Term
Contribution Margin Ratio |
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Definition
CM Ratio = CM / Sales
CM Ratio - CM per Unit / Price per unit |
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Term
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Definition
Level of which profit = 0
Sales - variable costs= CM - fixed expenses = profit |
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Term
Pre-Determined Overhead Rate |
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Definition
POHR = Estimated total manufacturing overhead cost / Estimated total amount of the allocation base |
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Term
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Definition
Product Costs: Direct Materials, Direct Labor, Variable Manufacturing Overhead
Period Costs:Fixed Manufacturing Overhead, Variable Selling and Administrative Expenses, Fixed Selling and Administrative Expenses |
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Term
Activity Based Costing Stages |
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Definition
1: Overhead costs are assigned to activity cost pools
2: Allocates overhead assigned to the activity cost pools to products or customers, using cost drivers |
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Term
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Definition
Cost that differs between alternatives |
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Term
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Definition
Can be eliminated (in part or in whole) by choosing one alternative over another |
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Term
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Definition
Always relevant. What you could be making |
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Term
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Definition
ROI = Net Operating Income / Average Operating assets |
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Term
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Definition
Increase Sales Reduce Operating Expenses Reduce Operating Assets |
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Term
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Definition
RI = Net Operating Income - (Average Operating Assets X Minimum Required ROR) |
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Term
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Definition
incorporates financial and nonfinacnial measures in an integrated system that links performance measurement and a company's strategic goals |
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Term
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Definition
= Cost + Markup
= (1+Markup Percentage) X Cost |
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