managerial accounting
the process of generating and communicating accounting information about operating, investing and financing activities for internal use by managers
financial accounting
the process of generating and communicating accounting information in the form of financial statements to those outside the organization
direct costs
costs that can be measured conveniently and economically by tracing them to a cost object
indirect costs
costs that cannot be measured conveniently and economically by tracing them to a cost object
period costs
costs of resources that are not assigned to products
product costs
include direct materials, direct labor, and overhead
product unit costs
cost of manufacturing a single unit of a product
service unit cost
cost to perform one service
direct materials costs
the costs of materials that can be conveniently and economically measured when making specific units of the product
direct labor costs
the costs of the hand-on labor needed to make a product or service that can be measured when making specific units
overhead costs
costs that cannot be practically or conveniently measured directly to an end product or service
indirect materials costs
the costs of materials that cannot be conveniently and economically traced to a unit of the product or service
indirect labor costs
the costs of labor for production-related activities that cannot be conveniently or economically traced to a unit of the product or service
prime costs
the primary costs of production
conversion costs
the costs of converting or processing direct materials into a finished product
variable costs
cost that changes in direct proportion to a change in productive output (or some other measure of volume)
fixed costs
cost that remains constant within a defined range of activity or time period
value-adding cost
the cost of an activity that increases the market value of a product or service
non-value-adding cost
the cost of an activity that adds cost to a product or service but does not increase its market value
manufacturing cost flow
flow of direct materials, direct labor and overhead through the Materials inventory, WIP, and Finished Goods Inventory into the Cost of Goods Sold account
Materials inventory account
shows the balance of the cost of unused materials
-shows the cost of materials that have been purchased but not used in the production process
Work in Process inventory account
shows the manufacturing costs that have been incurred and assigned to partially completed units of product
Finished Goods inventory account
shows the costs assigned to all completed products that have not been sold
total manufacturing costs
the total costs of direct material, direct labor, and overhead incurred and transferred to the WIP during a period
cost of goods manufactured
the cost of all units completed and moved to Finished Goods inventory during a period
cost of goods sold
the cost of all units sold during a period that move out of Finished Goods Inventory
statement of cost of goods manufactured
summarizes the flow of all manufacturing costs incurred during the period
actual costing method
uses the actual costs of direct materials, direct labor, and overhead to calculate the product unit cost
normal costing method
combines the easy-to-track actual direct costs of materials and labor with estimated overhead costs to determine a product unit cost
standard costing method
uses estimated or standard costs of direct materials, direct labor, and overhead to calculate the product unit cost
Fixed cost remains constant within a defined range of activity or time period
True
Managers use managerial accounting principles to guide their actions and decisions in the management process
True
Managerial accounting's main emphasis is on full and accurate for a disclosure of a company's operating results
False
The cost of marketing and delivering a product are recorded to WIP account
False
The overriding goal of a business is to increase the value of the stakeholder's interest in the business
True
Reporting format of managerial accounting is flexible and driven by user's needs
True
Management accountants who alter reports to meet targeted levels of performance are not acting unethically, because their job is to provide information that will aid in communicating the goals of the business
False
All ethical conflicts are resolved by the accountant of a company
False
Accounting rules applicable to management accounting are the same as those used for financial accounting
False
Period costs are charged against the revenue of the current period
True
Cost of sugar is an indirect cost in the manufacture of candy bars
False
Direct costs can be conveniently traced to a cost object
True
goal/vision
to increase the value of the stakeholders' interest in the business
mission statement
the fundamental way in which the company will achieve this goal/vision vision
strategic objectives
broad, long-term goals that determine the fundamental nature and direction of a business and that serve as a guide for decision making
tactical objectives
mid-term goals that position an organization to achieve its long-term strategies
operating objectives
short-term goals that outline expectations for the performance of day-to-day operations
business plan
a comprehensive statement of how a company will achieve its strategic, tactical, and operating objectives
budget
must include a forecasted income statement, a forecasted statement of cash flows, and a forecasted balance sheet
supply chain
the path that leads from the suppliers to the final consumer