Accounting Flashcards
Horizontal analysis
Comparing the horizontal lines with each other from different balances beets
Vertical analysis
The change is expressed in percentage
Fixed costs
Cost not effected by the sales volume
Direct costs
Directly bound with a item - tangible
Indirect cost
Intangible
Overhead cost
All expenses not connected to a profit center
Controllable costs
A manager can control and able to keep
Differential costs
Costs which are different between two cases
Relevant costs
Costs which are important to consider while making a decision
Sunk costs
Past costs related to a past decision
Opportunity costs
The costs connected to the opportunity chosen
Incremental costs
The cost of producing one more unit, including the variable costs and the variable portion of the mixed costs
The indifference point
The level of activity at which the cost is the same under either a fixed cost option or a variable cost option
Discretionary costs
Do not effect current capacity and has less impact, easy to restore
Step costs
The same on the range, but different from range to range
Mixed costs
Tmc = fixed costs +( variable costs per unit * unit sales)
High/ low method
8 steps
Select two periods
Calculate the difference
Divide the two differences with each other
Multiple the result with each of the periods
Subtract the result from step above
Fixed costs per period - result from 6 * time periods = total fixed costs
Total mixed costs - total fixed costs = total variable costs
CVP analysis
Assumptions
Fixed costs remains fixed
Variable costs fluctuates with revenue
Only quantitative
Revenue fluctuates with sales volume
All costs can be assigned to departments
Mixed costs can be divided into fixed and variable costs
CM
V -S
CMR W
TR-TV/TR
Interest on a loan
Principal* rate * time
Effective interests rate
Annual interest in loan/loan - compensating balance
CCC
OC -PDP
PDP
Average accounts payable/ daily costs of food sold
Remember the 365 because of daily
