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Flashcards in Chapter 1 Deck (20):
1

Managerial Accounting 

vs

Financial Accounting 

2

Management Functions 

  1. Planning 
  2. Directing 
  3. Controlling 

3

Manufacturing Costs

"Herstellungskosten" 

  • Direct Materials 
  • Direct Labor 
  • Manufacturing Overhead 

4

Raw Materials 

  • Basic materials and parts used in the manufacturing process 

5

Direct Materials

"Materialeinzelkosten"

  • Raw Materials that can be physically and directly associated with the finished product during the manufacturing process

6

Indirect Materials 

  • Considered part of manufacturing overhead
  • NOT physically a part of the finished product or 
  • or impractical to trace to the finished product 

7

Direct Labor 

"Fertigungseinzelkosten" 

  • Work of a factory employee that can be physically and directly associated with cnverting raw materials into finished goods
  • Direct Labor cost vom Time Ticket ablesen!!!

8

Indirect Labor 

  • NO physical association with the finished product 
  • or impractical to trace 

9

Manufactoring Overhead 

"Gemeinkosten"

  • Costs that are indirectly associated with manufactoring the finished product 
  • Includes all MANUFACTORING COSTS expect direct materials and direct labor 
  • Im "Manufacturing Overhead Account" werden alle Kosten zusammengefasst (Inventory Account)
  • NO admincost !!!!!!

 

Also called: 

factory overhead, indirect manufacturing cost or burden 

10

Product Costs

  • Components: (-> "Produktionskosten") 
    • Direct Materials 
    • Direct Labor 
    • Manufactoring Overhead 
  • Costs that are an integral part of production 
  • Recorded in the "inventory" account 
  • Not an expense (COGS) until the good is sold 

11

Period Costs

  • Non-Manufactoring costs 
  • Includes all selling and administrative expenses
    • "Vertriebs- und Verwaltungskosten"
  • Charged to expenses as incurred 

12

Income Statement and COGS

Merchandiser vs. Manfacturer 

Manufacturing Costs are reported in the income statement as an expense, once the manufactured item has been sold

13

Cost of Goods Manufactured 

 Beginning Work in Process Inventroy 

+ Total Manufacturing Costs 

---------------------------------------------------------------

  (= Total Cost of Work in Process)

- Ending Work in Process Inventory 

_________________________________

= Cost of Goods Manufactured 

14

Total Manufacturing Costs

 

= Direct Materials + Direct Labor + Manfacturing Overhead

15

Direct Materials bzw. Direct Materials Used 

= Raw Materials Inventory t=0 

+ Raw Materials Purchased 

- Raw Materials Inventory t=1 

 

16

The Inventory account of a manufacturer 

vs. 

The Inventory account of a merchandising company

 

Manufacturer:

  • Raw Materials 
  • Work in Process 
  • Finished Goods 

 

Merchandising Company: 

  • Shows ONLY One Category of Inventory 

17

Just-In-Time Inventory Method

  • Inventory System in which goods are manufactured or purchased just in time for sale 

18

Total Quality Management

  • Reduce defects in finished products, with the goal of zero defects 

19

Theory of Constraints

  • Constraints ("Bottlenecks") limit the complanys potential profitability 
  •  

20

Manufacturing Overhead Cost ? 

Factory Utilties 

Office Equipment Utilities

  • Factory Utilities: MANUFACTORING OVERHEAD
  • Office Equipment Utilities: EXPENSE
    • Costs are NOT indirectly associated with manufactoring the finished product