Operations Management Flashcards Preview

BEC > Operations Management > Flashcards

Flashcards in Operations Management Deck (43):
1

Cost Objects

resources activities that serve as the basis for management decisions

2

Prime cost

direct material + direct labor

3

Conversion Cost

Direct Labor+ Mftrg Overhead applied

4

Cycle of Inventory- All on the B/S. Part of Inventory

RM--WIP--FG

5

Product costs

Inventoriable costs. sit on the b/s they are not expensed until the product is sold

6

Product vs. Period

Period costs do not go on the b/s they are expensed and do not go on the b/s. Admin expenses etc

7

Nonmanufacturing Costs

costs that do not relate to the manufacturing of a product. These costs are expensed in the period incurred. This is treated as a period cost

8

Cost accounting measures PIE

-Product costing
-Income
-Efficiency

9

Tracing costs to cost object

-Product
-Department
-Geographic Area

10

Product cost

has to be in the factory

11

Cost drivers can be

dollars
hours

12

When traditional accounting used, application of overhead is accomplished in 2 steps

Step 1: Calculate Overhead rate : Budgeted overhead costs/ Estimated cost driver
Step 2: Applied overhead= Actual cost driver X Overhead rate

13

Variable Cost

Constant per unit. Total costs varies with the number

14

Fixed Cost

-Total fixed costs does not change
-FC vary per unit

15

Fixed Cost & Variable- Long-Run Characteristic

Any cost can be considered variable

16

Semi-Variable Cost

a little bit mixed with fixed and variable

17

Cost of Goods Manufactured Formula

Beg WIP
+ DM
+DL
+Manufacturing Overhead
-WIP Ending
= COG Manufactured

18

Materials used

Beg. RM
+Purchases (Including freight in)
= RM Available
-End. RM
= Raw Materials used

19

Cost of Goods Sold

Beg. FG
+Cog Manufactured
= Cost of Goods available for sale
-FG Inventory Ending
=Cost of Goods sold

20

Product cost is the sum of

DM
+DL
+Mftg Overhead

21

Job Order costing

used when there are relatively few units produced and when each unit is unique or easily identifiable

22

Overhead Applied

Rate X Actual $

23

Process Costing

We average the cost bc we are mass producing homogeneous units. Every unit is exactly the same

24

Goal of production report

to keep track of the physical units and the costs associated with all the units

25

Equivalent Units

Calculation is made by taking into account the partially completed units and by making use of equivalent units

26

FIFO

3 elements
1) WIP Beg. (how much work did we do this time, the amount of work that has to be done this period)
2) Units started and completed this period
( Units completed and transferred out)
3) WIP ending

27

Calculation using Weighted Average

1)Units completed and transferred out (always 100%)
2) Work in process ending

28

Cost per Unit under Weighted Avg. Method

Beginning Costs+ Current Costs
/ Equivalent Units

29

Cost per Unit under FIFO Method

Current Cost Only
/ Equivalent Units

30

Normal Spoilage vs. Abnormal Spoilage

NS- Included in the inventory cost B/S
AS- Should not occur, Should not be included in the standard

31

Abnormal Spoilage is what type of expense

period expense, goes separately on the income statement as a period expense

32

Activity based Costing

Traditional system single cost driver, direct labor hours. Single rate to apply

33

Activity Based

Uses multiple over head rates by department. Improves the cost allocation

34

Cost Drivers

Traditional One "Volume"
ABC- Multiple

35

Activity Centers

Cost pools

36

Value Chain

series of activities in which customer usefulness is added to the product. Support activites directly support value-added activities

37

Non-Value added Chains

These don't increase product value or service. For example surplus inventory

38

Advantages of ABC costing

If the product uses a particular demand then it gets a lot of overhead. this will remove must of the cost distortion caused by traditional volume based overhead systems

39

Joint product Costing

two or more products that are generated from a common cost "Main Products"

40

By-Product

minor or relatively small value

41

Split-off point

point in the production process where the joint products can be recognized as individual products

42

Net Realizable Value

Must back out separable costs

43

Price elasticity of demand

(Q2-Q1/Q1) / (P2-P1/P1)
2= New Price or New Quatity
1= Old Price & Old Quantity