Operations Mgmt Flashcards
Product Costs (Manufacturing Costs)
DM
DL
Manufacturing OH (IM, IL, other indirect)
Period Costs (Nonmanufactoring Costs)
Selling, general & admin Interest (Financing) expense Abnormal Spoilage Marketing Freight Out re-handling costs
Manufacturing Product Costs
IM
IL
Other Indirect Costs
Prime Costs
DM + DL
Conversion Costs
DL+ OH applied
Raw Material Calc
RM Begin \+ Purchases = M. Available - ending RM = DM used
Actual Cost System
DM/DL/Mfg OH based on actuals
Standard cost system
All costs based on standards
Normal Cost System
DM and DL based on Actuals
Mfg O/H based on Standards
Predetermined O/H Rate calc
Estimated O/H Costs / Estimated DL $ or Hrs
Applied O/H Calc
Predetermined O/H rate x Actual Production
WIP or Cost of goods Mfg
Begin WIP \+ DM Used \+ DL \+ Applied O/H = WIP available - Ending WIP = Cost of goods mfg
Finished Goods
Begin FG \+ Cost of goods mfg = FG available - ending FG = Cost of goods sold
COGS
COGS
+ underapplied O/H
- overapplied O/H
= COGS
Profit =
Sales - variable - fixed
Absorption Approach
Revenue - variable COGS - fixed COGS = gross margin - variable SG and A - fixed SG and A = net income
Contrition Approach (variable/direct)
Revenue - variable COGS - variable SG and A = contribution margin - fixed mfg cost - fixed SG and A = net income
Variable Costs
DM + DL + variable OH + variable SG and A
Unit contribution margin
Sales - variable costs / units
Contribution margin ratio
Contribution margin / revenue (sales)
Difference between absorption and contribution approach
The treatment of fixed factory OH
Absorption = product cost
Contribution = period cost
Fixed costs per unit
Fixed mfg OH / units produced
If production is greater than sales
Profit greater under absorption
Sales greater than production
Profit greater under contribution (variable)
