Quiz 1 Flashcards
(30 cards)
What are the 7 components of the Value Chain?
- R&D
- Design
- Purchasing
- Production
- Marketing
- Distribution
- Customer Service
Who are the primary users in Financial Accounting? Cost Accounting?
Financial Accounting = external users (mostly)
-creditors, investors
Cost Accounting = internal users
-management decision making
What does Financial Accounting do?
Show the Financial Position of a company
What does Cost Accounting do?
Show information on costs/customers for a company
Financial Accounting is geared towards what?
Accuracy and Compliance
Cost Accounting is geared towards what?
Efficiency and Effectiveness; Usefulness and Timely
What are Cost Drivers?
factor that causes or “DRIVES” costs
(e.g., increase # if cookies made, must increase labor)
What are Differential Revenues?
revenues that CHANGE in response to a particular course of action
What are Differential Costs?
costs that CHANGE in response to a particular course of action (i.e., alternatives)
What is a Responsibility Center?
specific unit of an organization assigned to a manager who is accountable for its operations and resources
What is a Budget?
financial plan of the revenues and resources (expenses) needed to CARRY OUT ACTIVITIES and MEET FINANCIAL GOALS
Who are the KEY financial players?
CFO
Treasurer
Controller
Internal Auditor
Cost Accountant
What must both the CEO and CFO do because of Sarbanes-Oxley?
sign off on financials - “do not omit material information”
sign off on evaluation of internal controls - are they operating effectively?
What is a Cost?
“sacrifice” of resources
What are the three types of costs?
Expense = cost that is charged AGAINST revenue in an accounting period (hits I/S)
Outlay = past, present, or future cash flows
Opportunity = FORGONE BENEFIT from the best alternative course of action
What is an Expense charged to and in what period?
Charged to P&L
in period it’s incurred
What is a Product Cost?
costs included in Manufacturing/Inventory
Expense as COGS when product is sold
What are included in Product Costs?
- Direct Materials (includes freight-in)
- Direct Labor
- Factory Overhead
-indirect material
-indirect labor
-other indirect costs (factory depreciation, lights, heat, etc..)
What is a Period Cost?
costs that are NON-MANUFACTURING
Expense when incurred, regardless of product sales
What are included in Period Costs?
- SGA Expense (includes freight-out)
- Abnormal Spoilage
What is the PRIME COST?
Direct Material + Direct Labor
What is the CONVERSION COST?
Direct Labor + Manufacturing Overhead
(“costs to convert raw materials”)
What are the 3 Inventory Accounts that Product Costs are allocated?
(depending on where in the production cycle)
- Raw Materials Inventory (ready to go into the production cycle)
- Work-in-Process (WIP) Inventory (in the production cycle)
- Finished Goods Inventory (out of the production and available for sale
What are FIXED COSTS?
fixed IN TOTAL/variable PER UNIT
e.g., rent, salaries
