Acc 2304

What is effect if Wally and Beaver raise prize money from 100 to 300?

no change in VC, increase in FC, no change in CM

Which major activities to Managers carry out?

planning, directing and motivating, controlling, evaluating, decision making

Managerial Accounting

provides info inside an organization who direct and control operations... Gathering and analyzing relevent info that is needed to make a decision.

2 type of income statement

traditional - Sales, COgs, gross profit, Sell & admin costs, Income before taxes CM - Sales, Variable costs, CM, fixed costs, operating income

MOS % =

$MOS/ Sales

Factors that influence Decisions

-Salary -Location -Success of Company -Makes You Happy -Job Security

Costing method best used

1) Fred exotic juices, "can have any flavor so long as it is boisenberry." --- Process 2) Aerodynamics is making 3 shuttles each is slightly different and will last 2 years --- Job Order 3) Masterpeices, makes evening gowns, each is tailor made to fit customers measurements --- Job Order

Managers Role

Decision Making. Types? Planning - Strategic (long), Operational (Short) Controlling - monitoring day to day activities Evaluating - Comparing actual results to planned results.

Who most likely uses Managerial accounting info

Employees

OH Rate

Est OH/Est Allocation base (MH, DLH, DL costs)

Margin of Safety is

Excess of budgeted or actual sales over the BE volume of sales

Cost Seperability

Expense that can be directly assigned to a specific activity or transaction.

Cost Traceability

Expense that can be directly assigned to an activity or cost object on the basis of a cause-and-effect (causal) relationship.

If the COGM is greater than COGS then:

Finished Goods inventory has increased during the period

Which formula is used to calc BE point in sales dollars?

Fixed expenses/CM ratio

Managerial Accounting:

Focuses more on timeliness than precision

Cost Behavior

The way in which a cost reacts to changes in the level of activity Patterns - 1) fixed 2) Variable 3)Step 4) Mixed

TC=

VC+FC

Total Cost =

VC/unit x Units + TFC

CM is amount remaining after:

Variable expenses have been deducted from sales revenue

effect on BE point

^ VC/unit = ^ ^ Units sold = No Effect ^ Sales Price = Decrease ^ FC = ^ ^ CM = Decrease ^CM ratio = Decrease ^ Margin of Safety = No Effect

OH costs are

all product costs except DM and DL

Who would most likely use financial accounting info?

Creditors

Job Cost Sheet

DM(material requiz slip)+DL(time ticket)+OH application TC & Unit cost

Over Under app OH

Applied < Actual = under Applied > actual = over

Step Costs

Business expenses that are constant for a given level of activity, but increase or decrease once a threshold is crossed. Step costs are those costs that change when a business' production levels increase or decrease.

CM ratio=

CM/Sales

COGS

COGM add: beg fin goods Less: end fin goods = COGS

The total of all credit entries to finished goods inventory represent:

COGS

Burt company reported 250,000 in depreciation for plant facilities. this is example of?

Committed Fixed Costs

Two Fixed Costs

Committed- An organizational expense that management consider permanent since eliminating it would tend to cause the company harm over time. eg. Key Personnel Discretionary- Cost such as that of advertising, preventive maintenance, research and development, that a manager may eliminate or postpone without disrupting the firm's operations or affecting its productive capacity in the short run. A discretionary cost is usually specific in amount, or is determined by a formula such as a certain percentage of sales revenue. Also called discretionary expenditure or managed cost.

Cost Characteristics

Cost Behavior, Cost Function, Cost Traceability, Cost Cost Seperability

Fixed Costs

Costs that do not vary with the quantity of output produced

Variable Costs

Costs that vary with the quantity of output produced

Mixed Costs

Costs with both fixed and variable elements

High Low

High $ - Low $/ High unit - Low unit = Fixed Costs y=cost/unit x unit + FC

Estimate methods

High-Low Method, Scattergraphs, Reg Analysis

All other things equal, an increase in number of units sold will...

Increase operating income, increase TVC, increase total CM

Managerial Accounting:

Involves providing info primarily to internal users

Margin of Safety

MOS=Current Sales - BE Sales$

CVP Formula

Operating income = Sales - TVC - FC

Setting a direction of a company is which manager role?

Planning

Examples of Product vs Period

Pr - Cloth used making bag - DM Pe - Sales commisions - Selling cost Pr - Depreciation on production equip - OH Pe - Dep on office equip - Admin cost Pe - Salary of President - Admin Pr - Wages of production employees - DL Pr - Materials used to repair machines - OH (indirect materials) Pr - Salary of production supervisor - OH Pe - Rent on finished good warehouse - Selling Pe - Advertisment - Selling

Characteristics of Managerial Accounting

Primary Users - Internal Mandated Rules - None Reporting Unit - Units of Organization eg. Segment Time Horizon - Future Timing of Info - As needed, often hurried. accuracy = less inmortant

Cost Function

Product - Costs used in production process to produce inventory -Capitalized as part of inventory (asset) cost (balance sheet) Period - other costs associated with admin of business or selling of products -Expensed in the same period incurred (income statement)

Costs product vs Period

Product - DM, DL, Manufact Overhead - until you finish Period - Sell and Admin

Inventory flows through main inventory accounts in which order?

Raw materials, WIP, Finished Goods, Manu OH, COGS

Breakeven Point =

SPx - VCx - FC = $0 or CMx - FC = $0 or FC/CM ratio$

What if?

SPx - VCx - FC = OI

Target Net Income

SRx - VCx - FC = target net income or (TFC= Target income)/cm

CM=

Sales - VC

Which is False?

T - Manufacturing company can use DLH as OH base in one department and MH in another F - Debit balance in the WIP indicated that not all good completed during the period were sold. F - Predetermined OH rate is computed by dividing budget or estimated units in oH base by Budget or Estim manu OH costs.

At BE point which is not true

T - Sales Revenue = TC F - CM is = TVC T - CM = TFC T - OI = $0

Which is False

T - VC will increase in total as activity does F - MC will increase per unit as activity does F - FC will remain constant per unit over all levels within relevent range

Which about Relevant Range is false?

T - Variable costs change in direct proportion to activity T - TFC remain constant T - Mixed Costs contain both Variable and Fixed components F - Fixed Cost per unit remains constant

COGM =

TC of all goods finished w/in a period. Direct Material in Prod - Direct Labor - Man OH - = Total Man Cost - Add: Begining WIP Less: End WIP = COGM

after taxes

Target OI/1- tax rate