managerial accounting exam 1

calculate cost of goods sold

1. calculate direct materials 2. calculate total manufacturing cost 3. calculate cost of goods manufactured 4. calculate cost of goods sold

staff positions

Positions that are supportive in nature and have only indirect responsibility for an organization's basic objectives

line positions

Positions that have direct responsibility for the basic objectives of an organization

Sales Revenue

Price × Units Sold

Period costs

all costs that are not product costs • Office supplies • Advertising cost • Research and development

Allocation

an indirect cost is assigned to a cost object by using a reasonable and convenient method

standards of ethical conduct for managerial accountants

competence, confidentiality, integrity, and credibility

Indirect costs

costs that cannot be easily and accurately traced to a cost object can't see it happen but is necessary (manufacturing overhead) assigned to a cost object using allocation

Mixed costs

costs that have both a fixed and a variable component (formula is total cost= fixed cost + (variable rate * amount of output))

fixed cost

does not increase in total as output increases and does not decrease in total as output decreases (does not change in total as output changes) • If answer is zero we DO have to pay/need/do something • independent of cost driver given

Prepare a cost of goods sold statement

find the cost of goods sold

total fixed labor cost for the year

fixed cost * 12 months

Discretionary fixed costs

fixed costs that can be changed or avoided relatively easily in the short run at management discretion (advertising- depends on management decision)

Committed fixed costs

fixed costs that cannot be easily changed (lease cost- involves long-term contract)

income statement

gross margin

sales

gross margin + cost of goods sold

results of regression

intercept = total fixed cost slope or x variable 1 = total variable cost

Managerial Accounting produces information for

internal users

direct materials

must calculate (will not be given)

fixed cost when nothing is produced

price * # of units

treasurer

responsible for the finance function

sales price

sales / units sold

opportunity cost

the benefit given up or sacrificed when one alternative is chosen over another

Accumulating costs

the way that costs are measured and recorded

cost of goods manufactured

total product cost of goods completed during the current period and transferred to finished goods inventory *must first calculate the total manufacturing cost (TMC)*

WIP

work in process

Three major forms of certification for managerial accountants

• Certificate in Management Accounting • Certificate in Public Accounting • Certificate in Internal Auditing

Planning

• The detailed formulation of action to achieve a particular end • Developing a strategy for disposing of hazardous waste

Controlling

• The managerial activity of monitoring a plan's implementation and taking corrective action as needed • Investigating production variances and adjusting the production process

Decision Making

• The process of choosing among competing alternatives

Managerial accounting has three broad objectives

• To provide information for planning the organization's actions • To provide information for controlling the organization's actions (evaluating and continuously improving an organization's actions) • To provide information for making effective decisions

financial accounting

• able to provide audited, objective financial information. • subject to externally imposed rules. • directed toward external users.

method of least squares

• also referred to as regression analysis. • offers ways to assess the reliability of cost equations. • involves minimization of the squared differences between actual observations and the line (cost function).

Direct costs

• costs that can be easily and accurately traced to a cost object • the relationship between the cost and the object can be physically observed, is easy to track, and results in more accurate cost assignments

Product (manufacturing) costs

• costs, both direct and indirect, of producing a product in a manufacturing firm or of acquiring a product in a merchandising firm and preparing it for sale • expenses when the product is sold

Manufacturing overhead

• factory supplies. • indirect materials. • indirect labor.

Variable cost

• increases in total as output increases • decreases in total as output decreases • stay constant on a per-unit basis as output changes. (If answer is zero we do NOT have to pay/need/do something (dependent of cost driver given)) • changes in direct proportion to changes in output within the relevant range

Managerial accounting

• providing accounting information for a company's internal users • aims at providing information for controlling the organization's actions

price

• revenue per unit • must be greater than cost for a firm to earn income

controller

• supervises all accounting functions and reports directly to the general manager and chief operating officer • participates in planning, decision making, & controlling

CPA (Certificate in Public Accounting)

• the only accountants permitted to serve as external auditors. • may be held responsible to provide assurance concerning the reliability of a firm's financial statements. • must pass a national examination and be licensed by the state in which they practice.