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