Accounting and Manufacturing Cost Practice Flashcards

These flashcards cover decision-making types, manufacturing cost classifications, inventory accounts, and the ABC cost hierarchy as detailed in the lesson notes.

Works of Management

The organizational functions consisting of Planning, Controlling, and Decision Making.

Objectives of Accounting

To measure and communicate information for the purpose of making decisions.

Raw Materials Inventory

A Balance Sheet account representing the initial components of a product that is to be manufactured.

Work in Process (WIP) Inventory

A Balance Sheet account representing goods that have been started but are not yet completed.

Finished Goods

A Balance Sheet account for manufactured inventory that is awaiting sale.

Cost of Goods Sold

An Income Statement account representing the cost of manufactured goods that have been sold to customers.

Product Costs

A general term for costs directly tied to the production aspect of a business.

Period Costs

Costs associated with the Selling and Administration aspects of a business, such as insurance on an admin building or sales commissions.

Direct Materials

Easily traceable inputs of the production process, such as wood used to manufacture desks for an office building.

Direct Labor

Easily traceable wages for individuals working directly on the production of a good or service, such as employees constructing desks.

Fixed Cost

A cost that does not change with production levels, such as an insurance policy on a sales office.

Variable Cost

A cost that changes in proportion to production, such as the cost of boxes of Rice Krispies Cereal used in making Rice Krispie Treats.

Mixed Cost

A cost containing both a fixed and variable component, such as a salesperson salary with a base amount and a commission.

Operating Activities

A Statement of Cash Flows category involving primary business activities, such as receiving cash from customers for providing services.

Investing Activities

A Statement of Cash Flows category involving the purchase or sale of long-term assets, such as purchasing a new stove for a restaurant kitchen.

Financing Activities

A Statement of Cash Flows category involving activities like receiving proceeds from issuing stock.

Unit Level

An ABC Cost Hierarchy level for activities performed each time a unit is produced, such as machine electricity.

Batch Level

An ABC Cost Hierarchy level for activities performed for a group of units, such as equipment calibration or grading a quiz.

Product Level

An ABC Cost Hierarchy level for activities that sustain a specific product line.

Facility Level

An ABC Cost Hierarchy level for activities that sustain the whole organization.