CBAD 202 Final

Type of accounting used by external users

What is financial accounting?

CPA

What is Certified Public Accountant?

CMA

What is Certified Management Accountant?

Costs incurred by manufacturers which are not incurred to produce their products (more support in nature)

What are period costs?

Sales revenues less cost of goods sold

What is gross profit (gross margin)?

Typically used by companies that produce small quantities of custom units

What is job order costing?

Lists all of the raw materials needed to manufacture a job

What is a bill of material?

Total estimated manufacturing overhead / Total estimated allocation base

What is the predetermined manufacturing overhead rate?

Predetermined MOH rate × Actual amount of allocation base used

What is allocated MOH?

Used to keep track of all of the costs of a job

What is a job cost record?

ABC

What is activity based costing?

Total estimated activity cost pool / Total estimated activity allocation base

What is the activity cost allocation rate?

Activity cost allocation rate × Actual amount of activity allocation base used by job

What is MOH allocated to job?

ABM

What is activitybased management?

Costs incurred for a particular product (not on a unit or batch basis)

What are product-level costs?

Sales revenue less variable expenses

What is contribution margin?

Point at which operating income is zero

What is the breakeven point?

Contribution margin / Sales revenue

What is the contribution margin ratio?

The relative amount of fixed and variable costs that make up total costs

What is operating leverage?

Breakeven point if FC = $1,000; Sales price per unit = $500; VC per unit = $300

What is 5?

Managers are more likely to be motivated by this type of budget

What is a participative budget?

Planning, coordination and communication; and benchmarking

What are the benefits of budgeting?

Comprehensive planning document for the entire organization

What is a master budget?

This budget is the starting place for budgeting

What is the sales budget?

What are the operating budgets?

A system for evaluating the performance of responsibility center and its manager

What is responsibility accounting?

Duplication of costs and goal incongruence

What are possible disadvantages of decentralization?

Its managers are responsible for both revenues and costs (but not division assets)

What is a profit center?

Operating income less minimum acceptable income

What is residual income?

A budget prepared for a different level of volume than that originally anticipated

What is a flexible budget?

Weighing costs against benefits to help make decisions