Managerial Accounting Final

Direct Cost

Can be traced specifically to the cost object

Indirect Cost

Related to but cannot be specifically traced to the cost object

Manufacturing Costs

Direct materials, Direct Labor, MOH

Predetermined Overhead Rate (POHR)

Estimated total MOH / Estimated total allocation base

MOH consists of:

Indirect material, indirect labor, depreciation

2 types of nonmanufacturing costs

Selling and Administrative expenses

Product Cost

EVERYTHING used to make the product. DM, DL, MOH

Variable Cost

Constant per unit, TOTAL varies

Fixed Cost

total remains constant regardless of activity

y=ax+b

y= total, a=fixed, b=variable cost/unit, x= # of units

Steps of High Low Method

V= change in cost / change in activity— then— F= TC - VC — then — plug it into y=ax+b

3 inventory accounts

Raw Materials, Work in Progress, Finished Goods

CM format income statement

REV-VC=CM-FC=NOI

Traditional format income statement

REV-COGS=GM-SG&A=NOI

3 types of overhead rates

Actual MOH (end), Estimated MOH (beg), Applied MOH (during)

Break Even (unit)

FC / unit CM

Break Even (sales)

FC / CM%

CM%

CM / Sales

Margin of Safety (MOS) $

Actual (budgeted) sales - Break Even Sales

Margin of Safety (MOS) %

MOS $$ / Actual Sales

Degree of Operating Leverage

CM / NOI

% Change of NOI=

DOL x % Change in Sales

Relevant Cost (make or buy)

Any cost that is different between 2 choices

Segment Margin

CM - Traceable FC

Common fixed costs ______________

only go in the totals column

Constraints are also known as

bottlenecks

Avoidable FC

would disappear if the segment disappeared

Production Budget

Budgeted sales

+ Desired units of ending FG

= Total Needs

- beg FG

= Required production

DM Budget

Required Production

x RM per FG=

RM needed for production

+desired end RM inventory

=Total RM needed

-Units of beg RM inv

=RM to be purchased

Cash Budget

beg cash balance

+cash reciepts

=total cash available

-cash disbursements

= excess OR deficiencey

What’s on the left side of the pitchfork

actual

Right side of the pitchfork?

flex