Chapter 19 - Managerial Accounting

Flashcards covering key vocabulary and concepts from Chapter 19 of Accounting Principles, 13th Edition, focusing on Managerial Accounting.

Chapter 19 Managerial Accounting

Provides economic and financial information for managers and other internal users.

Planning (Management Function)

Involves maximizing short-term profit and market share, committing to environmental protection and social programs, and adding value to the business.

Directing (Management Function)

Involves coordinating diverse activities and human resources, implementing planned objectives, providing incentives to motivate employees, hiring and training employees, and producing a smooth-running operation.

Controlling (Management Function)

Involves keeping activities on track, determining whether goals are met, and deciding what changes are needed to get back on track, using either informal or formal systems of evaluation.

Direct Materials

Raw materials that can be physically and directly associated with the finished product.

Indirect Materials

Materials that are not physically part of the finished product or are impractical to trace because their association is too small in terms of cost; considered part of manufacturing overhead.

Direct Labor

The work of factory employees that can be physically and directly associated with converting raw materials into finished goods.

Indirect Labor

The work of factory employees that has no physical direct association with the finished product, or for which it is impractical to trace costs to the goods produced.

Manufacturing Overhead

Costs indirectly associated with manufacturing the finished product; includes all manufacturing costs except direct materials and direct labor; also called factory overhead and indirect manufacturing costs.

Product Costs

Costs that are an integral part of producing a product; includes direct materials, direct labor, and manufacturing overhead; recorded in the 'inventory' account and expensed (COGS) when goods are sold.

Period Costs

Non-manufacturing costs that are charged to expense as incurred; include all selling and administrative expenses.

Total Manufacturing Costs

The sum of direct material costs, direct labor costs, and manufacturing overhead costs in the current year.

Total Work in Process

The sum of (1) the cost of beginning work in process and (2) total manufacturing costs for the current period.

Balanced Scorecard

A performance measurement approach that evaluates operations in an integrated fashion using both financial and non-financial measures and links performance to overall company objectives.

Corporate Social Responsibility

A company's efforts to employ sustainable business practices with regard to its employees, society, and the environment; sometimes referred to as the triple bottom line (people, planet, profit).

Value Chain

All activities associated with providing a product or performing a service.

Activity-Based Costing (ABC)

A method of allocating overhead based on each product's use of activities in making the product.

Total Quality Management (TQM)

Systems implemented to reduce defects in finished products with the goal of achieving zero defects.

Just-in-Time (JIT) Inventory

An inventory system in which goods are manufactured or purchased just as they are needed for use.

Sarbanes-Oxley Act (SOX)

Clarifies management’s responsibilities, requires certifications by CEO and CFO, defines selection criteria for Board of Directors and Audit Committee, and substantially increased penalties for misconduct