Managerial Accounting quiz 1

Materials Inventory

Cost of materials purchased but not yet used.

Work in Process Inventory

Cost of units started but not yet completed.

Finished Goods Inventory

Cost of units completed but not yet sold.

Product Costs

Costs directly tied to production (e.g., direct materials, direct labor, manufacturing overhead).

Period Costs

Costs not related to production (e.g., selling & administrative expenses).

Variable Costs

Costs that change in direct proportion to production levels.

Fixed Costs

Costs that do not change regardless of production levels.

Cost of Goods Sold (COGS)

Calculates total expenses related to products sold.

Direct Costs

Costs that can be directly traced to a specific product.

Indirect Costs

Costs that cannot be traced directly to a product.

Job Order Costing

Costing method used for unique or custom products.

Process Costing

Costing method used for mass production.

Mixed Costs

Costs that contain both fixed and variable components.

Manufacturing Overhead

Indirect costs related to production, such as utilities and salaries.

Schedule of Cost of Goods Manufactured

Summary of direct materials used, direct labor, applied overhead, and changes in WIP inventory.

Objective of Managerial Accounting

To provide internal managers with relevant data for planning and decision-making.

Cost Flow

Movement of costs through inventory accounts including Raw Materials, Work in Process, Finished Goods, and Cost of Goods Sold.