ACCT Ch18

Managerial Accounting

Provides financial and nonfinancial information to assist managers in decision-making, planning, and control.

Planning

Setting goals and devising strategies to achieve them within managerial accounting.

Control

Monitoring and evaluating activities and employee performance to ensure organizational objectives are met.

Direct Costs

Costs that can be cost-effectively traced to a cost object, such as materials or labor for a specific product.

Indirect Costs

Costs that cannot be easily traced to a cost object, like factory utilities or supervisor salaries.

Cost Object

A product, process, department, or customer to which costs are assigned.

Prime Costs

The sum of direct materials and direct labor used in manufacturing a product.

Conversion Costs

The sum of direct labor and factory overhead incurred to convert raw materials into finished goods.

Product Costs

Costs directly related to manufacturing a product, including direct materials, direct labor, and factory overhead.

Period Costs

Costs not tied to production but linked to a specific time period, such as administrative and selling expenses.

Just-In-Time (JIT) Manufacturing

A strategy to reduce inventory costs by receiving materials only when needed for production.

Lean Business Principles

The goal to eliminate waste while maximizing customer satisfaction and generating a positive return.

Raw Materials Inventory

Materials awaiting processing in the manufacturing process.

Work-in-Process Inventory

Goods that are currently in production.

Finished Goods Inventory

Completed products that are ready for sale.

Cost of Goods Manufactured Statement

A financial statement that summarizes the total production costs of goods completed during a specific period.