Accounting 2- exam 1

Managerial accounting involves

partnering in management with decision making
devising planning and performing management systems
providing expertise in financial planning and control

Managers three main responsibilities are to

plan, direct and control

direct cost

a cost that can be easily and conveniently traced to a specified cost object

indirect cost

a cost that cannot be easily and conveniently traced to a specified cost object

The value chain

The set of activities through which a product or service is created and delivered to customers.

Activities in the value chain

research and development
design
production or purchases
marketing
distribution
customer service

research and development

researching and developing new or improved products or services and the processes for producing them

Design

detailed engineering of products and services and the processes for producing them

Production or purchases

resources used by manufacturers to produce a product or merchandising companies to purchased finished merchandise for resale

Marketing

promotion and advertising of products or services

Distribution

delivery of products or services to customers

customer service

support provided for customers after sale

Product costs

incurred by manufacturers to produce their products or by merchandisers to purchase their products

direct materials, direct labor, manufacturing overhead,

Period costs

do not get treated as inventory, immediately expensed

Variable costs

change in total in direct proportion to changes in volume

Fixed costs

stay constant in total over a wide range of activity levels

How do you find total job cost

Direct materials + Direct Labor + Manufacturing overhead

Under allocated

when the actual MOH is greater than the allocated MOH

Over allocated

when the actual MOH is less than the allocated MO

Predetermined MOH rate

total estimated MOH costs/total estimated amount of allocation base

what is cost distortion

The cost allocated to the cost object under traditional may be disproportionate to the MOH actually used by the cost object

what are the four steps of activity-based costing?

Step 1: identify primary activities and estimate total MOH costs associated with each activity
Step 2: Select allocation base for each activity and estimate the total amount to be used for the year
Step 3: Calculate activity cost allocation rates
- activity cost allocation rate = total estimated activity cost pool/total estimated activity allocation base
Step 4: Allocate some MOH from each activity to the individual jobs and used the activities