Mangerial Accouting seesion 1

A vocabulary flashcard set created from Session 1 lecture slides covering managerial accounting functions, controller roles, and basic cost management concepts.

Managerial Accounting

The process of identifying, measuring, analyzing, interpreting, and communicating information to assist managers in achieving organizational goals.

Planning

The managerial activity of developing detailed operational strategies, objectives, and budgets to guide an organization's future operations.

Directing Operational Activities

The day-to-day managerial activity of running an organization's operations to ensure smooth and effective functioning.

Controlling

The managerial activity of evaluating performance, comparing actual results against plans, and taking corrective action when deviations occur.

Scorekeeper Role

A traditional controller role focused on recording and reporting reliable historical financial numbers with a hindsight orientation.

Analyst Role

A controller role focused on explaining cost drivers, using business intelligence, and predicting future performance to provide foresight.

Business Partner Role

A controller role that actively challenges and shapes business decisions and trade-offs to guide strategic management.

AI-Enabled Controller

An evolving controller role centered on framing, challenging, and governing AI agents, context, and accountability to translate AI output into decision-ready information.

Employee Empowerment

The concept of encouraging and authorizing workers to improve operations, reduce costs, and enhance product quality and customer service.

Balanced Scorecard

A business performance evaluation model that balances measures of financial performance, internal operations, innovation and learning, and customer satisfaction.

Financial Accounting

The accounting area focused on external reporting, adhering to externally imposed rules, reporting aggregated historical data, and prioritizing objective, verifiable information.

Cost

The sacrifice made, or resource given up, to achieve a particular purpose.

Expense

The cost incurred when an asset is used up or sold for the purpose of generating revenue.

Product Costs

Costs of goods manufactured or purchased for resale, which are inventoried on the balance sheet until sold and then expensed as cost of goods sold.

Period Costs

All non-product costs incurred during a relevant period, such as selling and administrative expenses, which are expensed as time passes.

Direct Cost

A cost related to a particular product or cost object that can be traced to it in an economically feasible way.

Indirect Cost

A cost related to a particular product or cost object that cannot be traced to it in an economically feasible way and must be assigned or allocated.

Direct Material

Raw material consumed in the manufacturing process and physically incorporated into the finished product.

Direct Labor

The cost of salaries, wages, and fringe benefits for personnel who work directly on converting materials into manufactured products.

Manufacturing Overhead

All manufacturing costs other than direct material and direct labor, including indirect material, indirect labor, and factory facility overhead.

Prime Cost

The sum of direct material cost and direct labor cost.

Conversion Cost

The sum of direct labor cost and manufacturing overhead cost required to convert raw materials into finished products.

Cost Driver

A characteristic of an activity or event that causes costs to be incurred.

Variable Cost

A cost that changes in total in direct proportion to changes in activity level, while remaining constant per unit.

Fixed Cost

A cost that remains constant in total when the activity level changes, but decreases per unit as the activity level increases.

Controllable Cost

A cost that can be significantly influenced or controlled by a specific manager.

Opportunity Cost

The potential benefit given up when one alternative course of action is selected over another.

Out-of-Pocket Cost

A cost that requires an explicit cash outlay.

Sunk Cost

A cost incurred in the past that cannot be changed or recovered by any current or future decision.

Differential Cost

The net difference in cost between two alternative courses of action.