| A | B |
|---|
| Used to evaluate internal financial status | managerial accounting |
| used to report to external agencies | financial acounting |
| targeted users are internal users and managers | managerial accounting |
| Targeted users are external users such as stockholders and creditors | financial accounting |
| No mandatory rules or procedures | managerial accounting |
| must follow gaap when preparing financial statements | financial accounting |
| financial and non-financial types of information | managerial accounting |
| financial information only | financial accounting |
| emphasizes the future (Planning and decision making) | managerial finance |
| historical orientation | financial accounting |
| provides detailed info about productlines, departments, etc | managerial accounting |
| information about overall firm performance | financial accounting |
| What are five areas that managerial and financial accounting differ? | 1. restrictions, types of information, time orientation, aggregation, target users |
| Cost directly associated with the manufacturing of goods or services | production or manufacturing cost |
| cost associated with the functions of design, development, marketing, distribution, customer service, and general administration | nonproduction or non-manufacturing cost. |
| examples of direct cost | direct material, direct labor, overhead. |
| examples of non-direct cost | selling cost and administrative cost. |
| non-inventoriable cost | selling and admin cost. |
| calls they can be easily and accurately traced to the cost object | direct costs |
| calls they cannot be easily and accurately traced to a cost object | in direct costs |
| a costs that, in total, changes in direct proportion to changes in output | variable costs |
| costs that, in total, remains constant within a relative range as the level of activity output changes | fixed cost |
| costs that have both fixed and variable components | mixed costs |
| costs assignment that supports a well specified managerial objective. Depends on the managerial objective being served. | Product cost |
| costs that all are expensed in the period incurred | period costs |
| what is the difference between product and period cost | product costs are inventory:. Cost are expensed in the periodIncurred |
| costs can be estimated using regression. What is the regression formula to estimate costs? | total costs = fixed costs + total variable costs |
| what is the formula to determine variable costs | variable rate X output |
| what is the dependent variable and independent variable in the cost estimation regression formula | the dependent variable is total costs, any independent variable is total variable costs |
| what are some weaknesses of cost formulas | 1. Goodness of fit may not be accurate. 2. Assumptions are based on the total cost being predicted by one cost driver only. |
| total revenue equals total costs | break even point |
| what is the formula to determine break even point | profit = (price times number of units) - (variable cost per unit X number of units) - total fixed costs |
| sales revenue - total variable costs is what | contribution margin |
| what is a shortcut to calculating break even units | number of units = takes costs/unit contribution margin |
| what are two assumptions of costs volume profit analysis | 1. All costs of the firm can be divided into two categories: fixed and variable costs. 2. Costs are soon-to-be linear function of sales volume. |
| how does contribution margin differ from gross margin reported on the Company's income statement | gross margin includes cost of goods sold which includes manufacturing overhead which includes some fixed costs such as depreciation and rent, where contribution margin only includes variable costs |
| another name for traditional cost allocation is what | functional base costing |
| how does functional base costing work | overhead costs are pooled and allocated to functions based on predetermined overhead rate |
| what are five common drivers for functional cost accounting | units produced, direct labor hours, direct labor dollars, machine hours, and direct material dollars |
| what is a major problem of functional costing | costs distortions, non unit related overhead costs, product adversity |
| what is one recommended solution for cost distortion | activity base costing |
| what is activity base costing | first assigning costs to departments, and then assigning cost to act |
| what is the main difference between functional base and activity based costing | functional based costing assigns fixed overhead costs using fixed overhead rates and activity based costing assigns fixed overhead rates based on activity |
| what is the main difference between relevant to and irrelevant costs | irrelevant costs do not change during the order |
| future costs that change across alternatives and her future costs | relevant costs |
| a firm is faced with limited resources and limited demand for products | Theory of constraints |
| the five steps to theory of constraints | 1. Identify the organizations constraints 2. exploit the binding constraints 3. Subordinate all other constraints 4. Evaluate the binding constraints for. 5. repeat the process |
