Accounting Chapter 1 and 2

• fixed costs


  Costs that do not vary with the quantity of output produced
• variable costs


  costs that vary with the quantity of output produced
• Mixed Costs


  Costs that contain both a variable- and a fixed-cost element and change in total but not proportionately with changes in the activity level.
• differential cost


  A future cost that differs between any two alternatives.
• opportunity cost


  the most desirable alternative given up as the result of a decision
• sunk cost


  a cost that has already been committed and cannot be recovered
• What are the categories in Manufacturing costs?

  Direct Materials, Direct Labour and MOH
• What are the differences between a merchandising company and a manufacturing companies income statement?

  Merchandising companies add purchases, while manufacturing companies add COGM after beginning inventory
• What are the 4 categories of period costs?

  Selling, General and administrative, Non-operating cost, taxes
• What are period costs?

  Costs that are expenses to the period in which they are incurred
• What are product costs?


  All cost involved with making a product.
• What are the two cost categories?

  Product Cost and period cost
• What is an example of an MOH?

  Depreciation for buildings and equipment, higher governance roles, insurance, etc.
• Manufacturing Overhead


  all manufacturing costs except direct materials and direct labor. They can be traced back to a unit of production.
• Direct Labor


  the work of factory employees that can be physically and directly associated with converting raw materials into finished goods
• Direct Materials


  Can be traced directly back to a unit of production
• What are the three basic manufacturing cost categories?

  Direct materials, Direct Labour, Manufacturing Overhead
• What are the four guidelines for ethical behaviour?

  competence, confidentiality, integrity, objectivity
• Controlling


  Gathing feedback to ensure that plans are running successfully.
• Dirrecting and modivating


  the day to day management of peoples, directing them to carry out routine operations
• What are main steps in planning?

  1. Identify alternatives

  2. Select alternatives for best job

  Develop budgets to guide progress to alternative
• What is the key objective of planning?

  Add value to the business, while focusing on the future
• What are the three main managerial functions in decision making?

  Controlling, Planning, directing and motivating
• Managerial accounting time focus

  Future oriented
• Managerial accounting does not have to follow what?

  GAAP, or any prescribed format
• Managerial Accounting


  accounting used to provide information and analyses to managers inside the organization to assist them in decision making