I. Chapter 1: Managerial AccountingII. Chapter 2: Managerial Accounting & Cost ConceptsIII. Chapter 3: Cost-Volume-Profit RelationshipsIV. Chapter 4: Job-Order CostingV. Chapter 5: Variable Costing & Segment Reporting: Tools for ManagementVI. Chapter 6: Activity–Based Costing: A Tool to Aid Decision MakingVII. Chapter 7: Differential Analysis: The Key to Decision MakingVIII. Chapter 9: Profit PlanningIX. Chapter 10: Flexible Budgets and Performance AnalysisX. Chapter 11: Standard Costs & VariancesXI. Chapter 12: Performance Measurement in Decentralized OrganizationsXII. Chapter 8: Capital Budgeting DecisionsFinal Exam Study Guide Chapters 1-7,9-12,8I. Chapter 1: Managerial Accounting - Three primary functions of managerso Planning Establish goals —> specify how goals will be achieved. —> Develop budgeto Controlling How are things going? 1000-dollar revenue goal, 2 weeks into the month… revenue only 200. Either they are doing something wrong or they have made an improper goal.  The controlling function gathers feedback to ensure plans are being followed Feedback in the form of performance reports that compare actual results to projected goalso Decision Making What should we be selling? Who should we be serving? How should we execute?II. Chapter 2: Managerial Accounting & Cost Concepts- What are the three manufacturing costs?o Direct materials Raw materials that become an integral part of the product and that can be conveniently traced directly to it; Ex. Flour for the loaf of breado Direct labor Those labor cost that can be easily traced to the individual units of the product; Ex. Wages paid to bakerso Manufacturing overhead Costs that cannot be easily traced to the specific units produced, basically everything else. (If it relates to the manufacturing of the product). Manufacturing Overhead also can be split into several costs…⁃ Indirect material: used to support production like lubricants and cleaning supplies for machines or equipment⁃ Indirect labor: wages paid to laborers not directly involved in production, ex: supervisors, janitors etc. ⁃ The building, the lighting, the desks, the utilities o Products costs Include direct materials, direct labor, and manufacturing overhead- What are nonmanufacturing costs?o Period costs Include all selling costs and administrative costs.  Selling costs: costs necessary to secure the order and delivery of the product Administrative costs: all executive, organizational, and clerical costs- What are variable costs and what are their characteristics?ACCT 2020 1nd Editiono Variable costs vary in total, in direct proportion to changes in the level of product produces. In some cases you total texting bill (if not on plan) is bases on how many texts you send. 1text=10ct so 5texts=50cents. The cost per unit remains constant. - What are fixed costs and what are their characteristics?o Fixed costs remain constant and total regardless of changes in the level of activity. A monthly cellphone contract that is unlimited would be constant. In this case, cost per unit varies inversely with changes in activity. If you talk 1 minute, then my cost per minute is $60/min. If I talk 10 minutes, then my cost per minute is $10/min. fixed costs often having a relevant range. For example, if a company needs 1020 square feet and the only options are 1000sqft, 2000sqft, or 3000sqft, they must take the available option of 2000sqft. This creates different thresholds, which has a flat relative range. If they needed 2500sqft, they would then need to go to the 3000sqft range. Activity level does NOT affect these costs. - What are prime & conversion costs?o Prime costs vary directly with the amount of product produced; Direct materials + Direct Labor, while conversion costs are those required to turn raw materials into sellable goods; Labor + overhead.- Hi-low methodo Portion that’s mixed vs. portion variableo Find the month with the highest, and lowest with activityo Change in cost = $9800-$7400 = $2400 = $6/hrChange in activity 850hrs-450hrs 400hr- What are a traditional & a contribution income statement?o Traditional is generally for external reporting, you have: Sales – COGS= gross margin – selling/admin = net operating income, while the Contribution format explicitly tells us what the constitution margin is and is used primarily used internally by management. Sales – variable expenses = contribution margin – fixed expenses = net operating income. - What are direct & indirect costs?o Direct costs can be easily and conveniently traced to a unit of product or other cots object. Ex) room service drinks directly related to guest, salary of the head chef is a direct cost to the hotel’s restaurant, Room cleaning supplies in relation to the housecleaning department; towels used in the gym are a direct cost for the gym. Indirect costs cannot be easily and conveniently traced to a unit of product or other cost object. Ex) salary of the Head chef is indirectly related to one particular customer; cost of cleaning supplies for a particular hotel guest; flowers for the reception related to a particular guest; wages of the doorman related to a particular guest; fire insurance indirectly relates to the hotel’s gym- What are opportunity costs & sunk costs?o Opportunity Cost is the potential benefit that is given up when one alternative is selected over another. For example, if you were not attending college, you could be earning 15,000/yr. your opportunity cost of attending would be 15,000.o Sunk Costs have already been incurred and cannot be changed now or in the future. These costsshould be ignored when making decisions. Suppose you had purchased gold for $400 an ounce, but now it is selling $250/ounce. So you should consider what you could possibly get for it in thefuture, because you can’t change the past. III. Chapter 3: Cost-Volume-Profit Relationships- What is contribution margin?o The percent of sales that end up being part of the contribution margin.o Contribution margin ($) = Sales ($) – variable expenses ($)- What is contribution ratio?o Contribution margin ratio is the percent of sales that end up being part of the contribution margin.o Overall CM Ratio ($) = Total CM ($) Total Sales ($)- Understand what happens to contribution margin as sales revenue increases.o An increase in the contribution margin ratio determines how much the operating income will also