Activity Based Costing focuses on activities as fundamental building blocks in compiling the indirect cost of products Activity Based Management uses activity based costing info to make decisions that increase profits but satisfy customers needs product mix cost cutting panning control Appraisal Costs costs incurred to detect poor quality goods services Audit Committee Subcommittee of the BOD Batch Level Costs cost incurred for every batch regardless of of units in the batch ex machine set up Bill of Materials specifies materials needed to produce a job Board of Directors BOD Oversee company Budgets Quantitative expression of a plan Chief Executive Officers CEO Manage company on a daily basis hired by BOD Chief Operating Officer COO Responsible for company s operations R D production and distribution Chief Financial Officer CFO responsible for all company s financial concerns reports to CEO Controller responsible for financial accounting managerial accounting and tax reporting reports to CEO Controlling evaluating results performance of operations against plans making adjustments as needed ex comparing budgeted sales w actual sales Conversion Cost Cost of transforming direct materials into finished goods Cost of Goods Manufactured calculated amount Directing Overseeing company s day to day operations Direct Labor Cost of compensating employees Direct Cost Costs that can be directly traced to a cost object Direct Materials Convert raw materials to finished products ERP serves info needs of people in accounting marketing warehouse External Failure Costs costs incurred when company does not detect poor quality goods services until after delivery to customers Facility Level Costs costs incurred no matter how many units batches or products are produced cost of depreciation insurance property tax on entire plant Financial Accounting Reports of entire company reliable objective external users Indirect Cost Everything else involved in making a product Institute of Management Accountants IMA professional assoc for management accountants in USA goal advance thru certification education etc Internal Audit reports to CFO or the CEO audit committee to ensure company s internal controls risk management policies are functioning properly Internal Failure Costs costs incurred from defects in poor quality goods services are corrected before delivery to customers Inventorial Product Costs costs associated with production purchases external reporting Job Costing used when diff jobs vary widely in resources time required complexity of process Kaizen Japanese word for Change for the better Lean Operations Philosophy and business strategy of manufacturing w o waste do not focus on internal external waste Lean Thinking management philosophy strategy focused on creating value for customer by eliminating waste Managerial Accounting Focuses on separate segments and how they are doing internal users Manufacturing Companies Report 3 diff kinds of inventory on balance sheet ex Dell Computers Proctor and Gamble MOH Indirect costs related to manufacturing that are not DM or DL Materials Requisition must be presented in order to get direct materials Overallocated overcosted too much allocated jobs too much expense Planning Setting goals objectives and determining how to achieve them involves budgets Period Costs Selling general and admin expenses operating expenses R D Marketing Distribution Customer Service costs PMOHR Calculated at the Beginning of year POUS storage system used to reduce waste of transportation and movement Prevention Costs costs incurred to avoid poor quality goods services Process Costing accumulating costs for each production process Product Level Costs costs incurred for a particular product regardless of of units batches of the product produced Raw Materials Everything to make an item Raw Materials Record Control for materials stored in storeroom Receiving Report duplicate of purchase order but w o quantity prelisted on the form Sarbanes Oxley Act 2002 enacted to restore trust in publically traded corporations their management financial statements auditors SEC Requires publicly traded companies to issue audited financial statements on info for investors Service Companies Intangible no inventory ex insurance healthcare law firms bank Takt Time rate of production needed to meet customer demand yet avoid overproduction Total Costs Costs of all resources used thru value chain Total Quality Management TQM To provide customers with superior products services ISO 9001 2008 for commitment to quality key to succeeding in global economy Treasurer Responsible for raising capital thru stocks bonds investing Triple Bottom Line People planet profit Underallocated Undercosted not enough allocated to jobs too little expense Unit Level Costs Incurred for every single of unit product produced Wholesalers Buy products in bulk from producers mark up resell to retailers Work in Process Inventory Composed of goods partially thru manufacturing process goods not finished yet XBRL Language that utilizes standardized coding system companies use to tag each piece of financial business info in a format that can be quickly and efficiently accessed over the internet 3 Inventory Accounts Raw Materials Work in Process Finished Goods 3 pillars of Sustainability Economic Environmental Social Managers primary responsibilities Planning Directing Controlling Management accountants work with Cross Functional teams IMA Ethical Standards Competence perform professional duties in accordance to laws regulations Confidentiality is a set of rules or a promise that limits access Integrity the quality of being honest and having strong moral principles mitigate conflicts of interest Credibility communicate info fairly objectively trustful Managerial Acct Direct plan control make decisions no legal info requirements direct employee behavior impact emphasizes data relevance Financial Acct Investment lending decisions GAAP external auditors data objectivity Value Chain R D Design Production or Purchases Marketing Distribution Customer Service Skills of managerial accountants analytical Microsoft excel skills written verbal communication accounting knowledge business knowledge teamwork Acronym for 8 wastes DOWNTIME Financial acct develops reports for external parties such as creditors shareholders Financial acct statements of public companies are audited annually by CPAs Manufacturing and Merchandising companies will always have the