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ACCT 2102: Test 1
financial vs managerial
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1. manage: internal, whatever management needs, no rules, future, part of company, everyone
2. finance: external, financial statements, GAAP, historical for company as whole, accountants
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ethics
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competence, confidentiality, integrity, and credibility
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sustainability
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meeting the needs of the present without sacrificing the needs of the future
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ppl care about sustainability
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triple bottom line:
-look at profit
-how decisions affect other people
-taking care of the planet
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service companies
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no tangible project they are offering, no inventory
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value chain
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expense is always a cost but a cost is not always an expense
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value chain process
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1. research: innovation, thinking about improvement
2. design: coming up with plan/recipe
3. production/purchase: NOT service company. PRODUCT.
4. marketing: how you sell it
5. distribution: deliver
6. customer service
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period cost
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not ever in inventory, expensed in period which they are incurred.
-never placed on balance sheet as asset. expensed on income statement as op expenses
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cost object
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thing we want to assign cost to.
-direct product: easy & convenient to trace to object.
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3 types of product cost
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1. DM
2. DL
3. MOH - indirect
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NEED COST OBJECT TO DETERMINE DIRECT OR INDIRECT
SHIP IN - PERIOD
SHIP OUT - PRODUCT
Income statement for merchandiser and manufacturer
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IDENTICAL
sales
-COGS
= GP
-op exp
= NI
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cost assigned to unites completed
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COGM
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COGS schedule does NOT include
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period cost. only op income includes period cost.
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job costing
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unique, customizable products in small batches
-manufactures but also some service companies.
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POHR
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budgeted MOH / budgeted allocation base
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MOH during year
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allocate MOH to each job by:
POHR * actual activity level of allocation for job
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ABC
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places greater focus on identifying the activity and related cost drivers that cause a company to generate MOH.
-better job of product costing than any other cost system
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cost of adopting ABC
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-low when company has accounting and info tech expertise
-understanding cost is extremely important in competitive markets and in company with high risk of cost distortion
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process costing
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large batches of identical units of product. inefficient to trace product cost to individual jobs.
RM, WIP, FG, COGS
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GOAL OF JOB AND PROCESS
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determine the cost of a unit of product
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equiv units
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used in process costing to enable fair assignment of costs to a completed unit and to a partially completed unity
-REPRESENT TOTAL AMOUNT OF UNITS THAT COULD HAVE BEEN COMPLETED GIVEN PRODUCT COSTS
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fifo
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more accurate when product cost part drastically from period to period
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weighted average
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combines physical flow and cost of units beginning inv and of units started during the period
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beginning % complete is irrelevant for current period calculations.
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relevant for prior period calc
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