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Final

Managerial Accounting (COMM 112) Final Exam Review

43 Pages
598 Views

Department
Commerce
Course Code
COMM 112
Professor
George Boland

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Description
Managerial Accounting Final Exam Review Shannon Bailey Chapter 1 Managerial accountingthe provision of accounting information ffor a companys internal usersNot bound by GAAP or IFRS and has three objectives 1 Provide info for planning the organizations actions 2 Provide info for controlling the organizations actions 3 Provide info for making effective decisions Financial accountingprimarily concerned with producing information for external users including investors creditors customers suppliers govt agencies etc Total quality Managementmanufacturers strive to create an environment that will enable workers to manufacture perfect 0 defect productsChapter 2 Costthe amount of cash or cash equivalent sacrificed for goodsservices that are expected to bring a current or future benefit to the organization Expensesexpired costs Pricerevenue per unit Accumulating coststhe way that costs are measured and recorded Assigning coststhe way that a cost is linked o some cost object Cost objectany item such as a product customer dept project plant etc for which costs are measured and assigned Direct coststhose costs that can be easily and accurately traced to a cost object Indirect costscosts that cannot be easily and accurately traced to a cost object Allocationmeans that an indirect cost is assigned to a cost object by using a a reasonable and convenient method Variable costone that increases in total as output increases and decreases in total as output decreases Fixed costa cost that does not increase in total as output increases and odes not decrease in total as output decreases Opportunity costthe benefit given up or sacrificed when one alternative is chosen over another never included in accounting records manufacturing organizations produce products service organizations provide services Direct materials DMthose materials that are a part of the final product and can be directly traced to the goods being producedMust be easily traceablerecognizable and reflect a significant portion of the total cost of the productie glue used to produce a TV might be so small that should be allocated as a factory OH cost Direct labour DLthe labour that can be directly traced to the goods being producedMust be easily traced to production and reflect a significant portion of the total cost of the product Manufacturing overhead MOHcosts that cannot be traced to the cost object of interest such as depreciation on buildings and equipment janitorial and maintenance labour plant supervision materials handling power for plant utilities and plant property taxes total product costDMDLMOH Prime costDMDL Conversion costDLMOHthe cost of converting raw materials into a final product Period costall costs that are not product costs like the cost of office supplies RD sellingadmin CEOs salary and advertisements if a period cost is expected to provide an economic benefit beyond the next year it is recorded as an asset capitalized and allocated to expense through depreciation throughout its useful life Selling costthe costs necessary to market distribute and service a product or service Administrative costsall costs associated with RD and general admin of the organization that cannot reasonably be assigned to selling or production Materials inventoryconsists of the costs of the direct and indirect materials that have not entered the manufacturing process Workinprocess WIP inventoryconsists of the direct materials direct labour and factory OH costs for products that have entered the manufacturing process but are not yet completed regardless of level of completion Finished goods inventoryconsists of completed products that have not yet been sold Cost of goods manufacturedthe total cost of making products that are available for sale during the periodMaking a Statement of Cost of Goods Manufactured 1 Determine the cost of direct materials used stMaterials inventory Jan 1 201265 000 Plus materials purchased 100 000 Cost of goods available for use165 000 Less materials inventory Dec 31 2012 45 000 Cost of Direct Materials used120 000 2 Determine the total manufacturing costs incurred Cost of direct materials used120 000 All direct labour210 000 All factory overhead70 000 Total manufacturing costs incurred 400 000 3 Determine the cost of goods manufactured Total manufacturing costs incurred 400 000 stWIP inventory Jan 1 2012 50 000 Total manufacturing costs 450 000 stLess WIP inventory Dec 31 201280 000 Cost of goods manufactured 380 000Statement of Cost of Goods Manufactured stFor the year ended December 31 2012 stMaterials inventory Jan 1 201265 000 Plus materials purchased 100 000 Cost of goods available for use165 000 Less materials inventory Dec 31 2012 45 000 Cost of Direct Materials used120 000 Plus direct labour210 000 Plus factory overhead 70 000 Total manufacturing costs incurred 400 000 stPlus WIP inventory Jan 1 201250 000 Total manufacturing costs 450 000 stLess WIP inventory Dec 31 201280 000 Cost of goods manufactured 380 000Beginning inventory of materialspurchasesdirect materials used in productionending inventory of materials Gross marginthe difference between sales revenue and cost of goods sold gross margin percentagegross marginsales revenueChapter 3Cost Behaviour Cost behaviourthe general term for describing whether a cost changes when the level of output changes Cost drivera causal measurement that causes costs to change Relevant rangethe range of output over which the assumed cost relationship is valid for the normal operations of a firm Fixed costscosts that in total are constant within the relevant range as the level of output increases or decreasesUnit fixed cost varies inversely with changes in activity throughout relevant range Discretionary fixed costsfixed costs that can be changed or avoided relatively easily at management discretion ie advertising cost Committed fixed costsfixed costs that cannot be easily changed often involving a long term contract ie leasing machinery purchase of property Variable costscosts that in total vary in direct proportion to changes in output within the relevant rangeVariable unit cost is fixed throughout relevant rangeTotal variable costsvariable rate x amount of output
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