MOS 1023 – November Exam Textbook Notes pg. 102-197.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 1023A/B
Professor
Maria Ferraro
Semester
Fall

Description
MOS 1023 – Into to Accounting Exam #2 Textbook Notes Pg. 102-197 Value: benefits less costs Opportunity cost: the value you give up to get something Shareholder value: maximize the returns to shareholders investing in the company Planning decisions: choices about acquiring and using resources to deliver products and services to customers. Control decisions: relate to motivating, monitoring, and evaluating performance through past performance with the purpose of improving future plans. Planning and control go hand in hand. Financial accounting: satisfy the needs of decision makers outside of the firm Managerial accounting: satisfy the needs of decision makers inside the firm Product costs: costs associated with getting products and services ready for sale ex. Salaries, facility rent, supplies maintenance. Gross margin: revenue less product costs Period Costs: costs that are not directly related to making the product, rather include ad, rent, customer service (all costs that are not product costs, appear below the line of gross margin) Subtract period costs from gross margin to get EBIT. Service firms: offer not tangible or storable good ex. Delta Inventory equation (merchandising): - COGS: cost of goods become part of cogs only when firm sells the items - Cost of beg inv + cost of goods purchased during the period – cost of ending inventory = COGS during period Cost flows in manufacturing - direct materials and direct labour - overhead (manufacturing overhead): total of all these indirect manufacturing inputs ex. Production support staff, machines, equipment - variable overhead (electricity) and fixed overhead (salaries never change) - selling and administrative costs - Prime costs: sum of material and labour costs - Capacity costs: sum of variable and fixed overhead - Conversion costs: sum of labour and overhead – required to convert raw materials to finished goods Get chart*** Relation of costs accounts: ending balance in balance sheet WIP account (COGManufactured) is the finished goods inventory account for income statement Cost Allocation: - Cost pool: total costs to allocate - Cost objectives: items or entities which we allocate the costs in the cost pool - Cost driver (allocation basis): attributes we can measure for each cost basis (ex. Number of males) - Allocation volume: sum of cost driver amounts across all cost objects Characteristics of effective performance measures: An ideal performance measure: - aligns employee and organizational goals - yields maximum info about the decisions or actions or the individual or organizational
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