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Chapter 14 Managerial Accounting Concepts & Princi.. - Flashcards

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Class:ACCT 202 - Acct Principles II
Subject:Accounting
University:Howard University
Term:Fall 2011
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Managerial Accounting An Activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers. 
Control The process of monitoring planning decisions and evaluating an organization's activities and employees 
Internal Control System Monitors and controls business Activities
Institute of Management Accountants Professional association for mangement accountants, has issued a code of ethics to help accountants involved in solving ethical dilemmas 
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Cost Object Product , Process, Department, or customer to which costs are assigned.
Direct Costs Those traceable to a single cost object

ex. If a product is a cost object, its material and labor costs are usually directly traceable 
Indirect Costs Are those that cannot be easily and cost-beneficially traced to a single cost object
Sunk Cost A Cost that has already been incurred and cannot be avoided or changed
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Out-Of-Pocket Cost Requires a future outlay of cash and is relevant for decision making
Opportunity Cost is the potential benefit lost by choosing a specific action from two or more alternatives
Product Costs Refers to expenditures necessary and integral to finished products. They include direct materials, direct labor and indirect manufacturing costs called overhead costs
Period Costs Refers to expenditures identified more with a time period than with finished products. They include selling and general administrative expenses 
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Raw Materials Inventory Refers to the goods a company acquires to use in making products. It uses raw materials in two ways: directly and indirectly. 
Indirect Materials They are not clearly identified with specific product units or batches. 
Goods In Process Inventory Consists of products in the process of being manufactured but not yet complete
Finished Goods Inventory Consists of completed products ready for sale
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Direct Materials Tangible components of a finished Product
Direct Material Costs Expenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods.
Direct Labor Refers to the efforts of employees who physically convert materials to finished product. 
Direct Labor Costs Are the wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods
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Indirect Labor Cost of other workers on the assembly line who assist direct laborers. 
Indirect Labor manufacturing workers' efforts not linked to specific units or batches of the product 
Factory Overhead Consists of all manufacturing costs that are not direct materials or direct labor
Factory overhead costs Cannot be separately or readily traced to finished goods 
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Prime Costs Expenditures directly associated with the manufacture of finished goods. 
Conversion Costs Expenditures incurred in the process of converting raw materials to finished goods 
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 Managerial AccountingAn Activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers. 
 ControlThe process of monitoring planning decisions and evaluating an organization's activities and employees 
 Internal Control SystemMonitors and controls business Activities
 Institute of Management AccountantsProfessional association for mangement accountants, has issued a code of ethics to help accountants involved in solving ethical dilemmas 
 Cost ObjectProduct , Process, Department, or customer to which costs are assigned.
 Direct CostsThose traceable to a single cost object

ex. If a product is a cost object, its material and labor costs are usually directly traceable 
 Indirect CostsAre those that cannot be easily and cost-beneficially traced to a single cost object
 Sunk CostA Cost that has already been incurred and cannot be avoided or changed
 Out-Of-Pocket CostRequires a future outlay of cash and is relevant for decision making
 Opportunity Costis the potential benefit lost by choosing a specific action from two or more alternatives
 Product CostsRefers to expenditures necessary and integral to finished products. They include direct materials, direct labor and indirect manufacturing costs called overhead costs
 Period CostsRefers to expenditures identified more with a time period than with finished products. They include selling and general administrative expenses 
 Raw Materials InventoryRefers to the goods a company acquires to use in making products. It uses raw materials in two ways: directly and indirectly. 
 Indirect MaterialsThey are not clearly identified with specific product units or batches. 
 Goods In Process InventoryConsists of products in the process of being manufactured but not yet complete
 Finished Goods InventoryConsists of completed products ready for sale
 Direct MaterialsTangible components of a finished Product
 Direct Material CostsExpenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods.
 Direct LaborRefers to the efforts of employees who physically convert materials to finished product. 
 Direct Labor CostsAre the wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods
 Indirect LaborCost of other workers on the assembly line who assist direct laborers. 
 Indirect Labormanufacturing workers' efforts not linked to specific units or batches of the product 
 Factory OverheadConsists of all manufacturing costs that are not direct materials or direct labor
 Factory overhead costsCannot be separately or readily traced to finished goods 
 Prime CostsExpenditures directly associated with the manufacture of finished goods. 
 Conversion CostsExpenditures incurred in the process of converting raw materials to finished goods 
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