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budgeted cost
predicted or forecasted cost
cost accumulation
the collection of cost data in some organized way by means of an accounting system
direct costs
are related to the particula cost object and can be traced in an economically feasible way
actual cost
the cost incureed or historical cost or past cost
indirect cost
are related to the particular cost object but cannot be traced to it in an economically freasible way
cost allocation
describes the assignment of indrect costs to a particular cost object
cost assignment
traces direct costs to a cost object and allocated indirect costs to a cost object
variable cost
changes in total in proportion to changes in the related level of total activity or volume
fixed cost
remains unchanged in total for a given time period, despite wide changes in related level of total activity or volume
cost driver
a variable, such as the level of activity or volume, that causally affects costs over a given time span
cost driver example
if product design costs change with the number of parts in a product the number of parts is a cost driver of product design costs
relevant range
the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question
direct materials inventory
direct materials in stock and awaiting use in the manufacturing process
work in process inventory
goods partially worked on but not yet completed (work in progress)
Finished goods inventory
goods completed but not yet sold
inventoriable costs
all costs of a product that are considered as assets in the balance sheet when they are incurred and that become costs of goods sold only when the product is sold
period costs
all costs in the income statement other than cost of godos sold(treated as expenses in year incurred)
Cost volume profit analysis
examines the behavior of total revenues, total costs, and operating income as changes occur in the units sold, selling price, the variable cost per unit, or fixed costs of a product
Contribution Margin
the difference between total revenues and total variable costs OR contribution margin per unit X number of units sold
Contribution Margin Per Unit
the difference between selling price and variable cost per unit
Contribution Margin Income Statement
groups costs into variable costs and fixed  costs to highlight contribution margin
Contribution Margin Percentage
CM per unit divided by selling price
Breakeven point
Quantity of output sold at which total revenues equal total costs, that is the quantity of output sold that results in $0 of operating income
BEP equation 1
(Selling price X quantity of units sold) - (variable cost per unit X quantity of units sold) - Fixed=operating income
BEP equation 2
(CM per unit X quantity of units sold) - fixed costs= operating income
BEP equation 3
fixed costs divided by CM per unit
Net Income
operating income plus nonoperating revenues minus nonoperating costs minus income taxes
Management accounting
measure, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.
Financial accounting
focuses on reports to external parties such as investors, goverment agencies, banks, and suppliers.
cost accounting
measures, analyzes, and reports financial and non financial information relating to the costs of acquiring or using resources in an organization
cost management
describes the approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals (example amount and kind of materials used)
value chain
is the sequence of bsiness functions in which customer usefulness is added to products of services
supply chain
describes the flow of goods, services, and information from the intial sources of materials and services to the delivery of products to consumers
Institute of Management accountants. largest association in the US. issued a standards of ethical conduct for practitioners of management
honesty, fairness, objectivity and responsibility
maintain an appropriate level of professional expertise. perfore duties in accordance to relevant laws. clear concise recommendations
keep all information confidential
mitigate conflicts of interests
communicate information fairly and objectively
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