Summary
Literature summary Management Accounting Business Administration J2
- Course
- Institution
Summary of the entire prescribed literature for Management Accounting
[Show more]
Seller
Follow
chelseavangool
Content preview
Literatuur Management AccountingHoofdstuk 3
Cost pool = groups in which costs are collected, for example by type, source or responsibility
Cost driver = a factor that causes or relates to a change in the total cost of an activity
Cost object = any product/service/activity etc. to which costs are assigned
Direct cost = can be conveniently and economically traced directly to cost pool/object
Indirect cost = is not directly traceable to a specific cost pool or object, needs to be allocated
Overhead = combination of all indirect costs in a cost pool
Prime costs = sum of direct materials and direct labor
Conversion costs = direct labor and overhead combined
Activity-based cost driver = relate to a sort of activity
Volume-based cost driver = relate to the amount produced or quantity of service provided
Relevant range = range of the cost driver in which actual value is expected to fall, and for
which the relationship between the cost and the cost driver is approximately linear
Variable costs = changes in total in response to changes in one or more cost drivers
Fixed costs = portion of total cost that doesn’t change with change of designated cost driver
Step cost = cost that varies with the cost driver, but in discrete steps
Unit cost = total cost divided by the number of units of output
Average cost = total cost of resources divided by the units of output
Cost of goods sold = cost of product transferred to income statement when inventory is sold
Product costs = only necessary costs to complete the product
Period costs = all nonproduct expenditures for managing the firm and selling the product
Hoofdstuk 8
Cost estimation = development of relationship between cost object and cost drivers
High-low method
Highest costs−lowest costs
Y = a + bx, b =
value costdriver highest −value costdriver lowest
Regression analysis
Statistical method that minimizes the sum of the squares of the estimation errors
High R-squared. higher t-value and small p-value are high validity
Hoofdstuk 9
Cost-volume-profit (CVP) analysis = method for analyzing how various operating and
marketing decisions affect short-term profit based on an understanding of the relationship
between variable costs, fixed costs, unit selling price and the output level
Operating profit = (Units sold x Selling price per unit) – (units sold x variable cost per
unit) – fixed costs
o π B =( p× Q )−( v × Q )−F
Contribution margin per unit = p – v
Total contribution margin = contribution margin per unit x Q
Contribution margin ratio = (p – v)/p, ratio of contribution margin to selling price per unit
Contribution income statement = income statement with sales – variable costs to give the
total contribution margin, subtracted with fixed costs to give the operating profit
Breakeven planning
Breakeven point = point at which total revenue equals total costs
Breakeven in units
o 0 = (p x Q) – (v x Q) – F, solve for Q
o Q = F/(p – v)
Breakeven in dollars
o 0 = [((p – v)/p) x Y] – F, solve for Y
o Y = F/((p – v)/p)
, CVP for profit planning
Revenue planning = determining the revenue for a desired amount of pretax profit
F + πB
o Q= in units
p−v
o Y = p x Q in dollars
Cost planning = determining the costs for a known sales volume and desired profit
F + πB
o v=p–
Q
o Tradeoff between high fixed costs and low variable costs or low fixed costs and high
variable costs is solved by solving the Q for which the cost equations are equal
CPV analysis for activity-based costing (ABC)
Identifying cost drivers for indirect cost activities to allocate them
Allocating them instead of seeing them as fixed costs as in volume based CVP
In batches:
F VB+ π B
Q=
o v AB
p−v−( )
b
o Q = units
o FVB = portion of fixed costs that does not vary with the activity cost driver
o VAB = cost per batch for the activity-based cost driver
o b = batch size
Margin of safety (MOS) = amount of planned (or actual) sales above the breakeven point
MOS ratio = MOS/planned sales or revenue
Operating leverage = the extent of fixed costs in an organization’s cost structure
Degree of operating leverage (DOL) = Contribution margin/operating profit, amount of
percentage operating profit would change for a percentage change in sales volume
CVP-analysis with two or more products/services
Sales mix = relative proportion in which a company’s products/services are sold, if this
remains constant as total volume changes, we can build a single CVP model
Weighted-average contribution margin per unit = average per-unit contribution margin
based on an assumed sales mix determined on the basis of physical units
Weighted-average contribution margin ratio = average contribution margin ratio based on
sales dollars
Hoofdstuk 4
Costing = accumulating, classifying and assigning direct materials, direct labor and factory
overhead costs to cost objects, three choices:
1. Cost accumulation method
a. Job costing: tracing costs to a specific product or service
b. Process costing: accumulating costs at the department level and then allocating
these to products or services
c. Operation costing: uses a job costing approach to assign direct materials costs to
jobs and process costing to assign conversion costs to products or services
2. Cost measurement method
a. Actual: uses actual costs for direct materials, direct labor and factory overhead
b. Normal: uses actual costs for direct materials and direct labor and normal costs
for factory overhead
c. Standard: standard costs and quantities for all three types of manufacturing costs
3. Overhead application method
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller chelseavangool. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82013 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now