Study guide chap 1-3
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This 2 page Study Guide was uploaded by Nikita Hendricks on Saturday September 3, 2016. The Study Guide belongs to 2304 at Baylor University taught by Prof. Stuebs in Fall 2016. Since its upload, it has received 8 views. For similar materials see Managerial Accounting in Accounts at Baylor University.
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Date Created: 09/03/16
MANAGERIAL ACCOUNTING CHAPTERS 1-3 EXAM STUDY GUIDE Managerial Accounting does not follow what? G.A.P.P (generally accepted accounting principle Three activities that managerial accounting helps carry out: 1. planning 2. controlling 3. decision making Planning: -Establishing goals, specifying how to achieve them, and develop a budget. Controlling: -Gathers feedback to ensure that plans are being followed. -Performance reviews compare actual results with the budget. Decision Making: -Involves making a selection among competing alternatives -Answers three questions: what should we sell, to whom, and how? Raw Materials Materials that go into the final product Direct Materials Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product Indirect Materials Smalls items of material such as glue and nails that may be an integral part of finished product, but whose costs cannot b easily or conveniently traced to it Contribution approach An income statement format that organizes costs by their behavior. Contribution margin The amount remaining from sales revenues after all variable expenses have been deducted Cost Behavior the way in which a cost reacts to changes in the level of activity Discretionary Fixed Costs Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research. Fixed Costs A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. High-Low Method A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels different word for product costs Cost behavior is said to be linear whenever a straight line is a reasonable approximation for the relation between cost and activity period costs Cost that are taken directly to the income statement as expenses in the period in which they are incurred or accrued. Product costs all costs that are involved in acquiring or making a product variable costs a cost that varies, in total, in direct proportion to changes in the level of activity.
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