Week 1 Accounting Notes
Week 1 Accounting Notes ACIS 2116
Popular in Principles of Accounting
Popular in Accounting and Information Systems
This 2 page Class Notes was uploaded by windwalkerr on Friday October 7, 2016. The Class Notes belongs to ACIS 2116 at Virginia Polytechnic Institute and State University taught by Chris Sherman in Fall 2016. Since its upload, it has received 3 views. For similar materials see Principles of Accounting in Accounting and Information Systems at Virginia Polytechnic Institute and State University.
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Date Created: 10/07/16
ACIS 2116 18.104.22.168.16 Primary setting for course Manufacturing environment Will discuss some service companies & retailers but main focus is manufacturing environment Manufacturing companies will usually have 3 types of inventory Cost concepts used throughout course Product vs period costs o Distinction used more for external financial reporting issues Fixed vs variable costs o Based on cost behavior & used more for planning & control issues Direct vs indirect costs o Based on assigning costs to specific cost object (i.e. producing units of product) Product vs period costs Product o Costs associated w/ “factory” o Manufacturing costs or inventoriable costs. These go to balance sheet & then to income statement o Go into COGS o Classified into one of 3 categories: Direct materials (DM) Direct labor (DL) Overhead costs (OH, FOH, MOH) Period o Costs associated w/ “office” o Nonmanufacturing costs. These go directly to income statement as expenses. o Typically classified as selling, general, and administrative costs (S, G, & A expenses) o Do not go into COGS Product cost: Equations to know Prime costs = DM + DL Conversion costs = DL + OH Fixed vs variable cost (in relation to increasing/decreasing production) Fixed cost o Total fix cost will remain same when production is either increased/decreased. o Fix cost per unit has an inverse relationship when production is changed; production increases, fix cost per unit decreases. o Total fix cost is yintercept on graph. o i.e. depreciation, insurance, property taxes, rent, advertising, salaries, etc Variable cost o Total variable cost has direct relationship when production is changed (increase increase) o Variable cost per unit will remain same when production is either increased/decreased. o Slope of line on graph is variable cost per unit ACIS 2116 22.214.171.124.16 o i.e. direct material costs, direct labor costs, etc Mixed cost some costs will be considered mixed cost. It will be part fixed & part variable cost. You will want ot create a cost function. Cost function: y=a+b(x) o y=total cost o a=total fix costs o b=variable cost per unit o x=# of units or some activity various ways to analyze mix costs o scattergraph plot plotting points on graph to see if there is some sort of linear relationship btw indep & dep variable o highlow method referring to high & low activity levels for certain time period. You will perform highlow method to find variable cost per unit & total fix cost which will create your cost function (see in class problems). Cost/quantity o leastsquared regression o multiple regression analysis analytical method used when dependent variable “cost” is caused by more than one factor most complex method but most accurate multiple regression & leastsquares are more accurate than scattergraph plot & highlow method.
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