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Cost Accounting for Decision Making Flashcards

Cost Accounting for Decision Making Flashcards
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Absorption Costing
A type of costing that sets prices based on variable costs, fixed costs and a segment of profit. It assumes that you will sell all of your available products.
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Split-Off Point
The area in which two similar products begin to differ from one another. For example, two companies sell tacos that are very alike. One has onions, one doesn't. The onions are this.
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Variable Cost
These costs will vary based on the number of products created by a business.
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Fixed Cost
Costs that stay the same no matter how many products a business creates.
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Differential Cost
This is the difference in cost between different procedures or products.
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Market Pricing Strategy
Businesses use this pricing strategy when they look at market conditions, such as the prices charged by other competitors, to set a price. It also involves the company's sales strategy.
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Cost Plus Pricing Strategy
This pricing strategy is used by companies that decide on a sales price by taking their inventory cost and adding a markup to it.
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Frequency Schedule
Ability of a business to ensure its service is available when consumers want it. Companies that focus on this, like Southwest Airlines, can strengthen their ability to make pricing decisions.
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17 cards in set

Flashcard Content Overview

Working with this set of flashcards can help you review differential, variable and fixed costs. You'll be able to look at different pricing strategies and absorption costing. These cards also focus on some of the Generally Accepted Accounting Principles (GAAP), including:

  • Matching
  • Realization
  • Rule of entities
  • Going concern
  • Dual aspect
  • Objectivity
  • Conservatism
  • Materiality
Front
Back
Frequency Schedule
Ability of a business to ensure its service is available when consumers want it. Companies that focus on this, like Southwest Airlines, can strengthen their ability to make pricing decisions.
Cost Plus Pricing Strategy
This pricing strategy is used by companies that decide on a sales price by taking their inventory cost and adding a markup to it.
Market Pricing Strategy
Businesses use this pricing strategy when they look at market conditions, such as the prices charged by other competitors, to set a price. It also involves the company's sales strategy.
Differential Cost
This is the difference in cost between different procedures or products.
Fixed Cost
Costs that stay the same no matter how many products a business creates.
Variable Cost
These costs will vary based on the number of products created by a business.
Split-Off Point
The area in which two similar products begin to differ from one another. For example, two companies sell tacos that are very alike. One has onions, one doesn't. The onions are this.
Absorption Costing
A type of costing that sets prices based on variable costs, fixed costs and a segment of profit. It assumes that you will sell all of your available products.
Operational Objectives
Goals a company pursues in the short term that are in line with the company's mission statement.
Generally Accepted Accounting Principles (GAAP) Concepts: Materiality
This concept of the GAAP tells us that we should report changes in a company's financial position if they are significant.
Generally Accepted Accounting Principles (GAAP) Concepts: Conservatism
Accountants who follow this GAAP concept report financial information accurately, without inflating or decreasing it.
Generally Accepted Accounting Principles (GAAP) Concepts: Objectivity
This concept of the GAAP instructs us to only report financial information that can be supported by evidence and documentation.
Generally Accepted Accounting Principles (GAAP) Concepts: Matching
The GAAP concept that says to record every business transaction, including sales and expenses, in the time period it occurred.
Generally Accepted Accounting Principles (GAAP) Concepts: Dual Aspect
A concept of the GAAP that says there are two aspects to all transactions. It includes the balance sheet equation.
Generally Accepted Accounting Principles (GAAP) Concepts: Realization
The GAAP concept that says liabilities and assets can be reported only when they take place, not before they happen.
Generally Accepted Accounting Principles (GAAP) Concepts: Going Concern
This GAAP concept tells us that companies intend to remain open and operational.
Generally Accepted Accounting Principles (GAAP) Concepts: Rule of Entities
One of the concepts of GAAP. It tells us that a person's business and personal accounts must be separate.

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