Term
| Lubricants used in a machine relative to the number of units produced would be considered what kind of cost? |
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Definition
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Term
| Relative to the number of units produced, hourly wages paid to a factory worker would be? |
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Definition
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Term
| Which of the following is a product cost: Depreciation on office equipment, insurance on corporate HQ, insurance on factory building, or hourly wages paid to office workers? |
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Definition
| Insurance on Factory Building |
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Term
| What are the four areas included on the Standard of Ethical Conduct for Management Accounts? |
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Definition
competence
confidentiality
integrity
credibility/objectiveness |
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Term
| Define Break Even by Equation |
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Definition
| Break Even is whe Cost of Goods Manufactured - (Variable cost per unit * number of units) - Fixed Costs=0 |
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Term
| If Cost of Unit Increases, then the Break even Sales volume will: |
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Definition
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Term
| At the end of a reporting period, the unfinished goods a placed where? |
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Definition
| Work In Process Inventory |
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Term
Which of the following is a direct cost of dining tables made by hand:
The cost of wood for the table
The cost of electricity used to operate the saws and lathes
The cost of the wages of the bookkeeper
all of the above |
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Definition
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Term
| These costs increase with the volume produced within the relevant range |
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Definition
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Term
| These costs remain the same regardless of number of units produced within the relevant Range |
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Definition
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Term
| When the level of production increases, fixed costs per unit will (increase, decrease, or remain the same) |
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Definition
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Term
| Break Even point is the level of sales where: Total Revenue equals total costs Profit is Zero Total contribution Margin equal Total Fixed costs All of the above |
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Definition
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Term
| How is the product cost per unit calculated? |
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Definition
| Cost of Goods MFG / number of units produced |
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Term
| These costs have a fixed component and a variable Component |
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Definition
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Term
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Definition
| Costs that are expensed to the period instead being part of cost of purchased goods or cost of manufactured goods. Examples include sales commissions, and Rent on ADMINISTRATIVE office |
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Term
| When would you use process costing as opposed to job costing |
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Definition
| When there is a consistent process and the output is not-unique from each other. |
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Term
| When would you used job order costing instead of of process costing |
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Definition
| When the work is more customized. More or Different materials may be used on each seperate output. |
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Term
| Under or Over applied overhead is adjusted where? |
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Definition
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Term
| If Overhead is underapplied, cost of goods sold will |
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Definition
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Term
| The equation of Contribution Margin is |
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Definition
| Sales Revenue minus All Variable Expenses |
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Term
| Break Even can be computed as Contribution Margin equals |
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Definition
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Term
| Break Even is reached with Contribution Margin equals |
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Definition
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Term
| What are the three points of the Fraud Triangle |
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Definition
Situational Pressures
Opportunities
Personal Characteristics |
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Term
Which of the following are Financial vs Managerial Accounting:
Emphasizes Objectivity and verifiability;Emphasizes relevance for decision making |
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Definition
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Term
Which of the following are Financial vs Managerial Accounting:
Reports are based on Internal user needs; Reports must follow GAAP |
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Definition
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Term
| Which of the following are Financial vs Managerial Accounting: Reports are based on Past Activities; emphasizes decisions affecting the future |
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Definition
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Term
| Predetermined Overhead Rates may be based on many items. What is the total overhead rate equation if overhead is 1.6 hours per machine hour and the cost is $5.26/hr |
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Definition
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Term
| What is the most efficent tool in determining the effect on NOI when either sales volume or variable costs change? |
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Definition
| Contribution Margin Ratio |
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Term
| What is the Break Even Point in Units Equation |
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Definition
| fixed costs / (sales price per unit - variable cost per unit) |
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Term
| what is the equation for contribution margin ratio -- do not use contribution margin in answer |
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Definition
| (sales - variable cost)/sales |
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Term
| Degree of operating leverage equation? without contribution margin |
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Definition
| (sales - variable costs)/ NOI |
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Term
| Describe the schedule of cost of goods manufactured. |
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Definition
Direct materials M
Direct Labor L
MFG Overhead O
Total MFG Cost (M+L+O)
Add: beginning WIP Inventory
Deduct: Ending WIP Inventory
Cost of goods manufactured: XXXXX |
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Term
| Average Cost Per Unit Equation: |
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Definition
| Cost of goods manufactured / Number of Units Produced |
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Term
| cost of goods sold equation |
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Definition
| sales in units * cost per unit |
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Term
| If Overhead is underapplied what will be affected. Will it increase or decrease? |
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Definition
| Cost of Goods Sold will increase |
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Term
| Describe the High-Low Method to estimate the variable and fixed costs. |
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Definition
1. Be carefule of outliers
2. Find the high and low periods BASED on ACTIVITY
3. sales delta = (high point sales - low point sales)
4. Activity delta = (High point units - low point units)
5. variable cost = sales delta / activity delta
6. Fixed cost = total cost - variable cost |
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Term
| Using regression what is the equation for total cost |
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Definition
| Total Cost = intercept (or fixed costs) + (slope (or variable cost per unit)* (number of units)) |
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Term
| In reqression for fixed and variable costs, what does R^2 Represent |
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Definition
| R^2 is the "goodness of Fit". It describes how well our regression equation fits the data. It helps us determine should we used this for our calculations. |
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Term
| This type of costing treats all manufacturing costs as production costs regardless of being variable or fixed. |
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Definition
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Term
| This costing method ONLY uses the manufacturing costs that are variable. Fixed Costs are not treated as product cost under this method |
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Definition
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Term
| What is the format of a variable costing income statement |
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Definition
Sales
Variable Expenses
Contribution Margin
Fixed Expenses
NOI |
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Term
| what effect does remaining inventory have on fixed vs absorption costing |
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Definition
| If Units Sold = Units Produced, then both are the same If Units Sold are > Units Produced, then Absorption is greater than fixed. If Units Sold < Units Produced, then Absorption is less than fixed. |
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Term
| This type of buget is prepared before a period begins. |
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Definition
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Term
| This Budget takes actual activity with planned costs to state what "should" have occurred. |
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Definition
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Term
| Describe the format of a flexible budget Performance Report |
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Definition
The rows are setup like a general Income statement. The columns are:
A) Planning Budget -- you planned number of units and the costs associated with them
B) Activity Variances -- Flexible budget - planning budget
C) Flexible Budget -- Actual number of units produced, and the costs that "should" have been spent
C)Revenue and Spending Variances -- Flexible Budget - Actual Results
D) Actual Results - This is the amount actually produced along with the spending that actually took plance. |
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Term
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Definition
| For each unit of production there is a defined amount of raw product, number of hours that go into that product. In addition, there is a defined cost per unit that a unit of raw material or unit of labor costs. These two numbers will combine into standards that are used to determine variances in planned and actual events |
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Term
Variance
Materials Price Variance |
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Definition
| Actual Quantity(Actual Price - Standard Price) |
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Term
Variance:
Materials Quantity Variance |
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Definition
| Standard Price or cost*(Actual Quantity - Standard Quantity) |
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Term
Variance:
Labor Rate Variance |
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Definition
| Actual Hours*(Actual Rate - Standard Rate) |
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Term
Variance:
Labor Efficiency Variance |
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Definition
| Standard Rate * (Actual Hours - Standard Hours) |
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Term
Variance:
Variable Overhead Rate Variance |
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Definition
| Actual Hours * (Actual Rate - Standard Rate) |
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Term
Variance:
Variable Overhead efficiency Variance |
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Definition
| Standard Rate * ( Actual Hours - Standard Hours) |
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Term
| Define the reponsibilities of a Cost Center Manager |
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Definition
| As the name implies, a Cost Center Manager has control over spending -- none over revenues or the use of investment center |
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Term
| Define the responsibilities of a Profit Center Manager |
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Definition
| In addition to the costs that the cost center manager has control over, a profit center manager has responsibilities of revenue as well. This allows this manager to be responsible for the total profits of that center. |
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Term
| Define the reponsibilities of an Investment Center Manager |
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Definition
| Adding to the responsibilities of the cost and the profit center managers, the investment center manager also has responsibilities of investments in operating assets |
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Term
| Describe a segmented income statement |
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Definition
Segments can describe a division based on product, or region, or other subdivision of the company.
The income statement includes the total income statement, as well as a column for each segment incorporating that segments values as a part of the whole. |
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Term
| Define a traceable fixed cost: |
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Definition
| A traceable fixed cost is fixed cost that is tied to a particular segment. In essence these costs exist because of the production of this segment's units |
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Term
| Define Common Fixed Costs |
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Definition
| Common fixed costs are not tied to a particular segment. These costs are used to support cross segment operations. These costs are still incurred without a particular segment. |
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Term
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Definition
| Segment Contribution Margin - Segment's Traceable Fixed Costs. This means that a segment should not be responsible for costs that are not traceable to that segment. |
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Term
| Define Return on Investment |
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Definition
| (Margin * Turnover) or (NOI / Average Operating Assets). Care needs to be given to AVERAGE operating assets. If given multiple years, then the average needs to be computed. |
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Term
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Definition
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Term
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Definition
| Sales / Average Operating Assets |
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Term
| What are criticisms of being evaluated ONLY on ROI: |
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Definition
1) ROI specific to the segment may not be beneficial to the company as a whole
2) A new manager may have inherited committed costs over which he/she has no control
3) A manager who is concerned with ONLY ROI may dismiss opportunits that lower his/her segment's ROI, but are still profitable for the company |
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Term
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Definition
| Residual Income = NOI - (Average Operating Assets * Minimum Required Rate of Return) |
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