Term
| In a given period, the amount transferred from work in process inventory to finished goods inventory, is called: |
|
Definition
| Cost of goods manufactured |
|
|
Term
| Cost of Goods Sold is what type of account? |
|
Definition
|
|
Term
| Direct material, direct labor, and manufacturing overhead are always what type of cost? |
|
Definition
|
|
Term
| If actual overhead costs exceed applied overhead for a period, the balance is called: |
|
Definition
|
|
Term
| Zola Inc. had under-applied overhead in 2007 and followed the common practice of closing the MOH clearing account to Cost of Goods Sold. CLosing the overhead account would: |
|
Definition
| Increase COGS and decrease income |
|
|
Term
| Happy Trails manufactures water bottles and uses a predetermined overhead rate that uses direct labor hours as the overhead application base. For 2012, total MOH was estimated (budgeted) at $600,000 and total direct labor hours were estimated at 30,000 hours. In 2012 actual overhead costs were $588,000 and actual direct labor hours incurred was 28,000. The total amount of overhead applied to jobs in 2007 was: |
|
Definition
| $560,000 (600,000÷30,000) |
|
|
Term
Job order costing would most likely be used by:
a) A paper manufacturer
b) a manufacturer of light bulbs
c) A landscaping company |
|
Definition
|
|
Term
| The cost of repairing products recaleld from customers is an example of: |
|
Definition
|
|
Term
| If the cost object is a product, and activity is measured by units produced, the cost of material used to manufacture stuffed toys would be: |
|
Definition
|
|
Term
Which of the following costs would be considered a period rather than a product cost in a manufacturing company?
a) salary of plant maintenance personnel
b)equipment depreciation
c) sales commissions |
|
Definition
|
|
Term
| A traditional push inventory system: |
|
Definition
| Can result in backlogs of work in process at various work stations |
|
|
Term
| What are the characteristic of management accounting? |
|
Definition
Emphasis on planning for the future.
Producing info for managers in the firm.
Is concerned with subunits of the organization. |
|
|
Term
| Banten Inc. has collected the following info about its electricity costs. In the firm's highest activity month, where 12,000 units were produced electricity cost was $80,000. In the lowest activity month 4,000 units were produced and energy costs were $48,000. Using the High-Low method, per unit variable cost would be: |
|
Definition
$4.00
$80,000 - $48,000 = $32,000
12,000 - 4,000 = 8,000
$32,000÷8,000 = $4.00 per unit |
|
|
Term
| When compared to activity-based costing systems, traditional costing systems using unit-based drivers often result in inaccurate product costs because: |
|
Definition
| Many types of overhead costs are not driven by unit volume |
|
|
Term
| Activities associated with setting up machinery to produce a particular type of product would be classified as: |
|
Definition
|
|
Term
Which of the following statements are true:
a) Overhead can be applied to products on either an activity, departmental, or plantwide basis.
b) Activity-based costing is characterized by having more cost drivers than cost pools. |
|
Definition
|
|
Term
| Company A has total sales of $1,200,000, total variable costs of $300,000 and total fixed costs of $120,000. The firm's breakevern point in sales dollars is: |
|
Definition
$160,000
BE=TFC÷(CM/Sales) = 1,200,000/ .75 = $160,000
(0.75 => Sales 1,200,000-Variable 300,000=CM 900,000) |
|
|
Term
| If the sale price is $10.00 per unit, variable costs are $6.00 per unit, total fixed costs are $7,000, and the firm sells 1,000 units more than breakeven units (their margin of safety is 1,000 units) the form's total profit (loss) would be: |
|
Definition
$4,000
1.00 - 6.00 = 4.00 * 1,000 units = 4,000 |
|
|
Term
| Hours of quality training per employee would be in what section of the balanced scorecard? |
|
Definition
|
|
Term
| A zero risidual income indicates: |
|
Definition
| A division is earning exactly the minimum required rate of return |
|
|
Term
Division A has net operating income of $800,000, sales revenue of $8,000,000 and net operating ssests of $4,000,000.
-What is ROI?
-What is Turnover Ratio?
-If Division A disposed of 2,000,000 of unneeded operating assests...?
-Assume Division A had a minimum required return of 16%. Residual Income would be? |
|
Definition
- ROI=20% (I÷A)
- Turn=2 (S÷A)
- Turn would Increase (by 2)
- $160,000 ($800,000-(16%*$4,000,000)) |
|
|
Term
| Traceable fixed expenses for a segment are: |
|
Definition
Deducted from the segment contribution margin to calculate the segment margin.
|
|
|
Term
|
Definition
| the proportion of throughput time devoted to processing (value-added activity) |
|
|
Term
| In a firm organized by division, common fixed expenses: |
|
Definition
| Are only deducted from the total column on a segment income statement. |
|
|
Term
| In a decentralized organization: |
|
Definition
| Decision making authority is delegated to lower level employees |
|
|
Term
| A cost that differs between alternatives: |
|
Definition
|
|
Term
| A cost that can be eliminated in whole of in part, by choosin one alternative over another: |
|
Definition
|
|
Term
|
Definition
|
|
Term
| Decision: Adding or Dropping a Segment |
|
Definition
|
Decision rule: Drop the segment only if the fixed cost savings exceed the lost contribution margin.
You can perform the analysis incrementally by comparing avoidable fixed costs to the segment contribution margin
OR
You can perform the analysis by comparing the income statement with the segment to the income statement prepared assuming the segment is dropped. Keep in mind that un-avoidable fixed costs will continue even if the segment is dropped.
|
|
|
Term
| Vertical Intergration-Advantages |
|
Definition
-Smoother flow of parts and materials
-Better quality control
-Realize profits |
|
|
Term
|
Definition
| Decision Rule: Compare the costs that can be avoided by using an outside supplier to the cost of buying the item from the outside supplier. If the cost of buying outside is less, then you should outsource. |
|
|
Term
|
Definition
| Decision Rule: Accepts the special order if the order price is greater than the incremental cost to produce the item. |
|
|
Term
| Utilization of a Constrained Resource |
|
Definition
|
When a constraint exists, a company should select a product mix that maximizes the total contribution margin earned since fixed costs usually remain unchanged.
Make and sell the product that has the highest contribution margin per unit of the constrained resource.
Once demand for the product that has the highest contribution margin per unit of the constrained resource is satisfied, make and sell the product with the next highest contribution margin per unit of the constrained resource. Repeat until production capacity is used up.
|
|
|
Term
|
Definition
| Two or more products from a common input |
|
|
Term
|
Definition
| The point in the manufacturing process where each joint product can be recognized as a separate product |
|
|
Term
| Sell or Process Further Decision |
|
Definition
| Decision Rule: it will always be profitable to continue processing a joint product after the split-off point so long as the incremental revenue exceeds the incremental processing costs incurred after the split-off point. |
|
|
Term
| Managerial Accounting differs from Financial Accounting in that Financial Accounting is: |
|
Definition
| Primarily concerned with external financial reporting |
|
|
Term
Companies characterized by the production of small batches of different products will most likely use which of the following methods of calculating product costs and providing management with unit cost data?
a)Job Order
b)Process costing
c)Direct costing
d)Variable costing |
|
Definition
|
|
Term
|
Definition
|
|
Term
| Conversion costs do not include: |
|
Definition
|
|
Term
| The Difference between variable costs and fixed costs is: |
|
Definition
| Unit variable costs are fixed within the relevant range, whereas unit fixed costs vary with the level of activity |
|
|
Term
| The difference between sales and total variable costs is: |
|
Definition
|
|
Term
| Which is true regarding relevant range? |
|
Definition
| Total fixed costs will not change |
|
|
Term
| Direct labor can best be described as a: |
|
Definition
|
|
Term
| Which is a product cost for a manufacturing company? |
|
Definition
|
|
Term
| The IMA Statement of Ethical Professional Practice requires an IMA member to follow the established policies of the organization when faced with an ethical conflict. If an organizations policies do not resolve the conflict, the member should: |
|
Definition
| Contact the next higher managerial level if initial discussion with the immediate supervisor does not resolve the conflict. |
|
|
Term
A company applies MOH based on DL hours:
- Est. OH costs: $500,000
- Est. DL hours: 200,000
- Actual OH cost: $515,000
- Actual labor hours: 210,000
Based on this information, MOH is: |
|
Definition
Overapplied by $10,000
500,000÷200,000=2.5
2.5*210,000=525,000
525,000-515,000=10,000 Overapplied |
|
|
Term
Buford Company rents out a small unused portion of its factory to another company for $1,000 per month. Te rental agreement will expire next month, and rather than renew the agreement Buford Company is thinking about using the space itself to store materials. The term to describe the $1,000 per month is:
|
|
Definition
|
|
Term
| This is generally considered a committed fixed cost for a retailing firm: |
|
Definition
| Lease payments made on the store building |
|
|
Term
| In doing analysis ti determine cost behavior, we somtimes use High-Low method. In this method how is the high point selected? |
|
Definition
| The point with the highest volume of activity is chosen. |
|
|
Term
| What is the advantage of using regression analysis to determine the cost equation (as oppposed to the high-low mthod)? |
|
Definition
- The method is objective
- All data points are used
- It will generally be more accurate than the high low method because it mehtematically produces the best fitting line
|
|
|
Term
| Liability arising from defective products ould be classified as _____ on a quality cost report? |
|
Definition
|
|
Term
| An increase in appraisal costs will sometimes result in an increase in: |
|
Definition
|
|
Term
| In a job-order costing system, the journal entry to record the application of OH cost to jobs would include: |
|
Definition
A credit to the MOH account
Actual(dr.) Applied(cr.)
100 (MOH) 110
10 |
|
|
Term
| Ivory Company uses a job-order costing system. What year-end journal entry could Ivory make to dispose of close (close out) $4,150 of overapplied MOH cost? |
|
Definition
|
|
Term
| Gross margin will increase when closing _____ to COGS. |
|
Definition
| Overapplied Manufacturing Overhead |
|
|
Term
| When applying MOH to jobs, the formula to calculate the amount is as follows: |
|
Definition
| Predetermined OH rate times the actual units of allocation base used by the particular job. |
|
|
Term
| In a job-order costing system, the amount of OH cost that has been applied to a job that remains incomplete at the end of a period: |
|
Definition
| is part of the ending balance of the WIP inventory account |
|
|
Term
|
Definition
|
|
Term
| Cost of Goods Manufactured: |
|
Definition
DL, DM, Applied MOH
(WIP Inventory-Credit balance) |
|
|
Term
| Labor charges that cannot be traced directly to a particular job are treated as: |
|
Definition
|
|
Term
| Light and heat for a factory is an example of a: |
|
Definition
|
|
Term
Journal:
$30,000 of raw materials were purchased on account
|
|
Definition
Raw Materials inventory 30,000
Accounts payable 30,000
|
|
|
Term
Journal:
Direct Labor costs for 500 hours totaled $4,500 and were paid in cash |
|
Definition
|
|
Term
Journal:
$10,000 of direct materials and $7,000 of indirect materials were issued to production |
|
Definition
WIP Inventory 10,000
MOH 7,000
Raw materials Inventory 17,000
(10,000 DM + 7,000 Indirect Materials) |
|
|
Term
Journal:
Rent of $9,000 was paid in cash. 40% relates to the factory; the remainder relates to the administrative offices. |
|
Definition
MOH 3,600 (9,000 * .4)
Rent Expense 5,400 (9,000 * .6)
Cash 9,000
|
|
|
Term
Journal:
Salaries of $12,000 were incurred but not paid. 30% of the total was paid to supervisors working in the factory. The remainder was administrative salaries. The salaries will be paid next period. |
|
Definition
MOH 3,600 (12,000 * .3)
Admin. Salary Exp. 8,400 (12,000 * .7)
Salaries Payable 12,000 |
|
|
Term
Journal:
Overhead was applied to jobs at the rate of $3.00 or 300% per direct labor dollar. Direct labor dollars totalled $4,500 during September. |
|
Definition
WIP Inventory 13,500 (4,500 * 3.00)
MOH 13,500 |
|
|
Term
Journal:
Jobs costing $23,0000 were completed. |
|
Definition
Finished goods inventory 23,000
WIP Inventory 23,000 |
|
|
Term
Journal:
Job #123, which had a total cost of $12,000 was sold on account for $19,000 |
|
Definition
COGS 12,000
Finished Goods Inventory 12,000
Accts Rec. 19,000
Sales 19,000 |
|
|
Term
Using High-Low method calculate a)variable cost per unit, b)total fixed cost, & c)cost formula:
INFORMATION:
High - August 4,200(#) $2,560(Cost)
Low - Sept. 3,600(#) $2,290(cost)
|
|
Definition
a) (2,560-2,290) ÷ (4,200-3,600) = $0.45
b) 2,560 = a + (4,200*.45); a=670
c) Y=670+(b*0.45) |
|
|
Term
| Predetermined OH rate formula: |
|
Definition
Est. MOH ÷ DL Dollar/cost
Est. MOH ÷ Est. Machine Hours |
|
|
Term
| Self-Imposed budgets typically are: |
|
Definition
| Subject to review by higher levels of management in order to prevent the budgets from the becoming too loose. |
|
|
Term
| The purpose of a flexible budget is to: |
|
Definition
| Update the static planning budget to reflect the actual level of activity of the period |
|
|
Term
|
Definition
| valid for only one level of activity |
|
|
Term
| Peterson's Snow Removal's cost formula for its vehicle operating cost is $1,750 per month pus $484 per snow-day. For the month of November, the company planned for activity of 15 snow-days, but the actual level of activity was 14 snow-days. the actual vehicle operating cost for the onthe was $8,360. the flexible budget would show budgeted costs of: |
|
Definition
$8,526
Flex) 14 * 484 = 6,776 + 1750 = 8,526
|
|
|
Term
| College Catering uses two measures of activity, jobs and meals, in the cost formula in its budgets and performance reports. The cost formula for catering supplies is $310 per month plus $84 per job plus $17 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The compay expected its activity in jusly to be 15 jobs and 127 meals, but the actual activity was 14 jobs and 126 meals. the flexible budget would show budgeted costs of: |
|
Definition
$3,628
310+(85*14)+(17*126) = 3,628 |
|
|
Term
|
Definition
| a measure of the amount of time required to perform an activity. |
|
|
Term
Which of the following s a transaction driver?
a)set up time
b)number of material moves
c)design time |
|
Definition
| b) number of material moves |
|
|
Term
| When there are batch level or product level costs, in comparison to a traditional cost system, activity based costing ordinarily will shift costs from: |
|
Definition
| High volume to low volume products |
|
|
Term
| A company implementing an ABC system could expect: |
|
Definition
| Some product costs to be lower and some to be higher |
|
|
Term
| When using an activity based costing system, each cost pool is formed to represent activities with a common _____ that uses organizational resources. |
|
Definition
|
|
Term
| Unlike a traditional product costing system, ABC assigns: |
|
Definition
| Costs to indiviual products (cost objects) based on various activies involved. |
|
|
Term
| What is the anticipated effect on the number of activity cost pools and related activity measures (allocation bases) when an ABC system replaces a traditional costing system? |
|
Definition
Number of Activity Cost pools INCREASE
Number of Actvity Measures (allocaiton bases) INCREASE |
|
|
Term
|
Definition
| A factor that causes a cost to increase or decrease |
|
|
Term
| At the breakeven point, the contribution margin equals total: |
|
Definition
|
|
Term
| Cost-Volume-Profit (CVP) analysis is a key factor in many busines decisions. A calculatoin used in CVP analysis is the breakeven point. Once the breakeven Point has been reached, operating income will increase by the: |
|
Definition
| Contribution Margin per unit for each additional unit |
|
|
Term
|
Definition
The amount by which a company's sales can decline before losses are incurred
(Sales-BE Sales) |
|
|
Term
| The degree of operating leverage: |
|
Definition
| Contribution Margin÷Net Oper. Income |
|
|
Term
| South Company selss a single product for $20 per unit. If the CM ratio is 40% of sales and fixed expenses total $9,600, the breakeven point in dollars will be: |
|
Definition
|
|
Term
Info:
Sales Volume (units) 200,000
Sales(dollars) $800,000
Total Variable Costs $200,000
Total Fixed costs $300,000
a) Company's CM per unit?
b) Company's CM Ratio?
c) Company's Break Even pin units?
How mnay units would the company have to sell to attain target profit of $225,000? |
|
Definition
a) 800,000-200,000=$600,000
$600,000÷200,000units=3 per unit
b) 600,000÷800,000= 0.75 or 75%
c) 300,000÷$3=100,000
|
|
|
Term
|
Definition
Beg. Cash Bal.
Add Receipts:
Total Cash Available
Disbursements:
Acct. payable, etc
Total Disbursements
Excess of cash
Financing:
Borrowing, etc.
Total Financing
Cash Balance, ending |
|
|
Term
| Basic Budgeted Income Statement: |
|
Definition
Sales
Less: COGS
Gross Margin
Selling and Admin Costs
Depreciation
Operating Income
Interest
Net Oper. Income |
|
|
Term
|
Definition
Sales
Add: Desired ending inventory
Less: Beg. Inventory
Production |
|
|
