Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
63 Cards in this Set
- Front
- Back
Chapter 3: Process vs Job Order Costing |
Process Costing: produces many units of a single product products are indistinguishable from each other Job Order Costing: many different products are produced each period |
|
Chapter 3: Predetermined Overhead Rate (POHR)= |
Estimated total Manufact Overhead Costs Estimated total units in the allocation base |
|
Chapter 3: Overhead Applied= |
POHR x Actual Activity |
|
Chapter 3: Process of Job Order Costing System |
1) Sales Order 2) Production Order
|
|
Chapter 3: Applied Overhead= |
POHR x Actual Direct Labour Hours
Overapplied means Applied overhead > actual (Net Income higher) Underapplied means Applied overhead < actual (Net Income Lower) |
|
Chapter 5: ABC is designed... |
to provide managers with cost information |
|
Chapter 5: ABC is different from traditional in four ways... |
1) assigns both types of costs to products 2) does not assign all manufacturing costs to products 3) uses more cost pools 4) bases level of activity on capacity
|
|
Chapter 5: ABC has 5 different activity levels... |
1) Unit-Level 2) Batch-Level 3) Product-Level 4) Customer- Level 5) Organization- Level
|
|
Chapter 6: Vairable Costs for 1) Merchandising 2) Manufacturing 3) Merchandising & Manufacturing 4) Service |
1) COGS 2) Direct Mat, Direct Lab, Variable Overhead 3) Commisions, shipping, clerical 4) Supplies, travel , and clerica
|
|
Chapter 6: Step-Variable Cost: |
Resource only obtainable in large chunks and whose costs increase or decrease only in response to fairly wide changes in activity
|
|
Chapter 6: The linearity assumption and the relevant range: |
a straight line closely approximates a curvilinear variable cost line within the relevant range. |
|
Chapter 6: Types of fixed costs |
1) Committed 2) Discretionary |
|
Chapter 7: 5 interrelationships among cost, volume, and profit |
1. prices of products 2. volume 3. per unit V.C 4. fixed costs 5. mix of products sold |
|
Chapter 7: Contribution margin is... |
the amount remaining from sales revenue after variable expenses have been deducted |
|
Chapter 7: Contribution Ratio= |
Total Contribution Margin/Total Sales
OR
Unit CM/ Unit Selling Price |
|
Chapter 7: Net Operating Income= |
units of sales above or below break even * Contribution Margin/Unit |
|
Chapter 7: Break Even Point Methods: |
1) Equation Method Profit= (Sales- VC)-FC Sales= V.C + F.C + Profits --> Profits =0 2) C.M Method B.E.P in units= FC +Target Profit / CM/unit B.E.P in dollars= FC + Target Profit/CM Ratio |
|
Chapter 7: Margin of Safety= |
Total Sales - Break-even sales
OR
Extra Sales/Total Sales
|
|
Chapter 7: Cost structure refers to.... |
the relative proportion of fixed and variable costs in an organization |
|
Chapter 7: Advantage of high fixed costs... Disadvantage of high fixed costs...
Low fixed costs... |
income will be higher in good years
income will be lower in bad years
provide stability |
|
Chapter 7: Degree of Operating leverage= |
CM/Net Operating Income |
|
Chapter 7: % increase in profits= |
% increase in sales x degree of operating leverage |
|
Chapter 7: Steps to indifference between two alternatives: |
1) Determine the unit CM x # of units + T.F.C of each alternative 2) Setup equation for each and set equal 3) Solve for Q, the indifference point |
|
Chapter 8: Absorption Costing- product costs, period costs Variable Costing- product costs, period costs |
1) Product Costs= Direct Mat, Direct Lab, Variable and Fixed M.O Period Cost= Variable and Fixed Selling and Admin 2) Product Costs= Direct Mat, Direct Lab, Variable M.O Period Costs= Fixed M.O, Variable and Fixed Selling and Admin |
|
Chapter 8: Production > Sales Production < Sales Production = Sales |
1) Inventory increases, Absorption > Variable Income 2) Inventory decreases, Absorption < Variable Income 3) No Change in inventory, Absorption = Variable |
|
Chapter 10: Standards are... |
benchmarks or "norms" for measuring performance.
Quantity standards specify how much of an input should be used
Cost Standards specify how much should be paid for each unit of input |
|
Chapter 10: Variance Analysis Cycle (6 steps) |
Identify Questions Receive Explanations Take Corrective Actions Conduct next period's operations Prepare Standard Cost performance report Analyse Variances |
|
Chapter 10: Budget vs Standard |
Budget is set for total costs
Standard is per unit cost |
|
Chapter 10: Material Price Variance= Material Quantity Variance= |
(AQ x AP) - (AQ x SP) (AQ x SP) - (SQ x SP)
|
|
Chapter 10: Labour Rate Variance= Labour Efficiency Variance= |
AH(AR - SR) (Two A's, H outside, R inside) SR (AH - SH) (Two S's, R outside, H inside)
|
|
Chapter 10: Variable Manufacturing Overhead Spending Variance (VMSV)= VMEV= |
AH (AR- SR) SR (AH-SH)
|
|
Chapter 10: Assigned Overhead= |
POHR x Standard Activity POHR= Overhead from flexible budget for the denominator level of activity/ Denominator level of actvity |
|
Chapter 10: Normal Cost vs Standard Cost |
Normal cost, overhead is applied to W-I-P based on actual # of hours worked
Standard cost, overhead if applied to W-I-P based on the standard hours allowed for the actual output |
|
Chapter 10: Budget Variance= Volume Variance= |
Actual Fixed Overhead - Fixed Overhead Budget (DH x FR)
Fixed overhead budget - Fixed Overhead Applied (DH x FR) - (DH x FR)
|
|
Chapter 10: Theoretical Capacity x Practical Capacity |
Theoretical capacity is the volume of capacity if all available production time is used and no waste occurs.
Practical capacity represents what could be produced with operations at theoretical capacity less unavoidable downtime. |
|
Chapter 11: Benefits of Decentralizaton |
- Lower level managers gain experience - Top mgmt freed to concentrate strategy - Lower level decisions often based on better info |
|
Chapter 11: Disadvantages of Decentralization |
- Lower level managers may make decisions without the "big picture" - lower level managers objections may not be those of the oranization
|
|
Chapter 11: A segment... |
any part of activity of an organization about which managers seeks cost, revenue, or profit data |
|
Chapter 11: Keys to building segmented income statement |
A contribution format should be used Traceable fixed costs should be seperated from common F.C |
|
Chapter 11: Segment margin= |
Segment C.M- Tracable F.V |
|
Chapter 11: Cost Centre: |
A segment whose manager has control over costs, but not over revenues or investment funds. |
|
Chapter 11: Profit Centre: |
A segment whose manager has control over both costs and revenues but no control over investment funds |
|
Chapter 11: Investment Centre: |
A segment whose manager has control over costs, revenues, and investments in operating assets
|
|
Chapter 11: Transfer price: Three primary approaches to setting transfer price |
is the price charged when one segment of a company provides goods or services to another segment of the company 1. Negotiated transfer prices 2. Transfers at the cost to the selling division 3. Transfers at market price |
|
Chapter 11: ROI= Margin= Turnover |
Operating Income / Average Operating Assets OR Margin x Turnover Operating Income/Sales Sales/ Avg Operating Assets |
|
Chapter 11: Residual Income= |
Operating Income - (avg operating assets x min required ROR)
|
|
Chapter 11: Balanced Scorecard |
Financial Customers Internal Business Processes Learning and Growth |
|
Chapter 11: Throughput= Manufacturing Cycle Efficiency= Delivery Cycle time= |
Process+Inspection + Move + Queue Process / Throughput Throughput + Wait
|
|
Chapter 11: Quality Costs (4) |
1. Prevention Costs 2. Appraisal Costs 3. Internal Failure Costs 4. External Failure Costs
|
|
Chapter 11: To be ISO 9000 certified |
1. A quality control system is in use 2. system is fully operational and is backed up 3. intended level of quality is being achieved
|
|
Chapter 12: Relevant Cost |
is a cost that differs between alternatives |
|
Chapter 12: Avoidable Cost: |
a cost that can be eliminated, in whole or in part, by choosing one alternative over another |
|
Chapter 12: Special Order: |
one-time order that is not considered part of the company's normal ongoing business |
|
Chapter 12: Constraint |
when a limited resource of some type restricts the company's ability to satisfy demand |
|
Chapter 12: Bottleneck: |
the machine or process that is limiting overall output (it is the constraint) |
|
Chapter 12: Theory of Constraints |
maintains that effectively managing a constraint is important to the financial success of an organization |
|
Chapter 13: Captial budgeting into two categories... |
1) Screening decisions (meeting standard (sevs) 2) Preference Decisions (choosing amoung several) |
|
Chapter 13: Determine NPV in 3 steps |
1) calculate PV of cash flows 2) calculate PV of cash outflows 3) Subtract the PV of the outflows from inflows |
|
Chapter 13: Typical Cash Outflows |
-Repairs and maintenance - working capital - inital investment - incremental operating costs
|
|
Chapter 13: Typical Cash Inflows |
-Salvage value - release of working capital - reduction of costs - incremental revenues
|
|
Chapter 13: Profitability Index= |
Present Value of Net Cash Inflows/ Investment Required
|
|
Chapter 13: Payback period= |
Investment Required/Net annual cash inflow |
|
Chapter 13: Simple Rate of Return= |
Incremental Revenues- Incremental expenses including depreciation/ initial investment |