4. Cost Acct

Question 1

Fixed vs Variable

Answer 1

Fixed- fixed in total, variable per unit

Variable - variable in total, fixed per unit

Question 2

High-Low Method

Answer 2

High less Low, this removes fixed costs. Finds slope (Y / X or TotCost / Hours), plug into Fix + Var(x) = TCost

Question 3

Manufacturing Costs: DM, DL, FOH

Answer 3

(product costs) (DM, DL prime costs/ DL, FOH conversion)
DM- used directly in production of product
DL- time to convert raw mat to finished good
FOH- incl indirect material/labor, rent, utilities, etc

Question 4

Non Manufacturing Costs

Answer 4

(period costs, expensed in period)

SGA, office rent, ABNORM spoilage

Question 5

Cost Systems: Actual, Std, normal

Answer 5

Actual: DM, DL, FOH are all actual
Std: all are based on standards
Normal: DM & DL are based on actual, FOH is standard (application rate)

Question 6

Predetermined OH Rate

Answer 6

Est OH costs / Est DL = PDOHR
PDOHR x actual production = applied OH (WIP)
$ / $ = % ex) $100 / $50 per hr = 200% of labor cost

Question 7

After PDOHR journal entries

Answer 7

Applied OH: WIP Control D, FOH Applied C
Actual OH: FOH Control D, $ C
If underapplied:
FOH Applied (temp acct) D, Exp/COGS D (Difference, opp if overappl), FOH Control (close temp acct) C

Question 8

Cost of Sales Calculation

Answer 8

Beg Inv
\+ Purch
=COG Avail for sale
- End inv
= COGS (end moves to purch in Cost Sys)

Question 9

Flow of a Cost System

Answer 9

RM/Mat used, WIP/COGM, FG/COGS, COGS (w/ under\over applied)
Beg RM
+ Purch [WIP (incl DM, DL, Applied OH in purch)]
= Avail
(End RM)
= Mat used [aka dm to WIP]

Question 10

Cost systems/ cost of sales calc

Answer 10

Beginning plus purchased, (is Avail), minus ending, equals used

Question 11

(x, y) = (0, 15k) and (20k, 75k)

Cost for mailing 12,000 parcels?

Answer 11

$51,000
75 = 15 + B(20)
60 = 20B
3 = B
y = 15 + 3(12)
y=51k

Question 12

In a traditional job-costing system, issuing indirect materials to production increases:

• Materials (stores) control
• WIP control
• MOH control
• MOH applied

Answer 12

MOH control

Question 13

In developing a PDFOHCost System, which could be used in the numerator and denominator?

• N: actual var FOH, D: actual machine hr
• N: actual var FOH, D: est machine hr
• N: est var FOH, D: actual machine hr
• N: est var FOH, D: est machine hr

Answer 13

The fourth:
-N: est var FOH, D: est machine hr
ESTIMATED OVER ESTIMATED, made in beginning of the year

Question 14

Practice questions in 4.05

Answer 14

Practice questions in 4.05

Question 15

Variable vs Absorption Costing

Answer 15

Variable: IN PERIOD INCURRED, Direct, Prime, CM
COGS section (fixed COGS), SGA section
Absorption: IN PERIOD SOLD, Full costing, GAAP, GM
Var costs, Fixed costs (Fix mfct cost)

Question 16

Absorption Costing

Answer 16

-GAAP-
Sales
(var COGS)
(Fixed COGS)***
=Gross Margin [GA, VC]
(Var SGA)
(Fix SGA)
=Op income
 (separating product [COGS] and period costs [SGA])

Question 17

Variable

Answer 17

-Internal Reporting-
Sales
(var COGS)
(var SGA)
=Contrib Margin [GA, VC]
(Fix mnfct cost)***
(fix SGA)
=Op Income
 (separating var and fixed costs) to contribute to fixed and profit

Question 18

Fixed MOH is $100,000, variable selling costs are $80,000. What is the period/product cost with the direct costing method?

• Period: 0, Product: 180k
• Period: 80k, Product: 100k
• Period: 100k, Product: 80k
• Period: 180k, Product: 0

Answer 18

-Period: 180k, Product: 0
Product: DM, DL, Var OH
Fixed OH changes (product for absorption, period for direct)
Period: SGA
same ex) if absorption: period of 80, prod of 100

Question 19

With variable costing, which costs are assigned to inventory? (yes/no)
I. Variable Selling and Admin Costs
II. Variable Factory Overhead Costs

Answer 19

I. Variable SGA = NO
II. Variable Factory Overhead Costs = YES
Same for absorption or variable

Question 20

At year end there were 1,000 units of inventory left. Var manuf cost = $90/unit, Fixed manuf costs = $20/unit. If using absorption over direct (variable) costing, the result would be a higher pre-tax income of:

• 0
• 20k
• 90k
• 70k

Answer 20

20k

Absorption includes the $20k in inventory still until the products are sold

Question 21

Look at var absorb end summary in 4.07

Answer 21

Look at var absorb end summary in 4.07

Question 22

Absorption vs Variable

Answer 22

• Difference is treatment of Fixed OH (absorption = incl in inventory, higher end income) (direct = expensed)
• PSA: Production greater than sales, Profits greater in absorption

Question 23

Break Even in Units

Answer 23

[Fixed Costs + Profit(loss)] / [SP - VC (aka CM)]

Question 24

Break Even in $

Answer 24

[Fixed Costs + Profit(loss)] / [CM Ratio (aka CM/sales price)]

Question 25

At break even point, CM equals:

• Fixed costs
• SGA costs
• Sales revenue
• Variable costs

Answer 25

-Fixed costs

Sales - Var = CM - Fixed = 0

Question 26

Break even analysis assumes that over the relevant range:

• Unit revenues are nonlinear
• Unit variable costs are unchanged
• Total costs are unchanged
• Total fixed costs are nonlinear

Answer 26

-Unit variable costs are unchanged

Question 27

Fixed costs 100k, break even sales 800k, what is the projected profit at 1.2M in sales?

Answer 27

$50,000
100 / CM ratio = 800
CM ratio = 1/8 or 12.5%
[100 + P] / .125
P =  50

Question 28

14 in 4.09, graph

Answer 28

14 in 4.09, graph

Question 29

P Co. had variable costs of 25% of sales and fixed costs of $30,000. P's breakeven point in sales dollars was:
A. $24,000.
B. $30,000.
C. $40,000.
D. $120,000.

Answer 29

-C $40,000
•Contribution margin ratio = Gross profit ÷ Sales = 75% (0.75)
•Breakeven point in dollars = Fixed costs ÷ CM ratio = $30,000 ÷ 0.75 = $40,000