4.0 Decision Making

Question 1

4.02 Prime Costs

Answer 1

Direct materials and direct labor

Question 2

4.02 Conversion Cost

Answer 2

Direct labor and overhead

Question 3

4.02 Total cost of goods sold

Answer 3

Direct materials plus conversion costs

Question 4

4.02 Conversion Costs Equation

Answer 4

Cost of goods manufactured + Ending WIP -Beginning WIP - Direct Materials

Question 5

4.02 Cost of Goods Sold Equation

Answer 5

= Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods

Question 6

4.02 Cost of Goods Manufactured

Answer 6

= COGS -Beginning F.G. + Ending F.G.

Question 7

4.01 High - Lo Method

Answer 7

Computes the slope for the variable rate based on the highest and lowest observations. The difference in cost is divided by the activity the obtain the variable rate.

Question 8

4.03 Predetermined Overhead Rate equation

Answer 8

Estimated Overhead Cost / Estimated Direct Labor $

Question 9

4.03 Applied Overhead

Answer 9

Predetermined O/H Rate x Actual Production

Question 10

4.04 Flow of a Cost System for a Merchandising Company

Answer 10

Beginning Inventory + Purchases = Cost of Goods Available for Sale - Ending Inventory = Cost of Goods Sold

Question 11

4.04 Flow of a Cost System for a Manufacturing Company

Answer 11

1. Raw Materials = Beg RM + Purchases = Available - Ending RM = Materials Used
2. WIP = Beg WIP + DM used + DL Applied Mfg O/H = WIP Available - Ending WIP = CoGM
3. Finished Goods = Beg FG + CoGM = FG Available - Ending FG = CoGS
4. Cost of Goods Sold = CoGS + Underapplied (Overapplied) = CoGs