B1- Corp. Governance and Operations Mgmt

Question 1

2004 COSO ERM Integrated Framework - to assist orgs. in developing a comprehensive response to Risk Management

4 Objectives

Answer 1

Strategic - high-level

operations - achieve objectives through effective/efficient use of resources

reporting - reliable and consistent

Compliance

SORC

Question 2

Key Elements / Components of ERM:

IS EAR AIM

Answer 2

Internal Environments
Setting Objectives

Event ID
Assess Risk
Risk Response

Activities, comma Control
Info and Communication
Monitoring

Question 3

COSO has ORC

ERM has SORC

Answer 3

ORC -

operations, reporting (THE FOCUS - reliability, timeliness and transparency of firm’s reporting as establisehd by regulators and internal policies,) and Compliance

Question 4

Control Environment: CRIME

Answer 4

Control Environment - Tone at the Top / Ethics

Risk Assessment - FS misstated or fraud

Info and Communication - FACT (fair accurate complete timely)

Monitoring - Efficencies of internal controls; report deficiencies in a timely way

Existing Control Activities - policies/procedures in place to mitigate risk

Question 5

IS EAR AIM :

IS

Answer 5

Internal Environment - EBOCA/HR

• commit to ethical vals and integrity, board oversight, org. structure, commitment to competence, accountability
• HR: risk mgmt philosophy, HR standards of hiring and promoting, risk appetite

Setting Objectives:
SORC

Question 6

IS EAR AIM :

EAR

Answer 6

Event ID: events, both negative (risks) and positive (opportunities,) need to be identifies. Supported by:
- events that occur, influencing factors, ID techniques (inventories, analysis, var/threshold)

Assess Risk:
inherent, residual (after mgmt makes a choice

Risk Response: avoidance, reduction, sharing, acceptance

Question 7

IS EAR AIM :

AIM

Answer 7

Acitivites, Control:
var. analysis, review reports, batch totals, physical asset controls, performance indicators / ratio analysis, seg. of duties

Info + Communication:
(fair accurate complete timely)
the identification, capture, and communication of information in an effective manner: obtain and use, internally communicate, communicate w/ external parties/CPA

Monitoring:
ongoing activties such as functional and operational support by managers (verifies effective ops. of controls), Internal Audit or ad hoc staff to evaluate, reporting deficiencies

Question 8

COSO - 1992 - Private Sponsoring Organizations:

purpose?

Answer 8

To help businesses assess internal control

Question 9

Fishbone diagram

Answer 9

Process, contribution to the process, or potential problem that could occur in each phase of the process

Question 10

Pareto Diagram (Histogram)

Answer 10

Represents and individual and cumulative graphical analysis of errors by type.

Indiv errors are represented by the histograph bar graph,

Cumulative errors is presented on a line graph

Question 11

Carrying Cost
Sunk Cost
Committed Cost
Mixed Cost

Answer 11

• Cost of carrying inventory
• Cost in the past, that was unavoidable
• Cost in the future, that is unavoidable
• Both Fixed and Variable components

Question 12

Allocating Joint Production Costs to products

Answer 12

JPC - NRV

to be allocated by multiplying above number by (2nd/1st+2nd)

Question 13

Product Cost
Relevant Cost
Period Cost
Opportunity Cost

Answer 13

Product:
Assigned to Goods (Products) that were either purchased or manufactured for resale

Relevant:
Costs that are only relevant to a particular decision

Period Cost:
Costs that are expensed during a period. They are not charged to a product (e.g. capitalized,) which is why they are expensed.

Opportunity Cost:
Costs that would have been saved or profits that would have been earned if alternative decisions were selected

Question 14

Cost of Jobs Completed / Cost of Goods Manufactured

COGM

Answer 14

Direct Materials Used +
Direct Labor +
Overhead Applied +
Beg. WIP -
End WIP

COGM = 90 +107+113+0-0
=310

Question 15

Job Order Costing

Answer 15

• accumulation of all costs associated with a job, order, proj, or activity
• most effective for customized activities with very traceable costs:
• Dir. Material and Dir. Labor traceable to individual jobs
• Manufacturing Overhead: applied to the individual job based on Budg.Overhead/est. Units produced

Question 16

Cost Driver:

Answer 16

Factor that has the ability to change the total cost

-Typically activity bases that are closely corrrelated with the incurring of Man. Overhead Costs in an activity center, and often used as an ALLOCATION basis for applying overhead costs to cost objects

Question 17

Process Costing

Answer 17

Group costs by dept. because products are being produced on a more-or-less continuous basis, and are indistinguishable from one another

-FIFO or weighted avg. method

Question 18

Activity-based costing

Answer 18

EG - base it on material moves per product line

• Divides the production process into activities where costs accumulate
• Production process assumes that activities consume resources (Dir. mat., dir. labor, Man. overhead)
• Assumes that products or services require the performance of activities / activities consume resources

Question 19

Prime Costs

Answer 19

the direct cost of a commodity in terms of the materials and labor involved in its production, excluding fixed costs.

Question 20

Total Manufacturing Cost

Answer 20

Dir. Mat + Dir. Labor + Overhead Applied (% * cost driver)

Question 21

Cost of Goods Sold/ COGS

for a period

Answer 21

Beg Bal, Finished Goods: 85

PLUS goods newly trf. to 
finished goods (calced): 484

SQUEEZE: 491

End. Bal. (given): 78

Question 22

Estimated Product Cost?

Answer 22

Dir. Mat. + Dir. Labor + Overhead

Question 23

Direct and indirect costs

Answer 23

Examples of direct costs are direct labor, direct materials, commissions, piece rate wages, and manufacturing supplies. Examples of indirect costs are production supervision salaries, quality control costs, insurance, and depreciation.

Question 24

Fixed Cost

Answer 24

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any business activity.

Question 25

Variable Cost

Answer 25

A variable cost is a corporate expense that varies with production output. Variable costs are those costs that vary depending on a company’s production volume; they rise as production increases and fall as production decreases.

Question 26

Total Manufacturing Cost

Answer 26

The basic formula for calculating total manufacturing costs is to add the costs of your direct labor, direct materials and manufacturing overhead. Determine the total cost of materials directly used for manufacturing. This includes all of the raw materials that actually go into the finished product.

Question 27

Conversion Cost Pricing:

Answer 27

Can be used when customer furnishes material used per manufacturing a product

Question 28

Why does ABC Costing refine product cost compared to traditional costing?

Answer 28

BC cost system emphasizes long-term product analysis (when fixed cost becomes variable cost)

Question 29

Product costs / Inventoriable Costs

Answer 29

DL, DM, Overhead