B1 : Cost Measurements

Question 1

Define cost accounting

Answer 1

designed to meet the goal of measuring cost objectives or objectives.

Question 2

Name the 3 most frequent cost objectives ( PIE)

Answer 2

1. Product Costing (inv,cogm,cogs)
2. Income deter (profitability)
3. Efficiency measurements (comparisons to standards)

Question 3

Determine if Product vs. Period:

1) Wages for factory employees
2) Wages for acct dept
3) Sales and promotion exp.
4) Raw materials purch.
5) General & admin cost
6) MFG OH
7) Interest expense

Answer 3

1) product
2) period
3) period
4) product
5) period
6) product
7) period

Question 4

Calculate OH under traditional costing

Answer 4

Step 1: calculate OH rate

budgeted oh cost/ estimated cost drivers ( Dl $, DLH, MH)

step 2: Find Applied Oh

actual cost driver * OH rate

Question 5

Calculate DM “used”

Answer 5

Beg RM
\+purchases
=DM available
-EI RM
= DM used

Question 6

Calculate COGMS

Answer 6

WIP
\+DM used, DL & MFG OH app
     (= Total Mfg. cost incurred)
=total mfg. cost avail(wip +tmci)
- WIP EI
= COGM (this period)

Question 7

Define job costing

Answer 7

method of product costing; used when there are few units produced and is identifiable

Question 8

Define Process costing

Answer 8

averages costs and applies them to large #s of homogeneous items

Question 9

Define an activity

Answer 9

any work performed inside a firm

Question 10

Define resource

Answer 10

an element that is used to perform an activity

Question 11

Name the two types of cost drivers

Answer 11

Traditional & ABC

Question 12

Define Cost pool

Answer 12

A cost pool is a group of cost ( raw mats, or DL) or specially identified cost center ( ex: dept manager) in which cost are grouped, assigned or collected

Question 13

Value chain

Answer 13

aka DM, DL

series of activities that add customer usefulness to product

Question 14

Non-Value- Added activities

Answer 14

aka surplus material

do not increase product value or service and are targeted for elimination

ex: warehousing

Question 15

Define common or joint cost

Answer 15

cost relates to more than one product and cannot be separately

**cost incurred up to split off point

Question 16

Define joint products

Answer 16

“main products”

are two or more products that are generated from a common input

Question 17

Define by-products

Answer 17

minor products that incidentally result from main product

Question 18

Define split-off products

Answer 18

point in the production process where joint products can be recognized as individual products

Question 19

Define separable cost

Answer 19

cost incurred on a product after split-off point