B1: Operations Management - Cost Measurement

Question 1

What is prime cost?

Answer 1

DM + DL

Question 2

What is conversion cost?

Answer 2

DL + Mfg. OH

Question 3

What are included in product costs? (Memorize!!!)

Answer 3

Product costs = DM + DL + Mfg. OH

Question 4

What is PIE?

Answer 4

The most frequent cost objectives:

1. Product costing
2. Income determination (profitability)
3. Efficiency

Question 5

How to calculate (predetermined) overhead rate?

Answer 5

Predetermined OH = Budget OH/Estimated cost driver (allocation base)

Question 6

How to calculate applied overhead?

Answer 6

Applied OH = Actual cost driver x Predetermined OH rate

Question 7

How to calculate cost of goods manufactured?

Answer 7

COGM = Beginning WIP + Manufactured incurred - Ending WIP

Question 8

How to calculate manufacture cost incurred in the period?

Answer 8

Mfg. incurred = DM used + DL + Mfg. OH applied

Question 9

How to calculate direct materials used?

Answer 9

DM used = Beginning raw materials + Purchases - Ending raw materials

Question 10

How to calculate cost of goods sold?

Answer 10

COGS = Beginning FG + COGM - Ending FG