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BEC CPA > B3/B4 > Flashcards

B3/B4 Flashcards

1
Q

How to distinguish what is direct labor

A

Cost DIRECTLY connected with manufacturing product

Ppl who just work on factories or mechanics are not DL

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2
Q

Job order costing

A

Alllocating production costs to products & srvices that u can identify separately (ex: furniture manufacturing, special order printing, shipbuilding)

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3
Q

Estimated NRV method to estimate joint costs, what units do u use

A

Units produced!! Not units sold

NRV per each product/unit = (units produced * selling price) - seperable cost

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4
Q

If you’re given ROA and asset turnover, how to find profit margin

A

ROA = NI/TA
asset turnover = sales / avg assets

ROA % / asset turnover = profit margin

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5
Q

What do product costs consist of

A

Direct material, direct labor, factory (manufacturing) overhead

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6
Q

Conversion costs

A

Labor and overhead

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7
Q

Prime costs

A

Material and labor

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8
Q

Control chart

A

Shows performance of a particular process in relation to accceptable upper/lower deviation limits

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9
Q

Pareto diagram

A

Individual and cumulative graphical analysis of errors by type

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10
Q

Fishbone diagram

A

Describes a process, contributions to the process, and the potential problems that could occur at each phase

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11
Q

When actual overhead expenses are incurred, do you debit or credit

A

Debit actual, credit applied (estimated) overhead

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12
Q

Optimal imputed interest rate used in residual income approach

A

Target return on investment set by company management

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13
Q

Purpose of cost allocation

A

Measuring income and assets for external reporting

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14
Q

Residual income

A

RI = NI (from income statement) - required return

Required return = NBV (equity) * hurdle rate

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15
Q

Comformance costs

A

Prevention & appraisal costs

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16
Q

Nonconformance costs

A

Internal & external failure costs

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17
Q

Engineered cost

A

Cost that bears an observable and known relationship to a quantifiable activity base
Have DIRECT association to output (if it doesn’t exactly tie to something like # of units produced, odds are it is not an engineered cost)

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18
Q

Activity based costing definition

A

Accounting system that collects financial & operating data on basis of underlying nature & extent of cost driver

19
Q

In joint costing,

Sales price less cost to complete at split off is equal to

A

Net sales value at split off

Basically this is the additional contribution to income generated by completing the product

20
Q

Static budget is based on what

A

Budgeted costs for budgeted output

21
Q

Regression equations estimates what

A

Dependent variables

Regression equation estimates dependent variables based on changes in the independent variable

22
Q

Under variable costing, what costs are assigned to inventory?

A

only the variable manufacturing costs (direct material, direct labor, variable overhead) are assigned to inventory.

23
Q

when you have a question about a special order & what the minimum sale price should be, how do you solve?

A

the minimum price for a special order is the sum of the variable costs of current utilization plus the contribution margin from the next best alternative.

24
Q

Cost-based pricing is associated with (3 THINGS)

A
  1. Price stability.
  2. Price justification.
  3. Fixed-cost recovery.
25
Q

Margin of Safety formulas

A

Margin of Safety % = (MOS $/ total sales)

MOS $ = Total Sales - BE sales

26
Q

BE SALES & Units formulas

A

BE $ = Total FC / CM ratio OR
BE $ = BE UNITS * sale price
BE UNITS = FC/ CM per unit

27
Q

R-squared (in regression analysis) indicates what

A

R squared is the coefficient of determination! - note: coefficient of determination measures the goodness of fit, which is:
the proportion of the total variation in a dependent variable (y) explained by independed variable (x)

28
Q

Monte Carlo simulation

A

Used to generate individual values for a random variable

29
Q

Regression analysis

A

Used to separate costs into fixed and variable components by means of least squares. Minimize the distance b/t trend line and actual observations

Used to estimate the DEPENDENT cost variable based on changes in the INDEPENDENT variable

30
Q

End Inventory formula

A 
Begin Inv
\+ production costs**
= MFG costs available
- COGS
= EI

** production costs include DL, DM, and applied overhead

31
Q

Absorption costing

A

Charges product costs (DM, DL, VOH/FOH) as inventoriable costs

32
Q

formula for DM used

A 
begin DM
\+ purchases
- purchase returns
\+ transportation available
= DM available
- ending DM
= DM used
33
Q

formula for calculating volume variance

A

remember standard = “budgeted”
[STD rate X standard quantity allowed**] + [std fixed rate * std production] = budgeted/applied

[STD rate X standard quantity allowed**] + [std fixed rate * actual production] = actual

**standard quantity allowed = # of units actually produced x rate per unit (usually DL hour)

34
Q

in evaluating costs for decision making, a company usually considers what 3 costs

A

incremental, differential, avoidable

variable costs are not considered

35
Q

how are “inventorial costs” classified

A 
as assets (inventory)
once they are sold they become "COGS"
36
Q

quality costs acronym

A 
APIE
appraisal cost
prevention costs 
(AP = conformance costs)
Internal
External
(IE = nonconformance)
37
Q

appraisal costs

A

quality check, inspection, testing

38
Q

prevention costs

A

training employees, search for high quality supplier,

39
Q

External failure cost examples

A

Lost customers, warranty costs, liability claims

40
Q

Profitability ratio that makes it easy to compare companies that differ in size

A

ROA

41
Q

Economic value added, what is the formula and what is the purpose

A

Uses the net operating profit after tax (NOPAT) and compares it to the required return for the capital

EVA= NOPAT - Required Return
Required Return = Investment x WACC

42
Q

Main disadvantage of using ROI as a performance measure

A

ROI may lead to rejecting projects that yield positive cash flows
Managers may not want to pursue investments as it could bring down the ROI ratio

43
Q

Interest rate/hurdle rate used in the residual income approach is characterized as:

A

Historical weighted average cost of capital for the company

HOWEVER, the OPTIMAL hurdle rate is the target return on investment set by the company’s management

44
Q

Primary cause of a sales price variance

A

** note: sales price variance is also known as revenue variance
Usually due to change in unit selling price

BEC CPA (11 decks)

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