B3 Bitch

Question 1

Waht are the three components to product cost? then break them down in to prime and conversion costs

Answer 1

Product Costs are DM, DL, MOH…

Prime Costs= DM + DL
Conversion Costs = DL + MOH

Question 2

Whats the difference between product and period costs

Answer 2

Product costs are inventoriable (DM, DL, MOH) and become COGS when sold

Period Costs are expensed when incurred and not inventoriable…think general admin costs

Question 3

equation for the traditional overhead rate

Answer 3

Budgeted Manufacturing costs / Estimated Cost Driver

Question 4

What is the relevant range?

Answer 4

Range of volume where the assumption of the cost river are valid and in which the actual value of the cost driver exist

Question 5

Cost of Goods Manufatured Formula

Answer 5

BASE Formula

BEGINNING WIP
ADD Dm, Dl, MOH
SUBTRACT END WIP
ENDING COGM

Question 6

Cost of Goods Sold Formula

Answer 6

BASE AGAIN
Beginning Finished Goods 
ADD: COGM
SUBTRACT: Ending Finished Goods
ENDING COGS

Question 7

Difference between Job and Process Costing

Answer 7

Job Costing is where the units/batch is customized and easy to allocate costs.

Process Costing is mass produced shit and costs are identified by activity and processes

Question 8

Lemme know what an equilalent Unit is and how them costs are applied?

Answer 8

An Equivalent unit are those that are fully/partially completed during a period

The costs are found by determining units, then costs then apply assumpotions for costs per unit and allocation of costs

Question 9

What are the equations for equivalent units and total costs under FIFO

Answer 9

( Beg. WIP * % TO BE completed, NOT completed) 
\+ Units Completed and Transferred Out
LESS: Beginning WIP
\+ (Ending WIP * % Completed)
=Equiv. UNits 

Total Costs = Cost incurred during the current period

Question 10

What are the equations for equivalent units and total costs under Weighted Average Method

Answer 10

Equiv Units = Units completed and transferred out + (Ending WIP * % Completed)

Total Costs = Costs in Beg. WIP + Costs incurred during the current period

Question 11

What are some types of spoilahe and how are they accounted for

Answer 11

Abnormal: charged to income for the current period

Normal: Increase the cost of the product being produced (like inventory)

Question 12

What is Activity Based Costing

Answer 12

Resource consuming activites cause costs and that these costs should be assainged to benefitting products based on the activites performed and the resources consumed….these ABC systems often aplit up costs into various activity centers.

Question 13

Whats the differnece between the direct method and the step down method

Answer 13

Direct Method is that eah service depts. costs are directly allocated to the production depts. without recognizing the service depth. themselves might use the services from other service depts.

Step-Down Method is a sequential approach to allocate service dept. Costs to production costs as well as other serive depts.

Question 14

What are the costs before the split off point

Answer 14

they are sunk costs which are not relecent to further processing decisions

Question 15

what are joint costs

Answer 15

allocated by an arbitrary means such as volume relationships or NRV at the split off point

Question 16

What is the difference between the total factor productivity ratios and partial productivity ratios

Answer 16

Total factor prod. ratios reflect the quantity of all outputs produced relative to the costs of all inputs used

Partial prod. ratios reflect the quantity of all outputs produced relative to the costs of individual inputs use

Question 17

What are control charts

Answer 17

used to plot comparison of actual results to a range. It tells us if its trending tom imporvement or deterioration

Question 18

What do pareto diagrams & fishbone diagrams do

Answer 18

Pareto identifies the frequency (High to low) of defects while fishbone takes a cause and effect approach

Question 19

What are conformance costs & non conformance costs

Answer 19

Conformance costs are associated with maintainging existing quality standards, include both appriasal and prevention costs

Nonconformace costs are those related to correcting nonconformance with existing stnadards which includes the internal failure and external failure

Question 20

Controllable margin deinition

Answer 20

represents the diff between the contribution margin (Revenue - Variable Costs) and the controllable fixed costs (costs that managers can impact in less than a year)

Question 21

What components are identified by blance score cards

Answer 21

FICA
Finance 
Interal Business processes
Cusotmer Satisfaction
Advanceent of innovation and HR Development

Question 22

What are the 4 SBU’s to set up business measures

Answer 22

Cost, Revenue, Profit, Investment

Question 23

What does ROE measure

Answer 23

rate of return earned by a company on the equity component

Question 24

Dupont ROE equation

Answer 24

Net Profit Margin x Asset Turnover x Financial Leverage

OR ROA x financial Leverage its the same thing
Net profti Margin: NI / Sales
Asset Turn = Sales / Avg. Total Assets
Fin. Leverage = Avg. total Assets / Equity

Question 25

Extended Dupont ROE

Answer 25

Tax Burden x Asset Turnover x Financial Leverage x Interest Burden x Operating Income Margin

Tax Burden = NI / Pretax Income
Interest Burden =  Pretax Income / EBIT
Operating Income Margin = EBIT / Sales 
Asset Turn = Sales / Avg. Total Assets
Fin. Leverage = Avg. total Assets / Equity

Question 26

What is residual income

Answer 26

measures the excess of actual income earned which is over the hurdle rate

Question 27

Waht is the resudal income FORMULA

Answer 27

NI - Required Return

Required Return is = Net Book Value x Hurdle Rate

Question 28

What is Economic Value Added and how is it different from the resudal

Answer 28

EVA measures the excess of income after taxes earned by the investment over the Rate of Return as defined by the WACC.

It’s diff from Residual because it requires WACC, and is more accurate

Question 29

Steps and formula to find Economic Value Added

Answer 29

1: Calculate required return and income after taxes
Investment * Cost of Capital = Required Return

2: Compare income and required return

Income after taxes - Required Return = EVA

Question 30

How do you determine the overhead rate and applied overhead using tradiitonal costing

Answer 30

Overhead Rate = Budgeted OH Cost x Estimated Cost Driver

Applied Overheard = Actual Cost Driver x Overhead Rate (Which is the budget)

Question 31

Process Costing steps to find product cost:

Answer 31

1. summarize flow of physical units w/ production report
2. Calcullate “equivalent unit” output
3. accumulate the total costs to be accounted for (DM + DL + MOH)
4. calculate the avg unit costs based on total costs and equivalent units
5. Apply the avg costs to the units completed and the units remaining in WIP inv.

Question 32

Prevention costs include:

Answer 32

Training, inspection expenses , redesign of product/process

Question 33

Appraisal Cost include:

Answer 33

statistical quality check, testing, maintence of lab

Question 34

Internal Failure Include:

Answer 34

rework costs, scrap, downtime

Question 35

External Failure Include:

Answer 35

Warranty costs, returned goods, liability claims

Question 36

Four types of Quality Reporting

Answer 36

APIE

Appraisal Cost
Prevention Cost
internal Failure
External Failure

Question 37

when assigning Joint costs using NRV what do you do?

Answer 37

find nrv by doing like sales vlalue - serperable costs for each product..sum total nrv….next apply the given driver to the product ratio of NRV which will give the final joint cost allocation

Question 38

How do you compute ROI both ways

Answer 38

Income / Invested Capital

Or

Profit Margin x Investment Turnover
PM = Income /Sales
Turnover = Sales / Invested Capital