BAR_1A3 Managerial and Cost Accounting

Question 1

Direct allocation of service costs

Answer 1

These cost must be allocated directly to production departments, it does not get allocated to other service departments

Question 2

Absorption costing

Answer 2

Considers both variable and fixed costs, all manufacturing costs absorbed by the unit

When more units are produced than consumed this method will yield a higher Net profit than Direct costing

Question 3

Direct (Variable) costing

Answer 3

Only considers variable cost, fixed costs are expensed in the period it has occurred (period costs).

Question 4

Activity based costing (ABC)

Answer 4

Cost drivers used to collect financial and operating data

Advantages:
Enhanced control of OH costs
Elimination of arbitrary assignment of OH costs
More reliable than traditional accounting cost systems

Limitation:
Cost in determining the pools and cost drivers is higher than traditional allocation systems

Question 5

Labor variance

Answer 5

Total labor variance = Labor price variance + Labor efficiency variance

Question 6

Production Volum variance

Answer 6

Production volume variance = Budgeted fixed OH - Applied fixed OH

Question 7

Know how to set up COGs manufactured

Answer 7

Beginning WIP
Add:
Direct material used
Direct labor used
Mfg OH applied
Total Mfg costs added
Mfg costs to account for:
Less ending WIP inventory
COGs manufactured

Question 8

Spending variances

Answer 8

Exists due to paying more for items than was budgeted

Question 9

Efficiency variances

Answer 9

Exists due to using more or less of the fixed OH item than expected