BEC 3 Flashcards
product costs
DM, DL, MOH (not expensed until sold)
Period costs
SG&A, interest expense (expensed when incurred)
prime costs
DM + DL
conversion costs
DL + MOH
overapplied overhead
credit balance
underapplied overhead
debit balance
Cost of Goods Manufacted
DM + DL + MOH
when to use process costing
large number of homogeneous items
when to use job costing
relatively few units, each of them are unique
Equivalent Units Using FIFO
Units = beginning WIP * % TO BE completed + (completed - beginning WIP) + ending WIP * % complete
Equivalent Unit Cost = current cost / EU
Equivalent Units Using Weighted Average
Equivalent Units = Units Completed + ending WIP * %
Equivalent Units Cost = beg. cost + current cost / EU
partial productivity ratios
quantity of output / quantity of single input used
total productivity ratios
quantity of output / cost of all inputs used
contribution margin
Revenue - VC
Controllable Margin
CM - controllable fixed costs
Balanced Scorecard Success Factors
Financial, internal business processes, customer satisfaction, advancement of innovation (learning and growth)
conformance costs
preventive and appraisal
nonconforming costs
internal failure and external failure
Return on Investment
ROI = profit margin x investment turnover
profit margin = income / sales
investment turnover = sales / invested capital
Return on Assets
ROA = net income / average assets
DuPont Analysis of ROE
ROE = net profit margin * asset turnover * financial leverage
net profit margin = net income / sales
asset turnover = sales / assets
financial leverage = assets / equity
Extended DuPont Model
Breaks out net profit margin
net profit margin = tax burden x interest burden x EBIT margin
tax burden = net income / pretax income
interest burden = pretax income / EBIT
EBIT margin = EBIT / Sales
Residual Income
Net Income - Required Return
Required Return = Book Value of Equity * hurdle rate
Economic Value Added
= NOPAT - required return
required return = investment * WACC
