BEC 4 Flashcards
Balanced Scorecard
The four perspectives of a balance scorecard are:
- Financial
- Customer
- Internal Processes
- Learning and Innovation
Dupont ROI Analysis
Net profit margin X Asset turnover X Equity multiplier
Net profit Margin : Net income / sales (revenue)
Asset turnover : Sales / Average total assets
Equity multiplier : average total assets / average shareholders equity
Process Costing Under FIFO
Under the FIFO method, only units completed during the period and units completed at the end of the period are adjusted for the completion %.
Any beginning inventory units and costs are tracked separately under FIFO and must be deducted from units completed (after you adjust for the beginning % of completion).
EU (equivalent units) : units started and still in WIP (EU % varies) AND units started and completed (EU % varies).
Labor USAGE/EFFICIENCY Variance
Standard Rate X (Standard Hours - Actual Hours)
standard hours is the actual production x the standard direct labor hours
Or
Actual total hours x standard rate per hour -
Standard total hours x Standard rate per hour
Labor RATE Variance
Actual Hours X (Standard Rate - Actual Rate)
Material USAGE/EFFICIENCY Variance
Standard Price X (Standard Material Allowed - Actual Material Used)
Material PRICE Variance
Actual Quantity Purchased x (Standard price per unit - Actual Price Per unit)
Overhead Efficiency (Usage) Variance
Overhead problems may ask for Total OH, Variable OH or Fixed OH
This compares the actual hours worked with the standard hours allowed X standard rate per DL hours
Standard allowed = Actual units produced X standard DL hours
Spending Variance
Actual total cost - Standard Cost
COGS and Gross Profit
Increasing COGS decreases Gross Profit
Process Costing under the Weighted Average Method
Includes units completed during the period + units in process at the end of the period and spoiled units.
EQ = units in beginning WIP (EU % varies), units started and still in WIP and started and completed.
After calculate EQ unit, divide the total cost the problem is asking about but EQ units to get price per equivalent unit
Then multiple units completed (plus spoilage if any) x equivalent unit rate to get the answer.
*Units in beginning inventory are not part of EU calculation because they are included in either work-in-process (WIP) or completed units by end of the month.
Normal spoilage is treated as a product costs and included with other production costs. Abnormal spoilage is a period cost.
Differnce between FIFO and Weighted Average
The only difference between process costing methods — FIFO and weighted average is the treatment of beginning WIP. Weighted average would include units would include beginnnging WIP and units completed that month/period.
Weighted average allocatescost to all units in production.
Job Order Costing
allocates manufacturing costs direclty to unique products (eg custom build in furniture) and is generally used when costs can be traced to specific units
Process costing
Used for continious production process of the same or similar goods (cans of red paint). PC is generally used when it is dificult to trace costs direclty to specific units.
Change Identification
Change Identification uses ongoing and separate evaluations to identify and address changes in internal control effectiveness.
