BEC 5: Cost Accounting and Performance Measurement Flashcards
What is production volume variance?
- A measure of how overhead is affected by production.
- Observe the change in overhead when volume is changed.
- How does overhead compare to the budget? Under budget is unfavorable.
What is the flexible budget equation
Total Costs = Fixed + Variable Cost Per Unit (Variable Units)
What costs are allocated to output under the weighted average method?
- Beginning Inventory Costs
- Costs incurred during the period
What units are allocated to output under the weighted average method? (Equivalent production)
- Spoiled units
- Units completed
- Ending inventory (% Complete)
What costs are transferred to department?
- Costs of completed units
- Costs of spoiled units
How is process costing measured?
-Weighted average method
or
-FIFO Method
What is the main difference between FIFO and Weighted Average?
- WA: Total Costs / Total Equivalent Units = Cost per unit
- FIFO: Costs this period / Units worked on this period = Cost per unit.
What is net realizable value?
- Sales minus additional costs
- Remember to calculate NRV for both products
What is proportional net realizable value?
- Product 1 NRV / (Product 1 NRV + Product 2 NRV)
- Assuming there are only 2.
How do you calculate joint costs?
-Apply the proportional net realizable value % x joint costs, net of any by-product NRV.
How do you calculate equivalent units under FIFO method?
=Beginning (% incomplete) \+Completed Units (Includes % Beginning completed) \+Ending Inventory (% complete) -Beginning Inventory (Total) =Equivalent Units
Direct Material Price Variance (Purchasing)
- AQ(SP - AP)
- While in the factory, can I control the quantity used? Yes
Direct Material Price Variance (Production)
- SP(SQ - AQ)
- While in the factory, can I control the price? No
Direct Labor Rate Variance (Personnel)
- AH(SR - AR)
- While in the factory, can I control the hours worked? Yes
Direct Labor Efficiency Variance (Production)
- SR(SH - AH)
- While in the factory, can I control the pay rate? No
Overhead Applied
Standard Direct Labor Hours x Predetermined Overhead Rate
Overhead Spending Variance
(Actual Direct Labor Hours x Predetermined Variable Overhead Rate + Budgeted Fixed Overhead) - Actual Overhead
Overhead Efficiency Variance
Predetermined Variable Overhead Rate x (Standard Direct Labor Hours - Actual Direct Labor Hours)
Overhead Production Volume Variance
(Standard Direct Labor Hours x Predetermined Fixed Overhead Rate) - Budgeted Fixed Overhead
Period Costs
Not a part of inventory costs
Fixed Costs
Costs that remain unchanged no matter the activity level (rent, insurance, etc.)
Variable Costs
Costs that change based on the level of production volume
Controllable Costs
Can be regulated by management.
When would you exclude ending work in process from calculating equivalent units?
If there is a requirement that it be a certain percentage complete before being transferred. Stated completion of 80%, completion is only 60%.
