BEC chpt 1 & 2 - Becker

Question 1

Name 3 components of product cost

Answer 1

• Direct Materials (DM)
• Direct Labor (DL)
• Manufacturing Overhead (MO)

Question 2

Prime Cost

Answer 2

DM + DL

Question 3

Conversion Costs

Answer 3

DL + MO

Question 4

Product Cost

Answer 4

Inventoriable; they become cost of goods sold when sold

Question 5

Period Cost

Answer 5

Expensed in the period incurred as they are not inventoriable

Question 6

Name the 3 objectives of an entity’s cost accounting system (PIE)

Answer 6

• Product Costing
• Income Determination
• Efficiency Measurements

Question 7

Determine the traditional overhead rate

Answer 7

Budgeted manufacturing OH costs / estimated cost driver

Question 8

Direct method for allocating service costs in ABC

Answer 8

each svc dept costs are allocated to the production departments but not to other service departments.

Question 9

Step down method for allocating service costs in ABC

Answer 9

a sequential approach is used to allocate svc dept costs to production and other svc departments.

Question 10

Contribution Margin Calculatiom

Answer 10

Sales - variable costs

Question 11

Contribution Approach Equation

Answer 11

Revenues - variable costs = contribution margin - fixed costs = net income

Question 12

Profit

Answer 12

Sales - variable costs - fixed costs

Question 13

Absorption Approach Equation

Answer 13

Revenues - cogs = gross margin - operating expense = net income

Question 14

Unit contribution margin

Answer 14

Contribution margin / units

Question 15

Contribution margin ratio

Answer 15

Contribution margin / revenues

Question 16

Special order full capacity decision

Answer 16

Price > vc per unit + opportunity cost

Question 17

Special order w/ excess capacity decision

Answer 17

Price > vc per unit

Question 18

Sales dollars needed to get desired profit

Answer 18

Vc + fc + pretax profit

Question 19

Sales units needed to get desired profit

Answer 19

Fc + pretax profit / contribution margin per unit

Question 20

Break even point in dollars methods

Answer 20

Total fc / contribution margin ratio

Or

Unit price x break even point in units / break even in dollars

Question 21

Break even point in units

Answer 21

Total fc / contribution margin per unit

Question 22

Traditional Costing Steps (overhead applied)

Answer 22

#1 Budgeted overhead cost / Estimated cost driver (DL$, DLhrs, Mhrs) = overhead rate
#2 Actual cost driver x overhead rate = applied overhead

Question 23

Cost Drivers

Answer 23

Direct labor $
Direct labor hours
Machine hours

Question 24

Direct Material Used Calc

Answer 24

Begin Raw Material
\+Purchases =
Material Available
- Ending Raw Material =
Material Used

Question 25

Joint Products

Answer 25

Two or more main products that are generated from a common input

Question 26

Gross Margin =

Answer 26

Sales less COGS

Question 27

Relative Sales Value at Split Off

Answer 27

Sales price less the cost to complete OR the additional contribution to income generated by completing the product.

Question 28

Cost per unit calculation

Answer 28

Total costs / saleable units = cost per unit