Bridging Course Flashcards
What is a cost unit?
Unit of product or service to which costs can be attached.
What is a cost card?
A document which groups the costs of a product or service in order to arrive at a total cost.
What is a direct cost?
A cost that can be directly attributable to the cost card
What is an indirect cost?
A cost that cannot be directly attributed to the cost card.
What is a prime cost?
Total of the direct costs
What is the production cost?
Total of the manufacturing costs
What are the 3 main functions of management?
Planning
Control
Decision making
What is activity level?
The number of units produced
What is cost behaviour
The way a cost changes as production quantity or activity level changes
What are overheads?
Indirect costs
What is the formula for OAR?
Total budgeted production overhead / Total budgeted activity level
What is the break even point formula?
Fixed costs / unit contributions
What is the formula for breakeven revenue?
Fixed costs / PV Ratio
What is the formula for PV Ratio?
Contribution / Sales
What is the margin of safety calculated using subtraction?
Budgeted sales volume - breakeven sales volume
What is the margin of safety formula as a %
Budgeted sales volume - Breakeven sales volume / budgeted sales volume x100
What is the target profit formula?
Fixed costs + required profits / unit contribution
What is the formula for overheads?
Indirect materials + indirect labour + indirect expenses
What are the 4 steps in calculating overhead costs per unit?
Allocation
Apportionment
Reapportionment
Absorption
What is allocation?
Is the charging of an overhead to a signe responsibility centre that has incurred the whole of that overhead.
What is apportionment?
The charging of a proportion of an overhead to each responsibility centre that incurs part of that overhead.
What is reapportionment?
Ensuring that all overheads are charged to manufacturing departments and not service departments as the manufacturing departments are responsible for the overheads.
What are the 2 methods of reapportionment?
The direct method
The step down method.
What is the amount absorbed formula?
Actual production activity x OAR