Capacity Costing And Sustainability Part 1 Flashcards
What are the 4 types of costing and their order?
Theoretical
Practical
Normal (eg 2-5 years)
Master budget
Target costing
Target price calculation
Reduce price by desired amount eg 20% reduction $1000 to $800, reduce further for target operating profit eg 10% $800 to $720, analyze costs to see where it can be reduced.
Target costing
Calculate target cost
Selling price x # units x percentage eg. If 15%, x .85
Target costing
Calculate the cost to see if it meets the needs
Add up costs Total Calculate target cost Calculate unit cost - total/# units Calculate target unit cost - selling price x remaining percentage eg .85 if 15%
What is value engineering
Evaluation of the value chain to try to reduce costs while maintaining quality
What are the parts of EMS?
Financial benefits, internal benefits, external benefits
What is sustainability?
The desire to meet the needs of the present without compromising the future
Calculate the overhead rate
Estimated overhead / estimated rate
Variable overhead analysis
Actual costs incurred - actual input qty x actual rate
Actual input qty x budgeted rate
FB budgeted input qty allowed for actual output x budgeted rate
Allocated budgeted input qty allowed for actual output x budgeted rate
Fixed overhead analysis
Actual costs incurred
Static budget - budgeted hours x budgeted rate
FB - budgeted hours x budgeted rate
Allocated - budgeted input qty allowed for actual output x budgeted rate
Types of fixed overhead variances
Spending variance, production volume variance, flexible budget variance
Types of variable overhead variances
Spending variance, efficiency variance, flexible budget variance
Standalone costing
Allocate % of total cost to each department
Incremental costing
Allocate most cost to first department and remainder to second department
Two cost strategies
Product differentiation
Cost leadership
4 Costs of quality
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
What is a balanced scorecard?
Considering: Financial perspective Customer perspective Internal business perspective Learning and growth
Journal entries
WIP
Direct materials
OH cost control
Indirect materials
OH cost control
OH incurred
WIP
OH cost control (allocation)
WIP
Wages
Finished goods
WIP
COGS
Finished goods
COGS
OH allocated
OH cost control
FIFO part 1 and 2
Beg WIP
Started in period
To account for
End WIP
Completed
Beg WIP
Costs Beg WIP This month Total Unit cost
Unit costs for a product
(Add direct man costs, direct labor costs, indirect man costs)/units
Cost allocation direct method
Allocate support department costs to operating departments but not other support departments
Costs allocation step down method
Allocate support department A to support department B and operating departments
Allocate support department B to operating departments only
Cost allocation reciprocal method
Allocate support departments to other support departments and to operating departments
Cost allocation single rate method
Actual hours x (budgeted VC rate + FC rate (FC/total budgeted hours)
Complete for each department
