Capacity Costing And Sustainability Part 1

Question 1

What are the 4 types of costing and their order?

Answer 1

Theoretical
Practical
Normal (eg 2-5 years)
Master budget

Question 2

Target costing

Target price calculation

Answer 2

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.

Question 3

Target costing

Calculate target cost

Answer 3

Selling price x # units x percentage eg. If 15%, x .85

Question 4

Target costing

Calculate the cost to see if it meets the needs

Answer 4

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%

Question 5

What is value engineering

Answer 5

Evaluation of the value chain to try to reduce costs while maintaining quality

Question 6

What are the parts of EMS?

Answer 6

Financial benefits, internal benefits, external benefits

Question 7

What is sustainability?

Answer 7

The desire to meet the needs of the present without compromising the future

Question 8

Calculate the overhead rate

Answer 8

Estimated overhead / estimated rate

Question 9

Variable overhead analysis

Answer 9

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

Question 10

Fixed overhead analysis

Answer 10

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

Question 11

Types of fixed overhead variances

Answer 11

Spending variance, production volume variance, flexible budget variance

Question 12

Types of variable overhead variances

Answer 12

Spending variance, efficiency variance, flexible budget variance

Question 13

Standalone costing

Answer 13

Allocate % of total cost to each department

Question 14

Incremental costing

Answer 14

Allocate most cost to first department and remainder to second department

Question 15

Two cost strategies

Answer 15

Product differentiation

Cost leadership

Question 16

4 Costs of quality

Answer 16

Prevention costs
Appraisal costs
Internal failure costs
External failure costs

Question 17

What is a balanced scorecard?

Answer 17

Considering:
Financial perspective
Customer perspective
Internal business perspective
Learning and growth

Question 18

Journal entries

Answer 18

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

Question 19

FIFO part 1 and 2

Answer 19

Beg WIP
Started in period
To account for

End WIP
Completed
Beg WIP

Costs
Beg WIP
This month
Total
Unit cost

Question 20

Unit costs for a product

Answer 20

(Add direct man costs, direct labor costs, indirect man costs)/units

Question 21

Cost allocation direct method

Answer 21

Allocate support department costs to operating departments but not other support departments

Question 22

Costs allocation step down method

Answer 22

Allocate support department A to support department B and operating departments
Allocate support department B to operating departments only

Question 23

Cost allocation reciprocal method

Answer 23

Allocate support departments to other support departments and to operating departments

Question 24

Cost allocation single rate method

Answer 24

Actual hours x (budgeted VC rate + FC rate (FC/total budgeted hours)

Complete for each department

Question 25

Cost allocation dual rate method

Answer 25

Budgeted hours x FC rate (FC/total budgeted hours) + actual hours x budgeted VC rate