chapter 2 cost type

Question 1

what point of cost accounting and financial accounitng

Answer 1

cost : provides info to make decisions

financial : finds profit for a period

Question 2

how are cost and financial accounting linked?

Answer 2

linked by cost type accounting

Question 3

what does it mean by attributability of costs

Answer 3

direct or indirect

Question 4

what meant with nature of input as a classification citerion for a cost type

Answer 4

material, personnel, machine etc

Question 5

dependance on output variance means?

so if the type of cost is sensitive to output amount

Answer 5

variable or fixed

Question 6

position in value chain?

Answer 6

manufacturing, selling and shippping, etc.

Question 7

origin of input goods

Answer 7

primary costs (outside of company), secondary costs (internal)

Question 8

how many cost types on average in company

Answer 8

800

Question 9

one benefit of more type of costs and more effort?

Answer 9

improve decision making with precise info

Question 10

auxiliary mterails?

Answer 10

paints adhesive (artificial indirect costs)

Question 11

what attributability do operating materials have (direct/indirect)

Answer 11

indirect costs (oils greases)

Question 12

inventory method

Answer 12

consumption = beginning inventory + acquisitions - ending inventory

Question 13

carrying on method

Answer 13

Consumption= directly recorded (differences because stolen, measurement errors, need person to hand out materials and cosument)

Question 14

retroactive accounting method

Answer 14

consumption = bills of material ( need inventory taking, difference bc stolen, bills of material need up to date keeping)

Question 15

FIFO

Answer 15

delivered fist is consumed first

Question 16

LIFO

Answer 16

material delivered last is consumed last

Question 17

ex post average price method

Answer 17

average purchase prices for all cosnumed material at end of accounting (take all prices and average them at the very end)

Question 18

moving average price method

Answer 18

take average after every new delivery and price

Question 19

5 types of personnel costs

Answer 19

salary ( each month)
time wage( hourly wage)
piece rate wage (per piece)
premium wage ( premium if good performance, bonus)
fringe benefits( car additionally)

Question 20

5 types of machine costs

Answer 20

depreciation, interest cost ( finance payments), leasing/rental payment , acquisition related costs, maintenance costs (repair)

Question 21

3 types of TIME dependant depreciation methods

Answer 21

straight line, declining balance, arithmetic degressive

Question 22

1 type of OUTPUT dependant depreciation method

Answer 22

units of production depreciation

Question 23

straight line depreciation

Answer 23

(acquisition value - residual value) / useful life

Question 24

declining balance depreciation

Answer 24

p is depreciation percentage
p =
1- square root with using useful life as square root number (residual / acquisition)

depreciation value decreases over time

Question 25

arithmetic degressive

Answer 25

d is depreciation rate

d = (acquisition - residual)/ 1 + 2 + .. + useful life
depreciation amount decrease each year by constant value

Question 26

units of production

Answer 26

(acquisition - residual) / total units of production

Question 27

interest cost formula

Answer 27

capital required for operations x interest rate

Question 28

4 steps of find interest cost

Answer 28

1. assets needed for operations
2. monetary value of assets
3. determine capital required for operation (deduct NIBL from operating assets)
4. find interest rate

Question 29

what do you normally exclude from NIBL

Answer 29

provisions, revenues received in advance accounts payable

Question 30

what a are provisions

Answer 30

money set aside from profits to cover unexpected liability (no interest there )

Question 31

why are accounts payable NIBL

Answer 31

money still need to pay suplliers (no need to pay interest there)

Question 32

why are advances recived NIBL

Answer 32

like revenues recieved in advance

Question 33

what are accruals

Answer 33

accruals are like provisions (so accrual is a plan to pay something, and you need provisions (money set aside) to handle accruals which will be payed later)

Question 34

are retained earnings NIBL?

Answer 34

no need to pay interest ( need to pay divends on retained earnings)

Question 35

Are loans NIBL?

Answer 35

no, need to pay interest to bank

Question 36

are common stocks NIBL?

Answer 36

no need pay interest bc they are stocks so dividents

Question 37

are current year earnings NIBL

Answer 37

no, need to pay dividents

Question 38

are accounts payable NIBL?

Answer 38

yes, this is money you need to pay suppliers so no interest pay involved

Question 39

whats a good thinking when deciding something is NIBL

Answer 39

do you need to pay anyone a bit ? if you need to still pay someone bacl like suppliers, or plan on spending something (provisions) or have sai you will pay something (accruals), or revenues recieved in advance (has nothing to do with anyone) then you dont need to pay anyone.

Question 40

How to find WACC

Answer 40

WACC = cost of equity x (equity/equity + debt)

1 cost of debt x (debt / equity + debt) ( 1- tax rate)

Question 41

how to find capital asset pricing model

Answer 41

r = risk free interest rate + company risk factor
r = rf + beta ( rm - rf)