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cost accounting > chapter 2 cost type > Flashcards

chapter 2 cost type Flashcards

1
Q

what point of cost accounting and financial accounitng

A

cost : provides info to make decisions

financial : finds profit for a period

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2
Q

how are cost and financial accounting linked?

A

linked by cost type accounting

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3
Q

what does it mean by attributability of costs

A

direct or indirect

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4
Q

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

A

material, personnel, machine etc

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5
Q

dependance on output variance means?

so if the type of cost is sensitive to output amount

A

variable or fixed

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6
Q

position in value chain?

A

manufacturing, selling and shippping, etc.

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7
Q

origin of input goods

A

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

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8
Q

how many cost types on average in company

A

800

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9
Q

one benefit of more type of costs and more effort?

A

improve decision making with precise info

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10
Q

auxiliary mterails?

A

paints adhesive (artificial indirect costs)

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11
Q

what attributability do operating materials have (direct/indirect)

A

indirect costs (oils greases)

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12
Q

inventory method

A

consumption = beginning inventory + acquisitions - ending inventory

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13
Q

carrying on method

A

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

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14
Q

retroactive accounting method

A

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

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15
Q

FIFO

A

delivered fist is consumed first

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16
Q

LIFO

A

material delivered last is consumed last

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17
Q

ex post average price method

A

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

18
Q

moving average price method

A

take average after every new delivery and price

19
Q

5 types of personnel costs

A 
salary ( each month)
time wage( hourly wage)
piece rate wage (per piece)
premium wage ( premium if good performance, bonus)
fringe benefits( car additionally)
20
Q

5 types of machine costs

A

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

21
Q

3 types of TIME dependant depreciation methods

A

straight line, declining balance, arithmetic degressive

22
Q

1 type of OUTPUT dependant depreciation method

A

units of production depreciation

23
Q

straight line depreciation

A

(acquisition value - residual value) / useful life

24
Q

declining balance depreciation

A

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

depreciation value decreases over time

25
Q

arithmetic degressive

A

d is depreciation rate

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

26
Q

units of production

A

(acquisition - residual) / total units of production

27
Q

interest cost formula

A

capital required for operations x interest rate

28
Q

4 steps of find interest cost

A
  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
29
Q

what do you normally exclude from NIBL

A

provisions, revenues received in advance accounts payable

30
Q

what a are provisions

A

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

31
Q

why are accounts payable NIBL

A

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

32
Q

why are advances recived NIBL

A

like revenues recieved in advance

33
Q

what are accruals

A

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)

34
Q

are retained earnings NIBL?

A

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

35
Q

Are loans NIBL?

A

no, need to pay interest to bank

36
Q

are common stocks NIBL?

A

no need pay interest bc they are stocks so dividents

37
Q

are current year earnings NIBL

A

no, need to pay dividents

38
Q

are accounts payable NIBL?

A

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

39
Q

whats a good thinking when deciding something is NIBL

A

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.

40
Q

How to find WACC

A

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

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

41
Q

how to find capital asset pricing model

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

cost accounting (9 decks)

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