Cost Accounting Flashcards
How do you calculate efficiency variance
(Standard Hours - Actual Hours) * Standard Cost
How do you calculate Price Variance
(Standard Price - Actual Price) * Actual Quantity
What is throughput
Measure of how long it takes the system to manufacture a product from start to finish
What is Setup Time
Non-value-added activity as a percentage of total production time
What is quality control
Measure of quality control by measuring rework as an internal failure cost of quality (Reworked Units / Total Units Completed)
What are the different types of budget
- Master: Does not adjust for various levels of activity
- Flexible: Adjusted for various levels of activity
- Continuos/Rolling: A plan that is revised frequently adding a period when another is removed (12 month timeframe)
- Zero: Forces management to create the budget from scratch and justify all activity
What is a Margin of Safety
Actual Sales - Break Even Sales
What is conversion cost
Cost to convert WIP goods to finished goods. Direct Labor Hours and Manufacturing OH
How do variances flow throughout the budget
What is ABC costing
How is Normal Spoilage treated
Normal spoilage is treated as product cost and absorbed by the good units produced.
Per unit cost = Total costs / number of good units
How is Abnormal Spoilage treated
As a period cost and charged to a seperate expense account in the income statement
What is Activity Based Costing (ABC)
Assigns costs to activities performed in an organization and then assigns them to products according to each products use of the activity
This is an indirect costing method and while more accurate, more expensive to implement
What is Process Costing
Costs are determined by dividing the total costs charged to a cost center by the output of that cost center.
Assumes goods are homogeneous
What is volume variance
The variance between the budget and the master
