Cost Accounting

Question 1

Cost of goods manufactured

Answer 1

Beginning WIP
+ DM, DL, OH
- Ending WIP

Question 2

Cost of goods sold

Answer 2

Beginning finished goods
+ Cost of goods manufactured
- Ending finished goods

Question 3

Equivalent units (FIFO)

Answer 3

Beginning WIP * % to be completed
+ Units completed - beginning WIP
Ending WIP * % completed

Question 4

Equivalent units (Weighted Average)

Answer 4

Units completed

+ Ending WIP * % completed

Question 5

Cost per equivalent unit (FIFO)

Answer 5

(Current Costs ONLY) / EU

Question 6

Cost per equivalent unit (WA)

Answer 6

(Beginning cost + Current cost) / EU

Question 7

Activity based costing (ABC) definition

Answer 7

Refines traditional costing methods and assumes that the resource consuming activities with specific purposes cause costs

Best way to assign indirect costs to products is based on the product’s demand for resource consuming activities

Question 8

Basic steps for ABC

Answer 8

1. Identify cost drivers
2. Accumulate costs in cost pools
3. Trace indirect costs to activity centers
4. Allocate remaining indirect cost pools
5. Divide assigned costs by level of activity for the cost center
6. Cost the product by multiplying the cost per activity pool by each activity, sum for total cost per product

Question 9

Joint Cost Allocation by unit volume

Answer 9

Allocate joint cost of production per pro-rata share of production units

Question 10

Joint Cost Allocation by Sales Value at Split-off

Answer 10

Allocate joint cost of production per pro-rata share of sales

Question 11

Joint Cost Allocation by Sales Value NOT known at split-off

Answer 11

Allocate joint cost of production by NPV (Sales - Further processing cost)