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Cost And Managerial Accounting > Cost and Managerial Accounting > Flashcards

Cost and Managerial Accounting Flashcards

1
Q

Job order costing

A

Process of tracking the costs of an individual product

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2
Q

Price - taker

A

the market sets the price + the company decides if they can produce the good/service while making a profit

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3
Q

Price - maker

A

company sets the price of a custom or unique product and charges based on costs + markup

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4
Q

What is the major purpose and use of job order costing?

A

To create a system in which manufacturing costs are accumulated by SEPARATE product orders

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5
Q

True or False: Having accurate product or service cost information is important for both price takers and price makers

A

TRUE

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6
Q

Job order costing is appropriate when which two conditions exist?

A
  1. Products produced are DIFFERENT from each other ( even if they’re the same TYPE of product)
  2. Manufacturing processes used are DIFFERENT for each product

Ex. Building trucks - different colors, tires, etc.

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7
Q

Why is having accurate product cost information important?

A

So manufacturers can charge a price based on costs and a reasonable markup

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8
Q

What is the foundation of managerial accounting?

A

Cost control

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9
Q

When should Job Order Costing NOT be used?

A

When the product produced cannot uniquely be identified from another - everything is UNIFORM

Ex. Soft drinks, newspapers, canned food

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10
Q

What is a condition to using job order costing?

A

Identifying each specific job or product manufactured

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11
Q

Which costs should be assigned to each product under a job order costing system?

A

Direct materials, direct labor, and manufacturing overhead

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12
Q

Direct materials

A

Material out of which a product is made

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13
Q

Direct labor

A

Wages paid to skilled workers who form direct materials into a final product

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14
Q

Manufacturing Overhead

A

Everything needed for a product to be made that is not included in direct labor or materials

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15
Q

Cost Flows in Manufacturing

A
  1. Raw materials are stored in RAW MATERIALS INVENTORY
  2. Raw materials are moved to production floor as WORK IN PROGRESS INVENTORY
  3. Workers combine materials + labor into finished products
  4. Finished products are moved to FINISHED GOODS INVENTORY
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16
Q

Product costs

A

costs incurred INSIDE the production facility

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17
Q

Period costs

A

costs incurred OUTSIDE the production facility

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18
Q

Examples of Direct Materials

A
  • Rubber for making tires
  • Steel for making cars
  • Wood for making tables
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19
Q

Examples of Direct Labor

A

Wages and other payroll related expenses of workers who work directly on products

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20
Q

Examples of Manufacturing Overhead

A

Supervisors, Custodians, utilities, depreciation of facilities, insurance, and property taxes

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21
Q

Examples of product costs

A
  • costs of raw materials
  • wages of employees working directly on products
  • salaries of supervisor over the product workers
  • utility bills to heat and light the facility
  • depreciation or rent on the facility
  • wages of maintenance personnel
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22
Q

Examples of period costs

A
  • wages employees working outside the facility (admin)
  • utilities to heat and light admin facilities
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23
Q

Which account are the costs of the raw materials, direct labor, and miscellaneous manufacturing overhead transferred to when the product is being manufactured?

A

Finished goods inventory

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24
Q

When manufacturing is completed on specific products, their costs are transferred to which account?

A

Finished goods inventory

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25
Q

What are the 3 steps in the Job Order Costing Procedure?

A
  1. Identify the products or project that needs costs measurement
  2. Specifically trace the direct costs to each product or project
  3. Allocate an appropriate amount of overhead costs to each product or project
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26
Q

Manufacturing Overhead Rate Calculation

A

The rate at which MO costs are assigned to products

= estimated MO costs for the period / number of units produced

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27
Q

Purchasing Raw Materials JE

A

DR - Raw mats inventory (increase in raw mats inventory)
CR - AP or cash (decrease in cash)

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28
Q

Using Direct Materials JE

A

DR - Work in progress inventory (WIP inventory increases)
CR - Raw mats inventory (raw mats inventory decreases)

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29
Q

Using Indirect Materials JE

A

DR - MO (MO costs increases)
CR - Raw mats inventory (raw mats decreases)

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30
Q

What is the MO account used for in accounting?

A

It is a temporary place that holds overhead costs until they are assigned to the appropriate place (rent, utilities, etc.)

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31
Q

Direct Labor JE

A

DR - Work in progress inventory (labor costs increases to WIP invent.)
CR - Salaries and Wages Payable (wages owed decreases when paid)

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32
Q

Indirect Labor JE

A

DR - MO (MO increases)
CR - Salaries and Wages Payable (wages owed decreases when paid)

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33
Q

Actual MO JE

A

DR - MO (MO costs decreases as they are assigned to each account)
CR - AP (Wages owed increases as they move out of MO)
CR - Rent (rent owed increases as they move out of MO)
CR - Prepaid insurance (insurance owed increases as they move out of MO)
CR - Accumulated Depreciation (accumulated dep. increases as they move out of MO)

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34
Q

Applied MO JE

A

DR - Work in progress inventory (WIP increases as MO is assigned)
CR - MO (MO decreases as assigned to correct account)

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35
Q

Predetermined Overhead Rate

A

The rate at which estimated MO costs are assigned to products throughout the year

= total estimated MO costs / number of units produced

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36
Q

Transfer of Goods Completed JE

A

DR - Finished goods inventory (FG inventory increases as products are completed)
CR- WIP inventory (WIP inventory decreases as products are completed)

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37
Q

Sale of Goods JE

A

DR - COGS (Expense increases)
CR - FG inventory (FG inventory decreases as products are sold)

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38
Q

Estimated MO

A

The amount of overhead costs that management has budgeted for in a period

= estimated MO / expected level of activity (direct labor hours)

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39
Q

Predetermined Overhead Rate Calculation

A

Total estimated MO cost for the YEAR / total estimated machine hours for the YEAR

Ex.
Total of indirect labor / indirect materials / repairs / rent = $268,000
Total estimated hours (direct labor hours) = 8,400

$268,000 / 8,400 = $32 per machine hour

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40
Q

Actual Manufacturing Overhead

A

MO costs OTHER than direct materials or direct labor

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41
Q

How are ACTUAL MO costs entered throughout the year?

A

As DEBITS (increases as costs are incurred and added to the MO “holding tank”

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42
Q

How are APPLIED MO costs entered throughout the year?

A

As CREDITS (decreases as they are assigned out to a respective account)

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43
Q

What is the order of the steps followed in accounting for manufacturing overhead costs?

A
  1. Budget estimated MO
  2. Record actual MO
  3. Apply MO to WIP
  4. Eliminate over or under applied overhead
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44
Q

Applied manufacturing overhead is directly recorded as a credit to which account?

A

WIP inventory

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45
Q

UNDER - Applied overhead

A

the Actual amount of MO is higher than the amount of Applied MO (there is a balance in the MO account that has not been assigned and remains in the holding tank)

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46
Q

OVER - Applied overhead

A

The applied amount of Mo is higher than the amount of Actual MO (

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47
Q

What causes an UNDER application of overhead?

A

An underapplication of overhead to each job during the year

Costs were TOO LOW or prices were TOO LOW

company is responsible for paying for excess overhead out of pocket

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48
Q

What causes an OVER application of overhead?

A

An overapplication of overhead to each job during the year

Costs were TOO HIGH or prices charged were TOO HIGH

driving customers away with high prices

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49
Q

Under-Applied overhead closing JE

A

DR - COGS (expenses increases)
CR - MO (decreases as MO is assigned to an account)

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50
Q

Over- Applied overhead closing JE

A

DR - MO (MO increases)
CR - COGS (expenses decrease since we overcharged)

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51
Q

Cost of Goods Manufactured Schedule

A

Summarizes the cost flows in a manufacturing organization during a given period

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52
Q

Finished Goods inventory JE

A

DR - Finished good inventory (increasing amount of finished goods)
CR - WIP (WIP decreases as goods are finished)

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53
Q

What do the debits on a T-account indicate?

A

costs put into production during the period

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54
Q

What do the credits on a T-account indicate?

A

cost of goods manufactured (finished products) during the period

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55
Q

Is Actual or Applied MO used in the COGM calc?

A

APPLIED

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56
Q

What is the COGM formula?

VERY IMPORTANT CONCEPT

A

Beginning mats inventory
+ mats purchased
- ending mats inventory
+ labor costs
+ applied MO
+ beg. WIP inventory
- ending WIP inventory

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57
Q

What is the COGS formula?

A

COGM
+ Beginning FG inventory
- Ending FG inventory
+/- Under or Overapplied MO

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58
Q

Is Overapplied MO added or subtracted in the COGS calc?

A

subtracted

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59
Q

When finished goods are sold, which account is debited?

A

COGS

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60
Q

Gross margin (Gross profit)

A

Total sales - COGS

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61
Q

Process costing

A

Method of product costing where production costs for a period are added together and averaged across all units manufactured during that period

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62
Q

When should process costing be used?

A

When products created are identical (Ex. Costco rotisserie chickens)

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63
Q

What is a unique feature of process costing?

A

Units go through process centers when being produced

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64
Q

Conversion costs

A

all product costs necessary to convert raw materials into finished goods

Includes all costs related to direct labor + MO

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65
Q

What are the 4 steps in process costing?

A
  1. Determine the amount of “work done” (equivalent units of production) during the processing time period.

2.Compute the product costs per unit by dividing total costs during the processing period by “work done.”

  1. Compute the total cost of units completed and transferred out. (COGM)
  2. Compute the total cost of units remaining in the process (ending work-in-process inventory) and at the end of the production period.
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66
Q

In PROCESS costing - where do costs go when all work is completed in the process centers?

A

Finished goods inventory

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67
Q

What is a measure of the amount of work down during the production period?

A

Equivalent units of production

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68
Q

Equivalent Units of Production

A

The calculation of the amount of work actually done during a period in terms of units of output

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69
Q

What are the sum of direct labor and manufacturing overhead costs referred to in a process costing system?

A

Conversion costs

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70
Q

FIFO

A

All beginning WIP inventory is completed before new units are started

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71
Q

Equivalent Units of Production Calc

A

Beginning WIP inventory
+ started & completed inventory
+ Ending WIP inventory

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72
Q

What is the relationship between equivalent number of units for direct materials?

A

equivalent number of units for direct materials is usually different from the equivalent number of units for conversion costs because direct materials are usually put into production at the beginning of a process, while direct labor and manufacturing overhead are put in throughout production.

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73
Q

Equivalent number of units calc for direct materials

A

Started & completed
+ 100% completed ending inventory

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74
Q

Is beginning inventory used in the equivalent number of units calc for direct materials?

A

NO

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75
Q

Equivalent number of units for conversion costs

A

Beginning inventory
+ Started & completed
+ Ending inventory

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76
Q

Product costs per unit calc

A

Direct materials total costs / equivalent number of units

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77
Q

Which costs make up the work-in-process inventory costs in the processing centers?

A

Direct materials and conversion costs

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78
Q

Between actual inventory items and the costs of those items, which are transferred from WIP to finished goods inventory?

A

BOTH

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79
Q

The costs that are associated with units completed and transferred out this period are the sum of what?

A
  • cost of beginning work-in-process inventory, both materials and conversion costs
  • cost per equivalent unit required to complete those units in beginning inventory
  • cost per equivalent unit of the items started and completed this period, both materials and conversion costs
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80
Q

How should the cost of the ending WIP inventory be calculated?

A

Material costs + conversion costs for unfinished units

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81
Q

Cost of Goods Transferred Out

A

the sum of the costs to make the finished goods in all processes, both in the current or prior period

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82
Q

Material costs for ending WIP inventory calc

A

materials cost per equivalent unit x material’s equivalent units in the ending work-in-process inventory

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83
Q

Conversion costs for ending WIP inventory calc

A

conversion cost per equivalent unit x conversion equivalent units in the ending work-in-process inventory

84
Q

he conversion cost of ending work-in-process inventory is equal to what?

A

conversion cost per equivalent unit x conversion cost number of equivalent units

85
Q

Ending WIP inventory calc

A

Cost per unit of direct materials
x equivalent units for materials
+ conversion costs per unit
x number of equivalent units for conversion costs

86
Q

Traditional overhead allocation

A

Assigns overhead costs to products using one simple measure of activity

All overhead costs are added together

Ex. direct labor or machine activity

87
Q

ABC (activity based costing) overhead allocation

A

Assigns overhead costs to products using multiple measures of activity

Each overhead cost is considered individually

88
Q

What is important to consider when determining how to allocate overhead costs to a product or a production process?

A

Determining what factors are causing overhead costs to be incurred

89
Q

Examples of Traditional overhead allocation

A
  • tire shop
  • installation of windows
90
Q

Does activity based costing (ABC) consider manufacturing or non-manufacturing costs?

A

BOTH

91
Q

What is different about allocating overhead costs using the activity-based costing method versus the traditional method?

A

Overhead is allocated based on a variety of activity measures when using activity-based costing.

92
Q

When is a traditional costing system appropriate?

A

when products are the same or when the production process is of a similar nature across different types of products.

93
Q

When is a activity based costing system appropriate?

A

hen the nature of the production process differs substantially across different products.

94
Q

Cost pool

A

Total costs being generated by a specific overhead cost activity

95
Q

Cost driver

A

A numerical measure that reflects how much effort has gone into an activity

96
Q

What is the first step for a company in implementing an ABC overhead allocation system?

A

Determine what activities are causing the miscellaneous costs associated with production

97
Q

Does Activity Based Costing relate to labor, materials, or overhead?

A

OVERHEAD

98
Q

Unit-level activities

A

overhead activities that are performed each time a UNIT is produced

Ex.
- Machine maintenance
- Machine depreciation
- Electricity

99
Q

Batch-level activities

A

overhead activities that are performed each time a new production is started or ended

Ex.
- inspections
- Machine setups
- Movement and accounting of materials

100
Q

Facility support activities

A

overhead activities that must be in place before any other production activities can take place

Ex.
- property taxes
- factory insurance
- security
- landscaping
- general accounting
- general factory administration

101
Q

Product-line activities

A

overhead activates that are associated with the capability to produce different types of products

Ex.
- engineering product design
- storage in specific warehouse
- management by a special supervisor
- ordering, purchasing, and receiving materials unique to a specific product line

102
Q

What are the 5 steps in activity based costing (ABC) ?

A
  1. identify overhead activities
  2. analyze individual overhead costs in terms of cost activities
  3. identify measurable cost drivers
  4. assign overhead
  5. use ABC model to make decisiosn
103
Q

Cost objects

A

a product or division for which costs are accumulated and tracked

104
Q

Which is an advantage of using ABC overhead costing over traditional overhead costing?

A

ABC allocates manufacturing overhead more accurately to products and processes that use the various activities

105
Q

How are facility support costs treated in an ABC system?

A

As common costs that are not assigned to any specific product, division, or product line.

106
Q

Activity rate calculation

A

cost pool / number of cost driver events

107
Q

CVP Analysis (Cost Volume Profit Analysis)

A

How much will profit or loss vary depending on the level of sales

108
Q

Examples of CVP

A
  1. How many customers will I need each month to cover rent
  2. How will profits be affected if I raise my prices by 10%, resulting in a reduction of 2% in the number of products sold
109
Q

Fixed costs

A

Costs that remain constant in total regardless of activity level

Ex. Property taxes (they may change each year, but they are not variable over the specific period)

110
Q

Variable costs

A

Costs that change in total in direct proportion to changes in activity level

Ex. The cost of cheese in a pizza restaurant&raquo_space; the more pizzas sold, the more cheese that’s needed

111
Q

Mixed costs

A

Costs that contain both variable and fixed cost components

Ex. Monthly rent minimum at a mall + an additional 4% of sales

112
Q

Stepped costs

A

Costs that increase with the level of activity but in steps instead of smoothly

Ex. A kindergarten class can be taught by one teacher until the number of student overwhelms one person and a second teacher must be hired

113
Q

Relevant range

A

the reasonable range of expected sales or production activity

Ex.

114
Q

What is the purpose of using CVP analysis?

A

To study the interrelationships among revenues, costs, levels of activity, and profits

115
Q

CVP (Cost Volume Profit) Calculation - SHORT

A

Sales revenue
- Variable costs
- Fixed costs
= Profit

116
Q

CVP (Cost Volume Profit) Calculation - LONG

A

(Sales price x units)
- (variable costs x units)
- Fixed costs
= Profit

117
Q

Contribution margin

A

How much of the selling price that you get to keep

118
Q

Contribution margin calculation

A

sales revenue
- variable costs

119
Q

Towards what is contribution margin contributing to?

A

Towards fixed costs

120
Q

Per unit contribution margin calculation

A

per unit sales revenue
- per unit variable costs

121
Q

Contribution margin ratio

A

the percentage of net sales revenue left after variable costs are deducted

122
Q

Contribution margin ratio calcualtion

A

contribution margin / net sales revenue

123
Q

Break even point

A

the volume of activity required at which total revenue equals total costs and profit is $0

124
Q

In a CVP graph, what is represented by the vertical-axis intercept of the total cost line?

A

Total fixed cost

125
Q

Sales mix

A

Proportion of sales revenue from each (multiple) products

126
Q

Break even calculation

A

fixed costs
/ average contribution margin ration average

127
Q

Margin of safety calculcation

A

Break-even point
- Expected sales

128
Q

Operating leverage

A

the extent to which fixed costs replace variable costs

the higher the proportion of fixed costs to variable costs, the faster income increases or decreases w changes in sales volume

129
Q

Degree of operating leverage calculation

A

Contribution margin ration / operating income

130
Q

responsibility accounting

A

system of evaluating performance where managers are held responsible for costs, revenues, assets, etc. that they have control over

131
Q

What are the 3 types of Responsibility centers ?

A
  1. Cost center - dept supervisor&raquo_space; controls incurred costs
  2. Profit center - store manager&raquo_space; controls revenues and costs
  3. Investment center - company manager&raquo_space; controls revenues, costs, and investments
132
Q

Standard costs

A

the budgeted cost for the production of one unit

133
Q

Cost variances

A

the comparison of standard costs to actual costs

134
Q

Standard cost system

A

Cost-accumulation system in which standard costs are used as product costs instead of actual costs

Standard costs are adjusted to actual costs when the financial reports are created&raquo_space; variances are reported to management

135
Q

Cost variance calculation

A

actual costs - standard costs

136
Q

management by exception

A

the strategy of focusing attention on significant deviations from standard costs or expectations

137
Q

Materials price variance

A

the extent to which the standard price varies from the actual price for the quantity of materials purchased or used

138
Q

Materials price variance calculation

A

(standard costs - actual costs) x quantity purchased

139
Q

Materials quantity variance

A

the extent to which the actual quantity of materials varies from the standard quantity

140
Q

Materials quantity variance calculation

A

(standard quantity - actual quantity) x standard price

141
Q

Materials Price Variances JE

A

DR Direct materials inventory
CR cash / AP
CR materials price variance

142
Q

Materials Quantity Variances JE

A

DR work-in progress inventory
DR materials quantity variance
CR direct materials inventory

143
Q

Is the standard or actual cost used in Material variances JEs?

A

STANDARD

144
Q

How is an UNFAVORABLE variance recorded in a JE? (expense)

A

AS A DEBIT

145
Q

How is a FAVORABLE variance recorded in a JE? (revenue)

A

AS A CREDIT

146
Q

Labor rate variance

A

the extent to which the standard labor rate varies from the actual labor rate

147
Q

Labor rate variance calculation

A

(standard rate - actual rate) x qty labor used

148
Q

Labor efficiency variance

A

the extent to which the actual labor used varies from the standard quantity

149
Q

Labor efficiency variance calculation

A

(actual quantity - standard quantity) x standard rate

150
Q

Where are small unfavorable variances closed to in the balance sheet?

A

To COGS to adjust to actual costs so inventory accounts on the balance sheet only include standard costs

151
Q

Labor variances JE

A

DR work in process inventory
DR labor rate variance
CR labor efficiency variance
CR wages payable

152
Q

Variable overhead spending variance

A

the actual amount spent on variable overhead minus the actual hours worked times the standard rate for variable overhead

153
Q

Variable overhead efficiency variance calculation

A

(actual hours - standard hours) x standard rate per hour

154
Q

variable manufacturing overhead efficiency variance

A

measures the efficiency of the underlying activity used to assign variable MO costs

155
Q

Manufacturing Overhead Spending Variance Calculation

A

(actual activity level x standard overhead rate) - actual overhead costs

156
Q

Manufacturing Overhead Efficiency Variance Calculation

A

(Standard level of activity allowed - actual activity level) × standard overhead rate

157
Q

Which group is typically responsible for the materials price variance?

A

Purchasing department

158
Q

What could cause a materials quantity variance?

A

Purchase of substandard or unsuitable materials

159
Q

Which person or people should be directly responsible for a labor rate variance?

A

Production manager or hiring manager

160
Q

Which variance should include an analysis of the indirect materials, indirect labor, utilities, and other miscellaneous manufacturing expenses when investigating why expenses are too high?

A

Materials price variance

161
Q

Which individuals should be directly responsible for the manufacturing overhead efficiency variance?

A

The manager responsible for the control of direct labor hours or the activity by which manufacturing overhead is assigned to products

162
Q

What does the master budget begin with?

A

Sales budget

163
Q

What does the sales budget get split into?

A

production and selling/admin budgets

164
Q

Sales budget

A

schedule of projected sales over the budgeted period - usually includes a measure of revenue earned and cash collected

165
Q

Budgeted sales in units

A

information in the sales budget that feeds directly into the production budget from which direct materials and labor budgets were created

166
Q

Budgeted sales in dollars calculation

A

Budgeted sales in units x unit sales price for each product in the next period

167
Q

Unit sales price

A

the expected or average sakes price each product is expected to be sold for in the next budget cycle

168
Q

Which should be considered when preparing a sales budget?

A

The percentage of sales that would be collected during the current month and the percentage of sales that would be collected during following months

169
Q

Which is an advantage of budgeting for an individual or company?

A

Companies or individuals that budget will have fewer negative consequences and unplanned surprises than those who do not budget

170
Q

Which budget is included in preparing the master budget?

A

Production budget

171
Q

Budgeted production in units

A

budgeted number of units to be produced in a period taking sales volume and units in beginning inventory into consideration, and the number of units required to be in ending inventory

172
Q

Which factor should be considered when preparing a production budget?

A

Desired amount of ending inventory

173
Q

Variable MO expenses

A

expenses needed to produce a product that vary w the amount of levels of budgeted or actual production

174
Q

Fixed MO expenses

A

expenses that do not vary w the amount of levels of budgeted or actual production

175
Q

Direct materials budget

A

schedule of direct materials to be used during the budget period

176
Q

MO budget

A

schedule of production costs other than those for direct labor or materials

177
Q

Selling and Administrative expense budget

A

schedule of all nonproduction spending expected to occur during the budget period

178
Q

Current Budget Calculation

A

(prior budget needs + ending inventory) - beginning inventory

179
Q

Production Budget Calculation

A

(sales budget - ending finished goods) - beginning finished goods

180
Q

Direct Materials Production Budget Calculation

A

production budget x direct materials per unit

181
Q

Direct Materials Purchases Budget

A

(direct materials production budget + ending direct materials) beginning direct materials

182
Q

Total cash collected from customers in the current period Calculation

A

(current period sales budget × current period cash collection rate) + cash collected from previous period’s sales

183
Q

Total cash payments to suppliers in the current period Calculation

A

(current period purchases × current period payment rate for purchases) + cash paid on previous period’s purchases

184
Q

What is important to add back when budgeting expenses?

A

depreciation expense and other noncash costs and expenses

185
Q

What is the correct sequence of budgets in a manufacturing business?

A

Sales, production, direct labor

186
Q

Budgeted Income Statement (AKA pro forma income statement)

A

projects the reported income for the coming period

187
Q

What is the purpose of a pro forma income statement?

A

To report project operating income for the coming period

188
Q

Which type of costs are used in calculating cost of goods sold for the pro forma income statement?

A

Direct materials cost in production

189
Q

According to a company’s cash budget, when can management plan to repay the company’s loans?

A

When excess cash is available

190
Q

How can a cash budget allow a manager to foresee potential problems and take timely action to correct them?

A

It identifies cash shortages in advance.

191
Q

Which items would be included in a cash budget?

A

Cash receipts
cash disbursements
financing needs
minimum cash balance desired

192
Q

Which item is the last item listed on a cash budget right before determining the ending cash balance?

A

Total financing inflows or outflows

193
Q

Sunk costs

A

cost that has already been incurred or a future costs that cannot be avoided

194
Q

Differential costs

A

future costs that change as a result of a decision

195
Q

Opportunity costs

A

the benefits lost as a result of selecting one alternative course of action over another

196
Q

Which costs are relevant to decisions?

A

Only differential costs and revenues

197
Q

Are sunk costs ever relevant?

A

No - because they are either past costs or future costs that cannot be changed

198
Q

Special order

A

an order that may be priced below the normal price to utilize excess capacity therefore contributing to company profits

199
Q

Outsourcing is associated with which application of differential analysis?

A

Making or buying a product or service

200
Q

Idle capacity

A

The part of the budgeted capacity within an organization that is unused

201
Q

What are some situations where idle capacity may exist?

A
  • manufacturer is selling products under it’s own brand and to retails chains as the generic brand
  • competitive bidding by contractors or manufacturers
  • selling products in distressing situations to keep the business afloat
  • establishing significant sales potential w a foreign entity
202
Q

When should a company process a joint product further?

A

When incremental revenues are greater than incremental costs

203
Q

Which factors are irrelevant when making additional processing decisions?

A

Joint costs that have been incurred up to the point of split-off

204
Q

Joint manufacturing process

A

one input creates several outputs

205
Q

Joint product costs

A

costs incurred before the point at which the different products are separated for further processing or immediate sale

206
Q

Critical resource factor

A

the resource that limits operating capacity by its availability

207
Q
A

Cost And Managerial Accounting (1 decks)

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