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Cost Accounting > Cost Final Exam > Flashcards

Cost Final Exam Flashcards

1
Q

What are the 3 vital activities performed by managerial accountants?

A

Planning
Controlling
Decision Making

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2
Q

What are the 5 skills managers need to be successful?

A

Strategic management skills

Enterprise risk management skills

Process management skills

Measurement skills
Leadership skills

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3
Q

What are the 4 principles in the code of conduct for management accountants?

A

honesty
fairness
objectivity
responsibility

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4
Q

What are the 4 standards in the code of conduct for management accountants?

A

Competence
Confidentiality
Integrity
Credibility

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5
Q

What are the 3 components of the customer value proposition?

A

Customer intimacy
Operational excellence
Product leadership

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6
Q

What are the 3 types of manufacturing costs?

A

Direct materials
Direct Labor
Manufacturing overhead

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7
Q

What type of manufacturing cost is indirect labor?

A

Manufacturing overhead

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8
Q

What are the 2 types of non manufacturing costs?

A

Selling costs

Administrative costs

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9
Q

On which financial statement can product costs be found initially?

A

Balance sheet (inventory)

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10
Q

When do product costs move from the balance sheet to the income statement?

A

When products are sold

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11
Q

What is another term for manufacturing costs?

A

Product costs

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12
Q

What is another term for non manufacturing costs?

A

Period costs

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13
Q

On which financial statement can period costs be found?

A

Income statement

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14
Q

What are the 2 components of prime cost?

A

Direct Materials

Direct Labor

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15
Q

What are the 2 components of conversion cost?

A

Direct Labor

Manufacturing Overhead

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16
Q

2 other terms for cost driver are

A

Activity base

Allocation base

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17
Q

Direct labor-hours and machine-hours are types of cost _____.

A

drivers

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18
Q

The relevant range is a range of activity within which the ____ assumption is reasonably valid.

A

linearity

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19
Q

What is the equation for a mixed cost?

A

Y = a + bx

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20
Q

In the Y = a + bx equation, what does Y represent?

A

The total amount of mixed cost

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21
Q

What is the high-low method equation?

A

(Cost at high activity level - cost at low activity level) / (High activity level - low activity level)

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22
Q

What does a traditional (absorption) format income statement look like?

A

Sales - COGS = Gross Margin - selling & admin expenses = net operating income

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23
Q

What does a contribution (variable) format income statement look like?

A

Sales - variable COGS - variable selling expenses = Contribution Margin - fixed expenses = net operating income

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24
Q

The thing for which cost data is desired is called the __ ___.

A

cost object

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25
Q

What is the difference between direct and indirect costs?

A

Direct costs can be easily and conveniently traced to a specific cost object

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26
Q

Costs that cannot be traced to individual cost objects because they support a number of cost objects are ____ costs.

A

common

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27
Q

When a product cost includes all manufacturing costs, this is called ____ costing.

A

absorption

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28
Q

When is job-order costing used?

A

When many different products are produced

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29
Q

What is the formula for predetermined overhead rate?

A

Estimated total manufacturing overhead cost / estimated total amount of allocation base

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30
Q

When is a predetermined overhead rate calculated?

A

Before the period begins

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31
Q

What is the formula for applying manufacturing overhead to a job?

A

Predetermined overhead rate x amount of allocation base actually incurred

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32
Q

What are the 3 inventory accounts on the balance sheet?

A

Raw Materials
Work in Process
Finished Goods

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33
Q

When goods are moved from work in process to finished goods, what cost is computed?

A

Cost of goods manufactured

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34
Q

What are the 3 components of work in process?

A

Direct materials used
Direct labor
Manufacturing overhead

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35
Q

Adding something to an inventory account requires a debit or credit?

A

Debit

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36
Q

Removing something from an inventory account requires a debit or credit?

A

Credit

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37
Q

What account is debited as manufacturing costs are incurred?

A

Manufacturing overhead

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38
Q

When is manufacturing overhead moved to work in process?

A

At the end of a job or period

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39
Q

What account is debited when indirect labor or materials are used?

A

Manufacturing overhead

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40
Q

If at the end of a job or period, there is a debit balance in manufacturing overhead, then the overhead must have been under/over applied.

A

underapplied

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41
Q

If manufacturing overhead is under applied, then COGS is over/under stated.

A

understated

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42
Q

A simple way to dispose of the balance in Manufacturing Overhead is to close it out to _____.

A

COGS

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43
Q

An accurate way to dispose of the balance in Manufacturing Overhead is to allocated it between what 3 accounts?

A

Work in Process
Finished Goods
COGS

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44
Q

When is process costing used?

A

When there is a continuous flow of indistinguishable units

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45
Q

Process costing computes unit costs by ____ rather than by job.

A

department

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46
Q

What is the formula for cost per equivalent unit using the weighted-average method?

A

(cost of beginning WIP inventory + cost added during the period) / equivalent units

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47
Q

What is the formula to calculate equivalent units?

A

Number of partially completed units x % completed

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48
Q

Using the FIFO method, units transferred out is divided into what two parts?

A

Units from beginning inventory that were completed during the period

Units that were both started and completed during the period

49
Q

Using the FIFO method, what 2 inventories are converted to equivalent units?

A

Beginning WIP

Ending WIP

50
Q

Which method blends work and costs from prior periods with the current period?

(FIFO, Weighted Average)

A

Weighted Average

51
Q

What is the formula for cost per equivalent unit using the FIFO method?

A

cost added during the period / equivalent units

52
Q

How is contribution margin calculated?

A

Sales revenue - variable expenses

53
Q

Selling price per unit - variable expenses per unit =

A

Unit Contribution Margin

54
Q

(Unit CM x Quantity Sold) - Fixed Expenses =

A

Profit

55
Q

The horizontal (x) axis in a CVP graph represents what?

A

Units

56
Q

The vertical (y) axis in a CVP graph represents what?

A

Dollars

57
Q

The first step to make a CVP graph is to draw a horizontal line to represent ___ ___.

A

fixed expenses

58
Q

The second step to make a CVP graph is to plot a point that represents ____ ___ at a selected ___ ___.

A

total expense

sales volume

59
Q

The third step to make a CVP graph is to draw a line through the point plotted in the previous step back to where the fixed expense line intersects the vertical axis. This is the ___ ___ line.

A

total expense

60
Q

The fourth step to make a CVP graph is to plot a second point, then draw a line through that point back to the origin. This is the ___ ___ line.

A

total revenue

61
Q

In a CVP graph, the vertical distance between the total revenue line and the total expense line is the anticipated ____ or ____ at any given level of sales.

A

profit

loss

62
Q

In a CVP graph, the ___ ___ ___ is where the total revenue and total expense lines cross.

A

break-even point

63
Q

Contribution margin / sales =

A

CM ratio

64
Q

Unit contribution margin / unit selling price =

A

CM ratio

65
Q

CM ratio x change in sales =

A

Change in CM

66
Q

(CM ratio x sales) - fixed expenses =

A

Profit

67
Q

(Sales - Variable Expenses) / Sales =

A

CM ratio

68
Q

1 - variable expense ratio =

A

CM ratio

69
Q

Variable expenses / sales =

A

variable expense ratio

70
Q

Unit CM x Quantity Sold - Fixed Expenses =

A

Profit

71
Q

(Target profit + fixed expenses) / unit CM =

A

Unit sales to attain target profit

72
Q

(Target profit + fixed expenses) / CM ratio =

A

Dollar sales to attain target profit

73
Q

Fixed expenses / Unit CM =

A

Unit sales to break even

74
Q

Fixed expenses / CM ratio =

A

Dollar sales to break even

75
Q

Total sales - Break Even Sales =

A

Margin of safety in dollars

76
Q

Margin of safety in dollars / selling price per unit =

A

Margin of safety in units

77
Q

Margin of safety in dollars / total sales in dollars =

A

Margin of safety percentage

78
Q

The relative proportion of fixed and variable costs in an organization is its ___ ___.

A

cost structure

79
Q

A measure of how sensitive net operating income is to a given percentage change in dollar sales is ___ ____.

A

Operating leverage

80
Q

Contribution margin / net operating income =

A

Degree of operating leverage

81
Q

degree of operating leverage x percentage change in sales =

A

percentage change in net operating income

82
Q

Net income varies from variable costing to absorption costing because of the treatment of what?

A

fixed manufacturing overhead

83
Q

Should selling and admin expenses ever be treated as product costs, even if variable?

A

No

84
Q

Fixed manufacturing overhead is expensed as incurred in variable/absorption costing

A

variable

85
Q

Fixed manufacturing overhead is allocated to each unit of product in variable/absorption costing

A

absorption

86
Q

When inventories increase, net operating income is higher under variable/absorption costing.

A

absorption

87
Q

When inventories decrease, net operating income is higher under variable/absorption costing.

A

variable

88
Q

When is net operating income the same under both variable and absorption costing?

A

When units processed = units sold

89
Q

The theory of constraints treats direct labor as a ___ cost.

A

fixed

90
Q

A fixed cost that is incurred because of the existence of a segment is a ____ fixed cost.

A

traceable

91
Q

A fixed cost that supports the operations of more than one segment is a ____ fixed cost.

A

common

92
Q

How is segment contribution margin calculated?

A

Sales - variable expenses

93
Q

How is segment margin calculated?

A

Segment contribution margin - traceable fixed costs

94
Q

What is the best gauge of the long-run profitability of a segment?

A

Segment contribution margin

95
Q

GAAP requires absorption/variable costing

A

Absorption

96
Q

Any event that causes the consumption of overhead resources is an ____.

A

Activity

97
Q

A bucket in which costs are accumulated that relate to a single activity is an ___ ___ ____.

A

Activity cost pool

98
Q

What are the 5 levels of activity?

A 
Unit-level
Batch-level
Product-level
Customer-level
Organization-sustaining
99
Q

Assigning organized costs to activity cost pools is known as ___ ____ _____.

A

first stage allocation

100
Q

Applying overhead costs and activity costs to products and customers is known as ___ ___ ____.

A

second stage allocation

101
Q

Holding a manager responsible for only the items that he or she can actually control is called ____ ____.

A

Responsibility accounting

102
Q

What are the 4 sections of a cash budget?

A

Receipts
Disbursements
Cash excess or deficiency
Financing

103
Q

An estimate of what revenues and costs should have been, given the actual level of activity is a ___ ___.

A

Flexible budget

104
Q

The differences between the planning budget and the flexible budget are ____ variances.

A

Activity

105
Q

The differences between the flexible budget and actual results are ___ and ____ variances.

A

Revenue and spending

106
Q

Investigating discrepancies in cost or quantity that depart significantly from standards is known as ____ ___ _____.

A

Management by exception

107
Q

Materials Quantity Variance =

A

SP (AQU - (SQ x output))

108
Q

Materials Price Variance =

A

AQP (AP - SP)

109
Q

Labor Efficiency Variance and Variable Overhead Efficiency Variance =

A

SR ( AH - (SH x output))

110
Q

Labor Rate Variance and Variable Overhead Rate Variance =

A

AH (AR - SR)

111
Q

What is the formula for budget variance?

A

Actual fixed overhead - budgeted fixed overhead

112
Q

What is the formula for volume variance?

A

Budgeted fixed overhead - fixed overhead applied to WIP

113
Q

Avoidable costs are relevant/irrelevant costs

A

Relevant

114
Q

Sunk costs are relevant/irrelevant costs

A

irrelevant

115
Q

IRR factor =

A

investment required / annual net cash inflow

116
Q

Payback period =

A

investment required / annual net cash inflow

117
Q

Project profitability index =

A

NPV / Investment required

118
Q

Simple rate of return =

A

Annual incremental net operating income / initial investment

Cost Accounting (6 decks)

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