Cost management

Question 1

manufacturing overhead

Answer 1

estimated variable mph for period
\+estimated fixed moh for period
= estimated total moh for period
/ estimated # of units for period (cost driver)
=predetermined overhead rate

apply moh to win
actual # of units for period (cost driver)
x poor
=moh applied

determine if under applied or over applied

Question 2

job order costing

Answer 2

used when units are relatively expensive and costs can be identified to units or batches

dm, dl, and moh applied charged to wip cost of completed units removed from tip and charged to finished goods
costs of units sold removed from finished good and charged to cogs

Question 3

process costing

Answer 3

used when units are relatively inexpensive and costs cannot be identified to units or batches

Question 4

weighted average process costing

Answer 4

costs in beg wio
+costs incurred during period
=total costs to be allocated

units completed during period
+ equivalent units in ending wip
=total equivalent production

total costs to be allocated
/ total equivalent production
=average cost per equivalent unit

units completed during period
x average cost per equivalent unit
=amount allocated to finished goods

equivalent units in ending inventory
x average cost per equivalent unit
= amount allocated to ending wip

Question 5

fifo process costing

Answer 5

determine costs incurred during period
units in beginning wip
-equivalent units in beginning wit
=equivalent units required to complete beginning wit

equivalent units required to complete beginning wip
/ units started and completed during period x 100%
\+ equivalent units ending wip
=total equivalent production
costs incurred during period
/ total equivalent production
=avg cost per equivalent unit
cost in beg wip
\+ units started and completed x avg cost per equivalent unit
=amount allocated to finished goods
equivalent units in ending wip
x avg cost per equivalent unit
=amount allocated to ending wip

Question 6

total costs

Answer 6

y = a + bx

y = total cost (dependent variable)
a = total fixed costs
b= variable cost per unit
x=# of units Independent)

Question 7

r= 1

Answer 7

strong direct relationship

Question 8

1 > r > 0

Answer 8

direct relationship, not as strong

Question 9

r = 0

Answer 9

no relationship

Question 10

0 > R > -1

Answer 10

indirect relationship, not as strong

Question 11

R = -1

Answer 11

strong indirect relationship

Question 12

absorption costing

Answer 12

used for financial statements

inventory is dm+dl+var oh+ fixed moh

Question 13

Variable costing

Answer 13

used for internal purposes only

inventory includes dm + dl+ var moh

Question 14

flexible budgeting

Answer 14

used to estimate revenue, costs, a group- of costs, or profits at various levels of activity

applies when operating within a relevant range
total fixed costs remain the same at all levels within range
variable costs per unit of activity remains the same within range

Question 15

static budget

Answer 15

budget at specific level of activity

Question 16

master budget

Answer 16

for use as a company as a whole

Question 17

Preparing a master budget

Answer 17

estimates sales volume
use sales volume to estimate revenues
use collection history to estimate collections
estimate cost of sales based on units sold
use current finished goods inventory, budgeted ending inventory and cost of sales to estimate units to be manufactured
use units manufactured to estimate material needs, labor costs and overhead costs
use material needs, current raw materials inventory, and budgeted ending inventory to budgeted purchases
use purchase terms to estimate payments
analyze expense and payment patterns to complete operating and cash flow budgets

Question 18

Budgeted marterials prchases

Answer 18

units sold
\+ budgeted increase in finished goods
-budgeted decrease in finished goods
= units to be manufactured
x units of raw material per unit of finished goods
=units of raw material required for production
\+budgeted increase in raw materials
-budgeted decrease in raw materials
=budgeted rm purchases
\+budgeted decrease in ap
- budgeted increase in ap
=budgeted payments for rm

Question 19

transfer price

Answer 19

price at which products are transferred from one department to another within the same company

Question 20

possible transfer prices

Answer 20

actual cost
mv
cost + profit
negotiated amount
standard cost

Question 21

sales price per unit

Answer 21

sales price -variable

Question 22

breakeven in units

Answer 22

fixed cost/ cm per unit

Question 23

profit as fixed amount

Answer 23

fixed costs + desire profit / cm per unit

Question 24

profit as percentage of sale

Answer 24

fixed cost/ cm - profit

Question 25

cm per unit

Answer 25

cm per unit / sales price per unit

Question 26

breakeven in dollars

Answer 26

fixed costs / cm ratio

Question 27

sales dollars required to earn desired profit

Answer 27

(fc + desired profit) / CM RATIO

Question 28

sales required to earn profit

Answer 28

fc/ (cm - profit)/sales price

Question 29

allocating joint product costs

Answer 29

calculate relative sales value for each joint product
add together to calculate total revenue sales value
calculate ratio of relative sales value for each join product to total relative sales value
multiply ratio for each product by joint product costs
results in amount of joint product cost to be allocated to each product

Question 30

accounting for by products

Answer 30

determine revenues from sale of by producs
reduce by separable costs, if any, and costs of disposal
net amount reduces cost of primary product or joint costs