Cost management Flashcards
manufacturing overhead
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
job order costing
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
process costing
used when units are relatively inexpensive and costs cannot be identified to units or batches
weighted average process costing
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
fifo process costing
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
total costs
y = a + bx
y = total cost (dependent variable)
a = total fixed costs
b= variable cost per unit
x=# of units Independent)
r= 1
strong direct relationship
1 > r > 0
direct relationship, not as strong
r = 0
no relationship
0 > R > -1
indirect relationship, not as strong
R = -1
strong indirect relationship
absorption costing
used for financial statements
inventory is dm+dl+var oh+ fixed moh
Variable costing
used for internal purposes only
inventory includes dm + dl+ var moh
flexible budgeting
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
static budget
budget at specific level of activity
master budget
for use as a company as a whole
Preparing a master budget
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
Budgeted marterials prchases
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
transfer price
price at which products are transferred from one department to another within the same company
possible transfer prices
actual cost mv cost + profit negotiated amount standard cost
sales price per unit
sales price -variable
breakeven in units
fixed cost/ cm per unit
profit as fixed amount
fixed costs + desire profit / cm per unit
profit as percentage of sale
fixed cost/ cm - profit
cm per unit
cm per unit / sales price per unit
breakeven in dollars
fixed costs / cm ratio
sales dollars required to earn desired profit
(fc + desired profit) / CM RATIO
sales required to earn profit
fc/ (cm - profit)/sales price
allocating joint product costs
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
accounting for by products
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
