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ACC 202 > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

Job order production

A

producing products or providing services customized for specific customers

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2
Q

Job

A

the production of activities for a customized product

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3
Q

Job Lot

A

producing more than 1 unit of a unique product

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4
Q

Process operations

A

Mass production of large quantities of similar products in continuous flow of steps

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5
Q

Job cost sheet

A

separate record maintained for each job used to record costs

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6
Q

Receiving report

A

source document used to record quantity and cost of items received

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7
Q

Materials ledger cards

A

perpetual records that are updated each time materials are purchased and each time materials are issued for use in production

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8
Q

Materials requistion

A

document identifying the type and quantity of materials needed in production

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9
Q

Job cost sheet

A

-accumulates the cost of DM as they are placed into production of a job
-accumulates the cost of DL as these costs are incurred

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10
Q

Time tickets

A

used by employees to see how much time employees spend on each job.
-determine total labor cost for pay period
-DL costs = Debit to WIP and Credit to Factory wages payable

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11
Q

Overhead costs

A

Indirect materials, labor and other overhead that cannot be cost effectively traced

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12
Q

steps to determine overhead:

A

1) set predetermined OH rate
2) apply estimated overhead to jobs
3) record actual OH

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13
Q

Predetermined OH rate formula:

A

Estimated OH cost / Estimated activity base

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14
Q

Applied OH formula:

A

Predetermined OH rate x Actual activity base used

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15
Q

What is the journal entry for applying overhead?

A

Debit: WIP inventory
Credit: Factory OH

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16
Q

What goes into recording actual OH?

A

1) Record ID materials used
2) Record ID labor used
3) Record other OH costs

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17
Q

Closing Underapplied OH:

A

Actual OH > Applied OH
-remaining debit balance is underapplied OH
-Factory OH credited to close
-COGS is debited

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18
Q

Closing Overapplied OH:

A

Actual OH < Applied OH
-remained credit balance in Factory OH is overapplied OH
-FOH debited to close
-COGS is credited

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19
Q

Procedure to determine Job order costing for service providers:

A

1) Determine DL costs
2) Determine the OH based on predetermined rate
3) Combine labor and overhead to obtain cost of job
4) Gross profit ratio

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20
Q

Gross Profit Ratio Formula:

A

(Service Revenue - Cost of Services) / Service Revenue

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21
Q

Do you want Gross Profit Ratio to be high or low?

A

Higher GPR means a company is more able to submit a lower price quote

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22
Q

Plantwide OH rate method:

A

-One OH rate to allocate OH costs
-Rate is determined using a volume related measure like DL and machine hours

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23
Q

Plantwide OH rate formula:

A

Total budgeted OH cost / allocation base

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24
Q

Plante wide- OH allocated formula:

A

Plantwide OHR x Allocation Base Used

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25
Q

Departmental OH rate:

A

-used multiple overhead rates
-uses a different OH rate for each department

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26
Q

What is the 3 step process for determining the OH rate for each department

A

1) assign budgeted OH cost to department cost pools
2) select an allocation base and compute and OH allocation rate for each department
3) allocate OH costs to costs object

27
Q

Departmental OH Rate formula:

A

Budgeted Departmental OH Cost/ Budgeted Departmental Allocation Base

28
Q

Overhead Allocated for Departmental OH Formula:

A

Departmental OH Rate x Hours per unit

29
Q

Activity Based Costing(ABC):

A

Assigns overhead cost by focusing on activities.
-uses more than 1 rate but is focused on activities

30
Q

ABC follows 3 steps:

A

1) identify activities and assign budgeted costs to activity pools
2) compute OH activity rate for each activity cost pool
3) Allocated OH costs to cost objects(products)

31
Q

Activity Based OH Rate Formula:

A

Budgeted Activity Cost / Budgeted Activity Usage

32
Q

ABC Allocated Cost Formula:

A

ABC OH Rate x Actual Activity Usage

33
Q

What are the 4 Activity Levels?

A

1) Unit
2) Batch
3) Product
4) Facility

34
Q

What is a unit activity?

A

-performed on each unit
-costs tend to change with the # of units produced
-EX: cutting parts, assembling components
-Machine hours, DL hours

35
Q

What is a batch activity?

A

-performed only on each batch or group of units
-costs do not vary with the number of units, but with the number of batches
-EX: setting up machines, receiving shipments, recycling hazardous waste

36
Q

What is a product activity?

A

-performed on each product line and are not affected by either the # of units or batched.
-EX: design of product, controlling inventory

37
Q

What is a facility activity?

A

-performed to sustain facility capacity as a whole and are not caused by any specific product
-costs do not vary with unit, line or batch
-EX: cleaning factory, providing electricity, reducing greenhouse emissions

38
Q

ABC for service providers 3 steps:

A

1) identify activities and their budgeted OH cost
2) compute OH activity rate for each activity
3) allocate OH costs to cost object

39
Q

What is the Cost Volume Profit analysis?

A

a tool to predict how changes in costs and sales affect profit
-looks at how income is affected by 4 factors

40
Q

what are the 4 factors that affect profit in the Cost Volume Profit analysis?

A

1) volume
2) sales price per unit
3) variable cost per unit
4) total fixed costs

41
Q

What is a fixed cost?

A

-Total fixed costs do not change when volume of activity changes
-fixed cost PU of output decreases as volume increases
-fixed costs on a graph is a horizontal line
-fixed costs PU decreases as production increases
-EX: rent, insurance, office salary, consistent charges

42
Q

What is a variable cost?

A

-variable costs change in proportion to changes in volume activity
-variable cost per unit stays the same, but the total amount of variable cost changes with the level of production
-variable cost on a line is a straight upward sloping line
-EX: DM, DL, packaging, IDM, Products,

43
Q

What is a mixed cost?

A

-includes both fixed and variable costs components
-when graphed it is an upward sloping line
-EX: sales rep, utilities, maintenance

44
Q

What is a step wise cost?

A

-fixed within a relevant range of the current production volume
-if production volume expands or decreases significantly, total costs go up or down y a lump sum amount
-EX: (+-) shift of worker, product lines, warehouses, sales regions

45
Q

What are the 3 ways you can measure cost behavior?

A

1) Scatter Diagram
2) High-Low Method *
3) Regression line

46
Q

What are the 3 steps of the High Low method?

A

1) identify the highest and lowest volume levels
2) compute the slope(variable cost per unit) using the high low volume levels
3) compute the total fixed costs

47
Q

High-Low method: Variable cost per unit formula:

A

(Cost at highest volume - Cost at lowest volume) / (Units at highest volume - Units at lowest volume)

48
Q

High Low Method: Total cost formula:

A

Total cost = Fixed Cost + (Variable Cost x # of units)

49
Q

Contribution Margin Formula:

A

Sales - Variable Costs

50
Q

Contribution Margin Per Unit Formula:

A

Selling price per unit - variable cost per unit

51
Q

Contribution Margin Ratio:

A

Contribution Margin / Sales
or
Contribution Margin per unit / selling price per unit

52
Q

What is the break point?

A

sales level at which total sales equals total costs, resulting in 0 income

53
Q

Break even point in units formula:

A

Fixed costs/ contribution margin per unit

54
Q

Break even points in dollars formula:

A

Fixed costs / contribution margin ratio

55
Q

Margin of safety formula:

A

Expected sales - break even sales

56
Q

Margin of safety rate% formula:

A

Margin of safety/expected sales

57
Q

Target Profit in Units:

A

(Fixed Costs + Target Profit) / Contribution Margin per unit

58
Q

Target Profit in Dollars:

A

(Fixed Costs + Target Profit)/ Contribution Margin Ratio

59
Q

What is sales mix?

A

proportion of sales volume for each product

60
Q

Weighted average contribution margin per unit formula:

A

CM per unit x Sales Mix %

61
Q

Degree of operating leverage is:

A

effect of changes in the level of sales on income is the degree of operating leverage computation

62
Q

Degree of operating leverage formula:

A

Dollars of Contribution Margin / Dollars of Income

63
Q

Change in income % formula:

A

Degree of operating leverage x Change in sales %

ACC 202 (4 decks)

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