FiNaL Stretch Flashcards

1
Q

Fill in the Blank.

Activity-Based Costing (ABC) can be used with either ___A__ or __B___.

A

A. process

B. job costing

i.e. Activity-based costing may be used by manufacturing, service, or retailing entities and in job-order or process costing systems

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2
Q

WHAT should the base of a cost pool be for a homogeneous cost pool?

A

A cause-and-effect relationship with the cost items in the cost pool

i.e. A cost allocation base is the common denominator for systematically correlating indirect costs and a cost object

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3
Q

What type of variance would a purchasing manager most likely influence?

A

Direct Materials Price

WHY? - Because the Purchasing Manager is in charge of purchasing the materials used in production

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4
Q

WHEN is Job-order costing used?

A

WHEN each product is unique

i.e. preparing a costing method for a gravel pit operation

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5
Q

WHEN is process costing used?

A

TO assign costs to inventoriable goods or services

i.e. It applies to relatively homogeneous products that are mass produced on a continuous basis (e.g., petroleum products, thread, computer monitors, and a gravel pit operation)

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6
Q

WHAT would be considered a basic assumption of Activity-Based Costing (ABC)?

A

Products or services require the performance of activities, and activities consume resources

i.e. ABC helps to manage costs by providing more detailed analyses of costs than traditional methods

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7
Q

WHAT is a benefit to a company using activity-based costing (ABC)?

A

THE gained/ added insight into causes of cost

i.e. ABC Costing allows for the discovery of cost relationships that are unnoticed using traditional accounting methods

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8
Q

WHAT is a nonvalue-added activity in Activity-Based Costing (ABC)?

A

An activity that does NOT contribute to customer satisfaction or meet a need of an entity

e.g. Raw materials storage - though it may greatly reduced or eliminate a just-in-time (JIT) production system; it still does NOT affect customer value

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9
Q

WHAT factors are considered WHEN using the weighted-average method of process costing in calculating the manufacturing cost per equivalent unit?

A

Current costs plus cost of beginning work-in-process inventory

i.e. weighted-average method of process costing combines the costs of work done in the previous period and the current period

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10
Q

HOW do you calculate the Sales Mix Variance?

A

THE change in income due to differences between budgeted sales mix and actual sales mix

i.e. the formula is: [actual unit sales × (actual sales mix % – budgeted sales mix %) × budgeted contribution margin per unit]

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11
Q

HOW do you calculate the Total Direct Labor Price Variance (DLPV)?

A

Actual # of hours worked x (Standard Hourly Rate - Actual Hourly Rate)

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12
Q

HOW do you calculate the Material Efficiency Variance?

A

= Standard Costs x (SQ - AQ)

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13
Q

WHAT is the difference between the actual factory overhead and factory overhead applied to production, under the three-variance method?

A

THIS is the Net factory overhead variance

i.e. The net manufacturing overhead variance is the difference between actual overhead and the amount applied to production

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14
Q

HOW do you define “Labor usage?”

A

THE difference between standard hours at standard wage rates and actual hours at standard wage rates

i.e. the Formula is [(SQ – AQ) × SP or (SQ × SP) – (AQ × SP)].

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15
Q

HOW do you calculate the Labor Rate Variance?

A

AQ × (SP – AP)

i.e. Actual Quantity x (Standard Price - Actual Price)

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16
Q

HOW is applied factory overhead recorded in a process costing system?

A

AS an increase in Work-In-Process inventory control

17
Q

WHAT are some causes for an unfavorable labor efficiency variance?

A

(1) improper or inadequate maintenance
(2) use of unskilled workers
(3) poor scheduling
(4) use of low-grade materials
(5) unrealistic standards

18
Q

HOW do you calculate the cost per EUP under the weighted-average method?

A

Beginning WIP costs plus Current-period costs divided by Equivalent Units Produced (EUP)

19
Q

Under ABC Costing, what should be used to assign a department’s manufacturing overhead costs to products produced in varying lot sizes?

A

Multiple cause-and-effect relationships

i. e. Multiple cause-and-effect relationships should be used
- Overhead is assigned based on the multiple cause-and-effect relationships between activities and their cost drivers

20
Q

WHAT does the Sales Mix Variance Measure?

A

THE effect of the deviation from the budgeted weighted-average contribution margin per unit associated with a change in the quantities of products in the mix