Final Study

Question 1

4 ways Job-order and process costing are different?

Answer 1

1) Different job vs. a single product
2) Costs accumulated by job vs. department
3) Job cost sheet vs. department production report
4) Unit costs computed by job rather than department

Question 2

Compare normal and actual costing

Answer 2

Normal: Budgeted MOH costs and reconciliation
Actual: Actual MOH costs

Question 3

What is under-/over-applied overhead and what should be done in each situation?

Answer 3

Under: Applied MOH < actual, Decrease COGS
Over: Applied MOH > actual, Increase COGS

Question 4

What comes out of the Employee time ticket and where do they go?

Answer 4

1) DL -> Job cost sheets

2) InD -> MOH account

Question 5

Where is MOH applied?

Answer 5

WIP account (in job cost sheet) with an adjustment if necessary

Question 6

What are conversion costs?

Answer 6

DL + MOH

Question 7

Weighted average vs. FIFO? 3 points each

Answer 7

WA: 
1) combines WIP with current period
2) simple
3) Not useful for cost when beginning inventories high
FIFO:
1) Separates WIP from Current
2) Detailed
3) Useful for cost control when inventory levels substantial

Question 8

What are equivalent units of production?

Answer 8

Units completed/tranferred + Equivalent units remaining in WIP

Question 9

What are transferred in costs?

Answer 9

Costs accumulated from earlier processes and transferred-in

Question 10

What is an activity cost pool?

Answer 10

A cost bucket where activity related costs are accumulated

Question 11

What are the 4 activity levels, and an example of each activity measure

Answer 11

Unit: Machine-hours
Batch: Number of setups
Product: Hours of design
Facility: Direct Labour Hours

Question 12

2 Benefits of ABC and 1 limitation

Answer 12

Ben: More accurate, more effective management
Lim: Cost of implementation might exceed benefits

Question 13

What are the 4 categories of Quality costs and an example of each?

Answer 13

Prevention: Training
Appraisal: Inspection
Internal Failure: Rework
External: Warranty

Question 14

What is the central concept of a flexible budget?

Answer 14

With actual activity, it shows what costs and revenue should have been

Question 15

How do you find the standard cost for DL/DM/MOH cost per unit?

Answer 15

Standard Quantity (hours) per unit x Standard rate (price) = Standard cost per unit

Question 16

What is a static budget?

Answer 16

A budget for a single planned activity level

Question 17

What 2 factors go into price variance? What is the formula?

Answer 17

1) AQ x AP
2) AQ x SP

PV = AQ(AP-SP)

Question 18

What 2 factors go into quantity variance? What is the formula?

Answer 18

1) AQ x SP
2) SQ x SP

QV = SP(AQ-SQ)

Question 19

Who is responsible for price variance?

Answer 19

Purchasing department for that materials

Question 20

Who is responsible for quantity variance?

Answer 20

Production department

Question 21

What 2 factors go into labour rate variance? What is the formula?

Answer 21

1) AH x AR
2) AH x SR

LRV = AH(AR-SR)

Question 22

What 2 factors go into Labour efficiency variance? What is the formula?

Answer 22

1) AH x SR
2) SH x SR

LEV = SR(AH-SH)

Question 23

What is the variable overhead spending variance formula?

Answer 23

VOSV = AH(AR-SR)

Question 24

What is the variable overhead efficiency variance?

Answer 24

VOEV = SR(AH-SH)

Question 25

What is the formula for Fixed overhead budget variance?

Answer 25

Actual FOH incurred - FOH budgeted

Question 26

What is fixed overhead volume variance?

Answer 26

FOH budgeted - (SH x FR)

FR=OH rate
SH= st hrs. allowed

Question 27

How do you calculate over- or under-applied overhead?

Answer 27

Sum of unfavourable and favourable OH variances for a period

Question 28

Compare Cost, Profit, and investment centres and an example of each

Answer 28

C: Control over costs (accounting)
I: Control over costs, revenues, profit, and investments (corp HQ)
P: Control over costs, revenue (indiv. store)

Question 29

Advantages/disadvantages of decentralization?

Answer 29

Ad: Top mgmt focused on strategy
DisAd: lack of coordination

Question 30

What is transfer price?

Answer 30

Price for an internal “sale” between segments

Question 31

What is the ROI formula?

Answer 31

ROI = NOI / Avg. Op Assets

or

Margin x Turnover

Question 32

What is the margin formula?

Answer 32

Margin = NOI / Sales

Question 33

What is the turnover formula?

Answer 33

Turnover = Sales / Avg. Op Assets

Question 34

What is residual income?

Answer 34

Income earned above Required Income

Question 35

What does “standard quantity allowed” or “standard hours allowed” mean?

Answer 35

Actual output X standard input allowed

Question 36

Which do you use the actual quantity used in production rather than purchased? : MPV or MQV

Answer 36

MQV