First Midterm Material Flashcards
How do we calculate Cost of Goods Sold?
Beginning inventory + the cost of goods purchased or manufactured = cost of goods available – ending inventory.
What do we do with Under Applied Overhead?
Under applied overhead is reported as a prepaid expense on the company’s balance sheet and, at the end of the year, it is balanced by inputing a debit to cost of goods sold
How do we calculate Overhead Costs?
Divide your monthly overhead cost by monthly sales and multiply by 100 to find the percentage of overhead cost. For example, a business with monthly sales of $900,000 and overhead costs totaling $225,000 has ($225,000/$900,000) * 100 = 25 percent overhead.
How do we calculate Mixed costs?
y=a+bx OR Fixed cost + Variable cost per unit
How do we calculate operating income? (Variable Costing)
Sales - Variable expenses - Fixed expenses = Net Operating Income
What is Material Price Variance?
Direct material price variance is the difference between the standard cost and the actual cost for the actual quantity of material used or purchased.
What is Efficiency Variance?
An efficiency variance is the difference between actual and budgeted quantities you purchased for a specific price.
What is Transfer Pricing?
Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price.
How do we calculate the Minimum Acceptable selling price?
Take all of the costs to make the product. Basically a breakeven including all costs/ unit
