M2 Cost Accounting: Part 2

Question 1

How to calculate cost of goods manufactured (COGM)

Answer 1

WIP Beg + DM used + DL + OH applied - WIP ending = COGM

Question 2

How to calculate cost of goods sold (COGS)

Answer 2

Beg finished goods inv
ADD COGM (WIP beg+DM+DL+OH-WIP end)
= COGAFS
LESS Ending inv
= COGS

Question 3

How to calculate the overhead rate?

Answer 3

Total mfg O/H estimated (variable and fixed )
/ total estimated DL hours (or cost driver)

Question 4

How to calculate overhead control

Answer 4

Actual overhead
LESS applied overhead (estimated)
——————————-
Total over/under applied (debit or credit?)

*if actual < applied = OVERAPPLIED/ESTIMATED = favorable = credit
*if actual > applied = UNDERAPPLIED/ESTIMATED = unfavorable = debit

Question 5

What method of product costing is used for large number of HOMOGENOUS items?

Answer 5

Process costing

Question 6

DM, DL, or conversion costs (DL plus factory OH) is equal to the amount of DM, DL or conversion costs necessary to complete one unit of production

Answer 6

Equivalent units

Question 7

When finding equivalent units, what is the formula under FIFO (3 steps)?

Answer 7

1.) Completion of units on hand at beg of period (1-%complete)
2.) Units started and completed during period (units complete - Beg WIP)
3.) Units partially complete at end of period (EI * % complete)

Question 8

When finding equivalent units, what is the formula under weighted average (2 steps)?

Answer 8

1.) Units completed during month (Beg WIP + units started and completed during month)
2.) Units partially complete at end of period (EI *%complete)

Question 9

How to find COST per equivalent units (FIFO vs weighted average)?

Answer 9

FIFO:
current costs ONLY / equivalent units

Weighted Avg:
Beg costs + current costs / equivalent units

Question 10

What components are included in conversion costs?

Answer 10

Direct Labor and Overhead

Question 11

“cost of goods completed” is synonymous with what?

Answer 11

cost of goods manufactured so the formula is
COGM = WIP beg + DM used + DL + O/H APPLIED - WIP end

Question 12

What is the difference when the question asks for total manufacturing costs vs cost of goods manufactured?

Answer 12

Total manufacturing costs does NOT include WIP in the calculation
COGM includes WIP:
Beg WIP + DM used (SQUEEZE) + DL + O/H APPLIED - End WIP