More StUFF Flashcards
HOW are direct labor costs initially recorded in a Job-Order Costing System?
As an increase in the “Work-in-Process” account
i.e. Direct labor costs are inventoriable costs
They are initially debited to the work-in-process control account
WHAT is the most frequently used method to allocate joint costs to joint products?
THE Relative Sales Value Method
i.e. It allocates joint costs based upon the products’ proportion of total sales revenue
HOW should underapplied overhead be accounted for?
Proportionately between Cost of Goods Sold (COGS), Finished Goods Inventory and Work-In-Process Inventory
Equation: Amount ÷ Sum of all three items x (Total of the underapplied overhead + sum of all three items)
WHAT are your Joint Costs?
Costs incurred prior to the split-off point to produce two or more goods manufactured simultaneously by a single process or series of processes
HOW are Direct Labor Costs initially recorded in a Job-Order Costing system?
As an increase in Work-In Process Control account
HOW are variable selling and administrative expenses accounted for on the income statement under Variable Costing?
IN the computation of the contribution margin
i.e. contribution margin equals sales minus all variable costs, which include the variable selling and administrative expenses as well as variable manufacturing costs
WHAT is the Equation to find the number of days in accounts payable?
Accounts Payable / (Purchases divided by 365 Days)
HOW do you calculate the Direct Material Usage Variance?
DM Usage Variance = (SQ - AQ) x SP
HOW do you calculate the Materials Price Variance in a standard cost system?
Equation: Actual Quantity Purchased x (Standard Price - Actual Price)
WHAT is the formula for Direct Materials Quantity Variance?
Standard Materials Price x (Actual Quantity Consumed (AQC) - Standard Quantity of Input Allowed)
HOW do you calculate the Total Labor Variance?
THIS is the: Difference between the actual labor rate multiplied by the actual hours worked and the standard labor rate multiplied by the standard labor hours
HOW do you calculate the Materials Price Variance?
Materials price variance
=
AQ × (SP – AP)
HOW do you calculate the equivalent units of production (EUP) with respect to conversion costs?
Units Transferred out (i.e. Completed)
Add: Ending Work In Process (EWIP)
Less: Beginning Work In Process (BWIP)
HOW would you calculate the predetermined overhead rate?
BY dividing the estimated overhead (the numerator) by the estimated amount of the activity base (the denominator)
NOTE: The latter may be direct labor hours, direct labor dollars, machine hours, or some other reasonable base
HOW do you calculate Residual income?
Residual income = Operating income – *Target return on invested capital
*Target return on invested capital = Average Invested Capital x Imputed Interest Rate
