PLANNING AND MEASUREMENT Flashcards
margin of safety?
difference between your actual or current sales and the break even point. It shows how far sales revenue decrease before operating income become negative.
what is the floor and ceiling in a transfer pricing decision?
the floor is opportunity cost plus costs of outlay. the ceiling is the market price
target pricing?
set prices based on what you think customers are willing to pay based on perceived value
economic value added?
net operating profit after taxes less cost of capital
how is the overhead rate calculated?
dividing estimated overhead costs(both variable and fixed) by a budgeted or estimated quantity of a cost driver. Example: total overhead costs of 75,000 divided by 20,000 budgeted direct labor hours for a overhead application rate of 3.75 per direct labor hour
conversion cost?
direct labor + overhead
how is a spoilage question done?
normal spoilage is a manufacturing cost because it’s an inherent part of production, so it is included in finished goods.Abnormal spoilage is treated as a period cost.If total units completed are 5500 with 5000 being saleable, 200 being normal spoilage, and 300 being abnormal spoilage, then 5200 is included in finished goods. so 5200/5500 times the total cost:(5200/5500)*99,000=93,600 which is what will be debited to finished goods
how to use high-low method:
total costs y=a+b(x)y=total costsa=fixed costsb=variable cost per unitx=number of kilos,etcb is change in costs divided by change in kilos, or (y2-y1)/(x2-x1)
what does a JCL do?
Job control language initiates programs, specifies priorities and running sequences, and which databases are used and which files are used
What is the order of creating master budget?
sales budget is first, then production budget, budgeted income statement then budgeted balance sheet
absorption costing?
assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing overhead) to inventory
direct costing?
assigns only variable manufacturing costs to inventory- which means variable manufacturing overhead
what does r squared actually mean?
percentage of variation in the dependent variable explained by the variation in the independent variables
what are x and y in a line equation?
x is the independent variable, and y is the dependent variable.
overhead efficiency variance?
The overhead efficiency variance is the difference between actual direct labor hours worked, and the standard quantity of hours allowed for actual production, times the variable overhead rate per hour.