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Managerial Accounting Final > Test 3 Ch 9-11 > Flashcards

Test 3 Ch 9-11 Flashcards

1
Q

Budgeting

A

Budgets- Financial plans for the future and are key component of planning

Budgets help business owners and managers plan ahead, and later, exercise control by comparing what actually happened to what was expected in the budget.

Budgets formalize managers expectations regarding sales, prices, and costs

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2
Q

Planning

A

Looking ahead to see what actions should be taken to realize particular goals.

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3
Q

Control

A

looking backward, determining what actually happened and comparing it with the previously planned outcomes.

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4
Q

Strategic Plan

A

Plots direction for an organizations future activities and operations; generally covers 5 years.

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5
Q

Production Budget

Units to be Produced

A

Production Budget- Tells how many units must be produced to meet sales needs and to satisfy ending inventory requirements.

Expected Sales in Units
+Desired Ending Inventory in Units

= Total Units needed
-BI

=Units to be Produced

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6
Q

Direct Materials Purchases Budget

quantity of DM to be purchased

A

DM purchases budget- tells the amount and cost of raw materials to be purchased in each time period.

Quantity of DM needed for production
+Desired EI of DM

=Tot. Quantity of DM needed
-BI of DM

=Quantity of Dm to be purchased

* (DL BUDGET IS SAME FORMULA JUST WITH DL)**

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7
Q

COGS Budget

Budgeted COGS

A

COGS Budget- calculated the expected costs of the goods to be sold.

DM used
+DL used
+OH

=Budgeted Manufacturing costs
+BI Finished Good

=Goods available for sale
- EI finished goods

=Budgeted COGS

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8
Q

Selling and Admin Expense Budget

A

Selling and Admin Expense Budget:

  • Outlines Planned Expenditures for non manufacturing activities.
  • Variable and Expense component
  • To get variable you might have to multiply some numbers
  • Fixed should be given
      TItle

Variable Selling Expense:

Commission (could be different) $

Fixed Selling Expense:
Salaries    $
Utilities     $
Office Space $
Advertising $

Tot Fixed expense $

= Total S&A expense

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9
Q

Budgeted Income Statement

A

TITLE

Sales $
-COGS ($)

=GM $

  • Var S&A ($)
  • Fix S&A ($)

=OI $
-Inc Tax ($)

=Net Inc

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10
Q

Cash Budget

A

Beg Bal
+Cash receipts
=Cash available $

Less: Cash Outflows
-Payments for food
-wages
-insurance
-rent
(above could be different)
=Tot. Cash                                    $

Ending Cash Bal= Tot Cash- Cash Available

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11
Q

Ending Inventory for month

A

Rate(%) x units x # of Drums (Could be something else, Drums was used in the example)

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12
Q

Overhead Budget

A

Shows expected cost of all production cost other then DM & DL

Tot. DL Hours
x VOH Rate

= Tot VOH
+FOH

=Tot. OH

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13
Q

Unit Standard Cost per Unit

A 
Quantity Standard (QS):
-quantity of input allowed per unit of output
Price Standard (PS):
-The price that should be paid per unit of input

Standard Cost per unit= QS x PS

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14
Q

Types of Standards

A

Ideal Standards:

  • Demand maximum efficiency and can be achieved only if everything operated perfectly.
  • No machine breakdowns, slack, or lack of skill (even momentarily) are allowed.

Currently Attainable Standards:

  • Can be achieved under efficient operating conditions
  • Allowance is made for normal breakdowns, interruptions, less than perfect skill, and so on.
  • These standards are demanding but achievable
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15
Q

Why are Standard Cost Systems adopted?

A
  • To improve planning and control

- To facilitate product costing

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16
Q

Advantages of Standard Product Costing

A
  • Greater capacity for control.
  • Provides readily available unit cost information.
  • No unit cost calculation for each equivalent unit category process costing.
  • No need to distinguish between FIFO and weighted average methods of accounting for beginning inventory costs
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17
Q

Standard Cost Sheet

A

Calculates the total standard cost for one unit of product

SQ X SP(SR)

– could be the materials, labor, VOH, FOH

18
Q 
Variance
Actual Cost (formula)
Planned Cost (formula)
A

Variance- occurs when actual input differs from planned input.

Actual Cost= AQ X AP

Planned Cost= SQ X SP

19
Q

Variance Analysis

A

Difference between actual cost of the input and its planned cost.

ACTUAL BUDGETED STANDARD

AQ(AH) AQ(AH) SQ(SH)
x x x
AP(AR) SP(SR) SP(SR)

Tot. Variance- difference between actual and standard.
– (AQ x AP) - (SQ x SP)

Price (Rate) Variance- Left side, difference between Actual and Budgeted.

    • (AP-SP)AQ
    • (F) if Budgeted is bigger then Actual

Usage (Efficiency) Variance- Right side, difference between Budgeted and Standard.

    • (AQ-SQ)SP
    • (F) if Standard is bigger then Budgeted
20
Q

Unfavorable (U) Variance

A

occurs when Actual is greater then Standard

21
Q

Favorable (F) Variance

A

occurs when Standard is greater then Actual

22
Q

Target Costing (definition and formula)

A

Target costing- Focuses on the reduction of the design costs of existing and future products and processes.
– A target cost is the difference between the sales price need to capture a predetermined market share and the desired per-unit profit.

Target Cost per Unit= Expected Sales Price per unit - Desired Profit per unit.

23
Q

Actual Variable Overhead Rate (AVOR)

A

AVOR= Actual VOH / Actual DLH

24
Q

Standard Variable Overhead Rate (SVOR)

A

SVOR= Standard VOH / Standard DLH

25
Q

Applied VOH

A

Applied VOH= Actual # of units x SH x SVOR

26
Q

Tot. Variable OH Variance

A

Actual VOH - Applied VOH

27
Q

Standard Hours for actual Production (Actual FOH)

A

SH x Actual Units

28
Q

Applied fixed OH

A

SH x actual units x SFOR

29
Q

Total FOH

A

Actual FOH - Applied FOH

30
Q

FOH Spending Variance (FOHSV)

A

Left side

(AFOR - SFOR)AH

31
Q

FOH Efficiency Variance (FOHEV)

A

Right side

(AH-SH)SFOR

32
Q

Tot FOH Variance

A

FOHSV- FOHEV

33
Q

Performance Report (what it is and what it looks like)

A

Performance Report- compares actual costs with budget costs.

                    ACTUAL           BUDGETED      VAR.
Units prod.
DM
DL
VOH
FOH
Total
34
Q

Static Budget

A
  • A budget for a particular level of activity such as a sales level of 1,000 units
35
Q

Flexible Budget

A

Compute expected costs at different levels of activity. A flexible budget is used to compute what costs should have been for the actual activity level.

36
Q

Actual Variable OH Rate (AVOHR

A

actual VOH / Actual DLH

37
Q

Applied VOH

A

Actual # of units x SH x SVOR

38
Q

Tot. Variable OH variance

A

Actual VOH - Applied VOH

39
Q

VOH SPENding Variable

A

(AVOR-SVOR)AH

40
Q

VOH Efficiency Variable

A

(AH-SH)SVOR

41
Q

Tot. VOH Variance

A

VOH SV - VOH EV

Managerial Accounting Final (4 decks)

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