Tha Good StuFF Flashcards
WHAT is the emphasis of the Total Quality Management (TQM) approach?
Quality as a basic organizational function
e.g. TQM measurement occurs throughout the process, and errors are caught and corrected at the source
NOTE: One of the basic tenets of TQM is doing it right the first time
WHAT account increases with the issuance of indirect materials to a production department?
THE Factory Overhead Control
i.e. As overhead is incurred, factory overhead control is debited and accounts payable, supplies, etc., are credited
WHAT costing method (i.e. Absorption or Variable) has a higher Net Income for a company that has no beginning inventory and whose production exceeds sales for the current period?
Absorption would have the higher Net Income
WHY? - Because absorption includes all manufacturing costs, both fixed and variable
Thus, since some fixed costs are included in ending inventory under absorption costing while the entire fixed costs are expensed under variable costing, net income is higher under absorption costing
WHAT is an item that would show up on the Income Statement under both the Variable costing and the Absorption costing method?
Operating Income
NOTE: ONLY the Absorption costing method calculates gross profit because the computation takes into account fixed manufacturing overhead in inventory which Variable Costing does NOT
HOW do I calculate the capital (investment) turnover ratio?
EASY: Sales divided by Average Invested Capital
HOW are Direct Labor Costs usually recorded in a Job-Order Costing system?
AS an increase in Work-In Process Control
i.e. Direct labor costs are inventoriable costs
Thus, they are initially debited to the work-in-process control account
HOW would you calculate the Predetermined Overhead Rate?
= (expected fixed cost ÷ expected volume)
WHAT is the Journal Entry to transfer WIP to FG?
Debit Finished Goods and Credit Work-in-Process
WHEN is the value of the by-product recognized in accounting for the by-product?
At the time of sale or time of production
i.e. By-products may be initially recognized at the time of sale or at the time of production
The alternative is to recognize the net realizable value at the time of production, a method that results in the recording of by-product inventory
WHAT are important factors in deciding whether to continue processing beyond split-off?
(1) Revenue from selling at split-off point
(2) Variable costs of upgrade
(3) Avoidable fixed costs of upgrade
(4) Revenue from selling after further processing
NOTE: Common, or joint, costs cannot be identified with a particular joint product
WHAT is the Equation for Return on Equity?
Net Income (e.g. Sales – COGS – interest expense – Taxes – Administrative expenses) divided by the average stockholders’ equity
WHAT is the Fishbone diagram?
- A total quality management process improvement technique (ALSO called the “cause-and-effect diagram”)
i. e. IT organizes the analysis of causation and helps to identify possible interactions among causes
Fill in the Blank.
Incremental Costs are equal to ______.
Relevant Costs
i.e. Incremental cost are the difference in total cost between two decisions
Thus, Fixed Costs are NOT included in your Incremental Costs
WHAT is a necessary system involving product breakdown into component parts and lead times for procuring said production parts?
THE Materials Requirements Planning (MRP) System
WHY? - Because Demand-dependent goods are components of other goods
Materials requirements planning (MRP) is a push system (i.e., the demand for raw materials is driven by the forecasted demand for the final product)
Fill in the Blank.
In a job-order cost system, direct labor costs usually are recorded initially ________.
As a an increase in Work-In Process Control
WHY? - Because they are inventoriable costs
Thus, they are initially debited to the work-in-process control account
