Week 2

Question 1

product costs

Answer 1

• direct labour
• direct materials
• MFG overhead

Question 2

COGM

Answer 2

beginning WIP
\+ GM used
\+ DL used
\+ OH applied 
- ending WIP

Question 3

COGS

Answer 3

beginning finished product
+ COGM
- ending finished goods

Question 4

job costing

Answer 4

• used when jobs are separately identifiable

Question 5

process costing

Answer 5

used in mass production

Question 6

transfer price methods

Answer 6

• cost based
• market based
• negotiated absed

Question 7

transfer price - cost based

Answer 7

• full cost base measures the full absorptioncost of the product
• variable cost measures the variable cost of the product plus a mark-up
• useful when prices are not readily available

Question 8

transfer price - market based

Answer 8

• based on external suppliers and prices
• can lead to optimal decisions when
  a) the immediate market is perfectly competitive and readily available
  b) inter dependencies between departments must be minimal
  c) use longer term prices to asmooth transfer prices

Question 9

transfer price - negotiation based

Answer 9

• working with each other to determine an understood price
• can be time consuming
• if the selling company can sell for more than the buying division would pay for it, should sell to an outside party

Question 10

governance purpose

Answer 10

1. reduce ambiguity and confusion in the organization
2. enhance effectiveness of strategy, risk management, resource allocation
3. enhance relationships between mgmt and principles
4. reduce risk of organizational failure

Question 11

Organizational structures

Answer 11

• simple
• functional
• divisional
• matrix
• network

Question 12

organizational structures - simple

Answer 12

• has an owner, single shareholder, or small group who manages and makes decisions
• quick decision making
• can keep decisions quick and in line with strategic objectives

Question 13

organizational structure - Functional

Answer 13

• departments are defined by their purpose (accounting, HR, processing)
• allows specialization in your area
• interdepartmental communication can become limited

Question 14

organizational structure - divisional

Answer 14

• each division has its own resources and managed as a separate business
• decision making decentralized with more autonomy
• can create competition between divisions

Question 15

organizational structure - matrix

Answer 15

• combines the stability of the functional structure and the flexibility of the divisional structure
• can have an unclear chain of command

Question 16

organizational structures - centralized

Answer 16

• more appropriate when there are few leaders
• quicker decision making
• fewer layers of management

Question 17

organizational structures - decentralized

Answer 17

• usually have teams with their own leaders

- facilitates growth