Accounting Ch. 6 & 7
Dollar break-even for a company is calculated as:
Dollar break-even for a company is calculated as: (Traceable fixed expenses + Common fixed expenses) / Overall CM Ratio
Absorption costing only
Fixed manufacturing overhead costs are included as part of Work in Progress inventory under:
Which are the same under both ABC and traditional costing:
Which are the same under both ABC and traditional costing: *Total Sales *Net operating income *Total costs
Which costing system assigns nonmanufacturing overhead on a cause and effect basis:
Which costing system assigns nonmanufacturing overhead on a cause and effect basis: ABC
Absorption Costing Income
is influenced by changes in unit sales and units of production. Net operating income can be increased simply by producing more units even if those units are NOT sold.
Variable Costing
only the variable production costs are included in product costs
An absorption costing income statement calculates:
An absorption costing income statement calculates: Gross margin by deducting cost of goods sold from sales Sales - COGS = Gross Margin
An activity-based costing system:
An activity-based costing system: *May exclude some manufacturing costs from product costs *Uses numerous overhead cost pools
From a decision-making point of view, ______ margin is most capacity decisions and ______ margin is most useful for short-term sales volume decisions.
From a decision-making point of view, Segment margin is most capacity decisions and Contribution margin is most useful for short-term sales volume decisions.
If the activity rate for the customer order cost pool is $250 per order and the total for this cost pool is $425,000 the total number of customer orders is:
If the activity rate for the customer order cost pool is $250 per order and the total for this cost pool is $425,000 the total number of customer orders is: 1,700 425,000 / 250 = 1700
Differences in net operating income between absorption costing and variable costing is due to:
The timing of when fixed manufacturing overhead is expensed
What level of activity is performed each time an item of a product is produced
What level of activity is performed each time an item of a product is produced Unit-level
When a segment is eliminated, a:
When a segment is eliminated, a: Common fixed cost will remain unchanged Traceable fixed cost will disappear
Units PRODUCED
When allocating fixed manufacturing overhead cost to units under absorption costing, the total fixed overhead costs must be divided by the number of units _____________
Net operating income is LESS under absorption costing than under variable costing when inventory for the period: (Increase, Decrease, Same)
When inventory for the period: Decreases
When making decisions using ABC data:
When making decisions using ABC data: Unavoidable fixed costs should be ignored
When preparing a contribution margin income statement:
When preparing a contribution margin income statement: * Variable and fixed costs ae listed in separate sections of the statement * COGS consists of only variable manufacturing costs
When using the absorption costing, fixed manufacturing cost per unit = Total Fixed Manufacturing Overhead divided by: ______ _______
When using the absorption costing, fixed manufacturing cost per unit = Total Fixed Manufacturing Overhead divided by: units produced
Absorption Costing
Which Method will produce the highest values for work in progress and finished goods inventories
Absorption Cosing
it treats fixed manufacturing overhead as a product cost
In ABC any event that causes consumption of overhead resources is an _______
In ABC any event that causes consumption of overhead resources is an ACTIVITY
In activity-based costing another term for activity measure is ______ ______
In activity-based costing another term for activity measure is COST DRIVER
If a segment is eliminated, ___________ __________ costs that are NOT traced to the segment will not change
If a segment is eliminated, COMMON FIXED costs that are NOT traced to the segment will not change
Costs such as factory supplies and power to run machines could be combined in a cost pool based on the number of: _________ _________
Costs such as factory supplies and power to run machines could be combined in a cost pool based on the number of: UNITS PRODUCED
The use of absorption costing can lead to the omission of segment costs because nonmanufacturing costs are NOT included as cost of a product. Calculate the Unit Product Cost under absorption costing: $____ Direct Materials: $50 per unit Direct Labor: $75 per unit Var manuf. Overhead: $27 per unit Fixed manuf. Overhead: $30,000 Units produced: 10,000 Units sold: 6,000
The use of absorption costing can lead to the omission of segment costs because nonmanufacturing costs are NOT included as cost of a product. Calculate the Unit Product Cost under absorption costing: $ 155 Direct Materials: $50 per unit Direct Labor: $75 per unit Var manuf. Overhead: $27 per unit Fixed manuf. Overhead: $30,000 Units produced: 10,000 Units sold: 6,000 50 + 75 + 27 + (30,000 / 10,000) = 155
Designing and advertising a product are ________-level activities
Designing and advertising a product are product-level activities
Transaction Drivers
Simple counts of the number of times an activity occurs are TRANSACTION drivers
Total cost of each activity divided by the total activity is the computation of: _______ _______
Total cost of each activity divided by the total activity is the computation of: Activity Rates
A customer relations cost pool would include the cost of:
Sales calls
Segment
A part or activity within an organization about which managers would like cost, revenue or profit data is called a ____
Product Margin
A product's is a function of sales and the direct and indirect costs that the product causes
Benchmarking
A Systematic approach that can identify improvement opportunities is: Benchmarking
Traceable fixed cost
A ___ fixed cost is incurred because of the existence of the segment
Common cost
A ____ cost will continue even if the segment is entirely eliminated
A link to how people are evaluated and rewarded
A characteristic essential for successful implementation of ABC is:
A company with three segments has $10,000 in common fixed expenses. All three segments are at the break-even point. As a result the company:
A company with three segments has $10,000 in common fixed expenses. All three segments are at the break-even point. As a result the company: Has an overall net operating LOSS of $10,000 (If all three segments are at the beak-even point, common fixed expenses have not been covered) (Common fixed expenses are not considered when computing segment break-even)
Which are correct regarding income statements prepared under variable and absorption costing?
* Both income statements include product and period costs * Reported net income on the statement often differ (The difference is in how fixed manufacturing overhead is accounted for)
Using variable costing and the contribution approach for internal decision making:
* Supports Decision making * Enables CVP analysis * Facilities explaining changes in net income
Discontinuing a profitable segment results in:
* The loss of the segment's revenues * A reduction in the overall profits of the company (A segment's traceable fixed costs would be eliminated, but common fixed costs would not change)
Types of costs that might be included in a cost pool based on order size include:
*Factory Supplies *Equipment Depreciation
Absorption costing is:
*Used by most companies for both internal and external reports *Required by GAAP and IFRS
ABC does NOT conform to GAAP because it:
ABC does NOT conform to GAAP because it: *Excludes some manufacturing costs *Includes some nonmanufacturing costs
ABC is NOT used for external reporting because _______ would not be comfortable using allocation based on employee interviews
ABC is NOT used for external reporting because Auditors would not be comfortable using allocation based on employee interviews
Blissful Breeze manufactures and sells ceiling fans. Each fan has a unit product cost of $112 and a unit selling price of $190. If it produces 900 fans and sells 842 fans this month the total cost of goods SOLD will be: Total COGS = $______
Blissful Breeze manufactures and sells ceiling fans. Each fan has a unit product cost of $112 and a unit selling price of $190. If it produces 900 fans and sells 842 fans this month the total cost of goods SOLD will be Total COGS = 842 x 112 = $ 94,304
Citrus Scents produces body sprays. Variable selling and admin expense is $1.05 per bottle and fixed selling and admin expense is $4,500 per month. The company produced 1,490 bottles this month and sold 1,203 of those bottles. Total selling and admin expense for the month was: $________
Citrus Scents produces body sprays. Variable selling and admin expense is $1.05 per bottle and fixed selling and admin expense is $4,500 per month. The company produced 1,490 bottles this month and sold 1,203 of those bottles. Total selling and admin expense for the month was: $ 5,763.15 (1.05 x 1,203) + 4,500 = 5,763.15
Granny's Touch manufactures and sells cookbooks. The company's variable cost of goods sold is $39,200 and variable selling and administrative expenses is $6,200. Fixed manufacturing overhead is $19,700 and fixed selling and admin expense is $9,290. An income statement prepared using variable costing shows $______ as the total fixed expenses.
Granny's Touch manufactures and sells cookbooks. The company's variable cost of goods sold is $39,200 and variable selling and administrative expenses is $6,200. Fixed manufacturing overhead is $19,700 and fixed selling and admin expense is $9,290. An income statement prepared using variable costing shows $28,990 as the total fixed expenses. 19,700 + 9,290 = 28,990
Variable
Treating direct labor costs as _____ can lead to bad decisions
Under Activity-Based Costing overhead includes:
Under Activity-Based Costing overhead includes: All Indirect Costs
Absorption Costing
Under ________ costing, fixed overhead is treated like a variable cost because a portion of the total cost is allocated to each unit produced, rather than being expensed as one large sum
Using absorption costing for segmented income statements can lead to:
Under-costing of segments Omission of upstream and downstream costs
Absorption Cosing
all production costs, variable and fixed, are included when determining unit product cost
ABC is generally used for ________ reporting
ABC is generally used for Internal reporting
Absorption costing can lead managers to mistakenly believe that fixed manufacturing overhead costs will (increase or decrease) in total as the number of units produced increases.
Absorption costing can lead managers to mistakenly believe that fixed manufacturing overhead costs will INCREASE in total as the number of units produced increases.
Arbot Co. manufactures appliances at three manufacturing facilities in the United States. Each location has a plant manager who oversees the manufacturing process for that location. Segmented income statements are prepared for each plant and for each product manufactured in the plant. The salary of each plant manager is:
Arbot Co. manufactures appliances at three manufacturing facilities in the United States. Each location has a plant manager who oversees the manufacturing process for that location. Segmented income statements are prepared for each plant and for each product manufactured in the plant. The salary of each plant manager is: Traceable fixed cost to the plant and a common fixed cost for the individual product lines made in the plant.
Absorption Costing
Because this typw of costing assigns fixed manufacturing overhead costs to units produced, it gives the impression that fixed manufacturing overhead is variable with respect to the number of units produced, but it is not. The result can be inappropriate pricing decisions and product discontinuation decisions.
Costs that can be easily traced to individual products include
Costs that can be easily traced to individual products include *Warranty repair costs *Shipping costs *Sales commission
Costs that can be traced directly to a segment: Should NOT be allocated to other segments
Costs that can be traced directly to a segment: Should NOT be allocated to other segments
Customer service employees are a ____-____ cost
Customer service employees are a STEP-FIXED cost
Decision-making problems that could occur when using absorption costing include inappropriate ______ decisions, and decisions made to ______ products that are in fact profitable
Decision-making problems that could occur when using absorption costing include inappropriate PRICING decisions, and decisions made to DROP products that are in fact profitable
Variable Costing
Direct costing or marginal costing are other terms for ______ costing
Discontinuing a profitable segment results in:
Discontinuing a profitable segment results in: * A reduction in the overall profits of the company * The loss of the segment's revenues (NOT THIS ONE>) Reduced common fixed costs for the company (A segment's traceable fixed costs would be eliminated, but common fixed costs would not change)
External reports are ______ (more/less) detailed than internal reports
External reports are LESS (more/less) detailed than internal reports
Variable Costing
Fixed manufacturing overhead costs are expensed as units are sold as part of cost of goods sold under ABSORPTION costing and expensed in full with period costs under ____ costing
Expensed as incurred under super-variable costing
Fixed overhead and direct labor are expensed as incurred under super-variable costing
If the activity rate is $65 per order with a total of 120 orders for a product the overhead cost assigned to the product is $______
If the activity rate is $65 per order with a total of 120 orders for a product the overhead cost assigned to the product is $ 7,800 65 x 120 = 7,800
An Allocation Base
In activity-based costing an activity measure is:
In activity-based costing first state allocation assigns ___________ costs to activity cost pools
In activity-based costing first state allocation assigns Overhead costs to activity cost pools
In activity-based costing first-stage allocation assigns _________ costs to activity cost pools.
In activity-based costing first-stage allocation assigns overhead costs to activity cost pools.
In activity-based costing nonmanufacturing and manufacturing costs are assigned to products on a _____ AND ______ basis
In activity-based costing nonmanufacturing and manufacturing costs are assigned to products on a cause and effect basis
In recent years direct labor as a percentage of total cost began declining, which caused overhead to ________
In recent years direct labor as a percentage of total cost began declining, which caused overhead to increase
In the 19th and 20th centuries, cost systems relied on allocation bases such as:
In the 19th and 20th centuries, cost systems relied on allocation bases such as: *Machine hours *Labor hours
In the 19th and 20th centuries:
In the 19th and 20th centuries: Direct labor hours was a satisfactory overhead allocation base
In trading costing ________ costs are assigned to products
In trading costing manufacturing costs are assigned to products
Incorrectly or arbitrarily assigning common costs to segments:
Incorrectly or arbitrarily assigning common costs to segments: * Could reduce the overall profits of the company (if segments are inappropriately eliminated) * Distorts the profitability of segments * Holds managers responsible for costs they cannot control
Variable Costing
It correctly identifies the additional variable costs incurred to make one more unit. It also emphasized the impact of total fixed costs on profits
Limitations of activity-based costing systems:
Limitations of activity-based costing systems: *ABC requires substantial resources *Managers and employees may resist the change to ABC *ABC procedures produce numbers that do not match traditional costing (The benefits of accuracy may Not outweigh the costs)
When units produced exceed units sold, net income will generally be:
Net income will generally be Higher under absorption costing than under variable costing
Under both variable costing and absorption costing, variable and fixed selling and admin costs are treated as _____ costs
Under both variable costing and absorption costing, variable and fixed selling and admin costs are treated as PERIOD costs
Unit-level activities are: proportional to the number of units produced
Unit-level activities are: proportional to the number of units produced. In ABC the greater the number of activities the: *More accurate the costs are likely to be *More costly the system will be to design (More activities make a system more complex)
Usually, traditional costing _____-costs high-volume products and _____-costs low-volume products
Usually, traditional costing OVER-costs high-volume products and UNDER-costs low-volume products
Variable costing net income may be computed by multiplying the number of units sold by the ____ ____ per unit and subtracting total _____ expenses
Variable costing net income may be computed by multiplying the number of units sold by the CONTRIBUTION MARGIN per unit and subtracting total FIXED expenses
Variable costing treats fixed manufacturing overhead as a PERIOD cost
Variable costing treats fixed manufacturing overhead as a _______ cost
Period Cost
Variable costing treats fixed manufacturing overhead as a:
Variable Costing
The number of units produced does NOT affect net operating income when using _____ costing
Administrating parts inventory is a ______-Level activity
Administrating parts inventory is a Product-Level activity
A cost pool including costs to entertain clients and make sales calls is a _______-level activity
A cost pool including costs to entertain clients and make sales calls is a Customer-level activity
Activity-based costing only charges products for the cost of the capacity used because:
Activity-based costing only charges products for the cost of the capacity used because: *It results in a more stable unit product cost *Products are only assigned the costs of resources they actually use (Assigning costs of unused capacity would increase per unit product cost)
ONLY Traceable fixed expenses
Segment break-even calculations include:
Setting up equipment, placing purchase orders, and arranging shipments to customers are all examples of ______-level activities
Setting up equipment, placing purchase orders, and arranging shipments to customers are all examples of batch-level activities
Pearls! Manufactures and sells jewelry. The total variable cost of goods sold this month is $72,490. Variable selling and admin cost is $22 per unit sold. If 350 units are produced and 314 units are sold this month, the total variable cost reported on the income statement for the month is $_____ Total variable cost =
(?)
A company's products had sales of $750,000 and total costs of $360,000. If the net operating income for the company was $215,000 total overhead costs not assigned to products was $________
A company's products had sales of $750,000 and total costs of $360,000. If the net operating income for the company was $215,000 total overhead costs not assigned to products was $ 175,000 750,000 - 360,000 = 390,000 390,000 - 215,000 = 175,000
Activities that occur regardless of which customers are served, which products are produced or how many batches are run or units are facility-level or _______ _______ activities
Activities that occur regardless of which customers are served, which products are produced or how many batches are run or units are facility-level or organization sustaining activities
Second-stage allocation
Activity rates are used to apply overhead costs to products and customers in the second-stage allocation
Activity-based costing is NOT used for external reporting because
Activity-based costing is NOT used for external reporting because *ABC would disclose too much info about individual products *External reports are less detailed than internal reports *It is difficult to make changes in the existing accounting system *ABC does not comply with GAAP
Activity-based costing system:
Activity-based costing system: *Produces different numbers that a traditional system *Is costly to maintain *Requires substantial resources *The benefits may or may not outweighs the cost
Period Expense
Activity-based costing treats organization-sustaining costs as _______ expenses
Activity-based costing uses more ____ ____ than traditional costing
Activity-based costing uses more cost pools than traditional costing
Activity-based costing uses numerous __________ cost pools
Activity-based costing uses numerous Overhead cost pools
Activity-based management is focused on:
Activity-based management is focused on: *Eliminating waste *Reducing defects (Process improvements) (Decreasing processing time)
Costs assigned and traced when computing product margin in a traditional cost system are:
Administrating parts inventory is a Product-Level activity Costs assigned and traced when computing product margin in a traditional cost system are: *Direct Labor *Manufacturing Overhead *Direct Material (Traditional costing systems include only manufacturing costs)
Advocates of __________ costing believe fixed costs are an essential part of product production
Advocates of absorption costing believe fixed costs are an essential part of product production
TRADTITIONAL costing system
All manufacturing costs are allocated to products in a _____ costing system regardless of whether the product consumers the resources associated with those costs.
All manufacturing costs are assigned to products in ________ costing
All manufacturing costs are assigned to products in traditional costing
Common Fixed Costs
Allocating ______ ______ ______ to a segment may cause an otherwise profitable segment to appear unprofitable.
An activity cost pool accumulates costs for ____ ____ activity measure
An activity cost pool accumulates costs for exactly one activity measure
Compared to traditional systems, activity-based costing uses ______ cost pools and unique measures of activity
Compared to traditional systems, activity-based costing uses MORE cost pools and unique measures of activity
Direct Materials
Considered variable under super-variable costing:
On an absorption costing income statement, selling and administrative expenses:
On an absorption costing income statement, selling and administrative expenses: *Are reported as one single amount *Equal the amounts reported on a variable costing income statement
To assist in first-stage allocation in ABC employees designated as indirect factory workers should provide the:
Percentage of employee time spent for each activity period
Place the steps for implementing ABC in order: Define activities, activity cost pools, and activity measures Assign overhead costs to activity cost pools Calculate activity rates Assign overhead costs to cost objects Prepare management reports
Place the steps for implementing ABC in order: Define activities, activity cost pools, and activity measures Assign overhead costs to activity cost pools Calculate activity rates Assign overhead costs to cost objects Prepare management reports
Power to run production equipment would be a ______-level activity
Power to run production equipment would be a UNIT-level activity
Which help companies channel their resources into the most profitable growth opportunities?
Product and customer profitability reports
What is the benefit of a cross-functional team designing an ABC system:
Resistance to change is reduced
SPS Products has two divisions - Catalog Sales and Online Sales. For the last quarter the Catalog Sales segment margin was ($5,000). Online sales were $100,000. Online sales contribution margin was $60,000 and its segment margin was $40,000. If catalog sales are discontinued, it is estimated that online sales will increase by 10% or 0.10. Discontinuing Catalog sales should increase company profits by: $__________
SPS Products has two divisions - Catalog Sales and Online Sales. For the last quarter the Catalog Sales segment margin was ($5,000). Online sales were $100,000. Online sales contribution margin was $60,000 and its segment margin was $40,000. If catalog sales are discontinued, it is estimated that online sales will increase by 10% or 0.10. Discontinuing Catalog sales should increase company profits by: $ 11,000 Increased online sales CM (100,000 x 0.10 x 60,000 / 100,000) is $6,000 + $5,000 saved from stopping catalog sales = 11,000
Sleep tight manufactures pillows. The company incurred $42,000 of fixed manufacturing overhead cost this year. Variable unit product cost was $17. Variable selling and admin cost was $9 per unit and fixed selling and Admin expenses totaled $59,000. The company manufactured 28,000 pillows and sold 15,408. Total fixed expenses on the variable costing contribution format income statement equal: $________
Sleep tight manufactures pillows. The company incurred $42,000 of fixed manufacturing overhead cost this year. Variable unit product cost was $17. Variable selling and admin cost was $9 per unit and fixed selling and Admin expenses totaled $59,000. The company manufactured 28,000 pillows and sold 15,408. Total fixed expenses on the variable costing contribution format income statement equal: $ 101,000 42,000 + 59,000 = 101,000
Activity-based costing
Some manufacturing costs may be excluded from product costs when using
Strengths of Time-driven activity-based costing (TDABC):
Strengths of Time-driven activity-based costing (TDABC): *It is easy to update *It helps eliminate the financial impact of aligning capacity with demand *Employees do not have to self-report idle time
Equals units sold
Super-variable costing and Variable costing will: Report the same net operating income when units produced ______ units sold
Exceed units sold
Super-variable costing will have higher net operating income than variable costing when units produced: ________ units sold
The segment margin equals the segment's contribution margin less the segment's _____ Fixed Costs
TRACEABLE FIXED COSTS
Taking customer orders, processing orders and shipping orders are included In a ______-level cost pool
Taking customer orders, processing orders and shipping orders are included In a batch-level cost pool
The MOST common management reports using ABC data are: ______ Profitability and ______ Profitability
The MOST common management reports using ABC data are: Customer Profitability and Product Profitability
The activity rate for the Customer Orders activity pool is $20 per order. If there are 400 customer orders for a product, the total overhead cost assigned to this product for customer orders is $____
The activity rate for the Customer Orders activity pool is $20 per order. If there are 400 customer orders for a product, the total overhead cost assigned to this product for customer orders is $8,000 400 x 20 = 8000
Duration Driver
The amount of time required to perform an activity is measured by a _______ Driver
The customer orders cost pool uses 25% of indirect factory wages. If total indirect factory wages are $500,000 the amount allocated to this cost pool in the first-stage allocation is: $______
The customer orders cost pool uses 25% of indirect factory wages. If total indirect factory wages are $500,000 the amount allocated to this cost pool in the first-stage allocation is: $125,000 500,000 x 0.25 = 125,000
MACHINE HOURS
The most appropriate activity measure for a cost pool consisting of equipment depreciation and power to run machines is _______ _______
The most appropriate activity measure for a cost pool consisting of the costs of resources consumed taking and processing individual consumer sales is the number of:
The most appropriate activity measure for a cost pool consisting of the costs of resources consumed taking and processing individual consumer sales is the number of: Customer Orders
The most common reports prepared using ABC data are the product and _________ ________ _________
The most common reports prepared using ABC data are the product and customer Profitability reports
The most common reports prepared using ABC data are the product and customer _________ reports
The most common reports prepared using ABC data are the product and customer profitability reports
ABSORPTION COSTING and VARIABLE COSTING
The two general costing approaches used by manufacturing companies to prepare income statements are ________ Costing and ________ Costing
The unit product cost of a blender is $24. If 900 blenders are produced and 849 blenders are sold, the total cost of goods sold is $ _____
The unit product cost of a blender is $24. If 900 blenders are produced and 849 blenders are sold, the total cost of goods sold is $ 20,376 849 x 24 = 20,376
Time-driven activity-based costing (TDABC) performs _______ Analysis to evaluate employee idle time
Time-driven activity-based costing (TDABC) performs Capacity Analysis to evaluate employee idle time
Time-driven activity-based costing (TDABC):
Time-driven activity-based costing (TDABC): *Does Not assume employees will self-report idle time *Overcomes some important limitations of ABC (Does NOT require extensive interviews with employees)
Total estimate manufacturing overhead is $900,000 and total estimated activity is 30,000 machine-hours. The plantwide overhead rate is $__ per machine hour
Total estimate manufacturing overhead is $900,000 and total estimated activity is 30,000 machine-hours. The plantwide overhead rate is $ 30 per machine hour 900,000 / 30,000 = 30
What causes traditional and activity-based costing systems to report different product margins?
What causes traditional and activity-based costing systems to report different product margins? *Traditional costing systems allocate all of the manufacturing overhead costs to products using a volume-related allocation base *The ABC system assigns nonmanufacturing overhead costs to products on a cause and effect basis as appropriate *The traditional cost system allocate all manufacturing overhead costs to products
What is the total amount of indirect factory wages if the amount allocated to product design was $200,000 and product design consumes 40% of indirect factory wages? $_______
What is the total amount of indirect factory wages if the amount allocated to product design was $200,000 and product design consumes 40% of indirect factory wages? $500,000 200,000 / 0.4 = $ 500,000
Absorption Costing Method
When inventory increases, which costing method generally results in higher net income
When managers allocate organizational-sustaining and unused capacity costs to products:
When managers allocate organizational-sustaining and unused capacity costs to products: Costs will be overstated Incorrect decisions may be made (Product margins will be understated)
Which are inventoriable costs under super-variable costing?
Which are inventoriable costs under super-variable costing? * Variable overhead * Direct materials
Which might be included in a customer relations cost pool?
Which might be included in a customer relations cost pool? *Customer entertainment *Cost of sales calls (Customer orders and machine set ups are batch-level costs)
Variable Costing Income
is only affected by changes in unit sales. It is not affected by the number of units produced. As a general rule, when sales go up, net operating income goes up, and vice versa
Blink sells and manufactures frames for eyeglasses. The unit product cost for frame #47320 is $76.35. Last period, Blink produced 200 frames and sold 155 of them. Total COGS equals: $________
Blink sells and manufactures frames for eyeglasses. The unit product cost for frame #47320 is $76.35. Last period, Blink produced 200 frames and sold 155 of them. Total COGS equals: $ 11,834.25 76.35 x 155 = 11,834.25
Super-variable costing
ALL Direct Labor and Manufacturing Overhead is treated as fixed under:
Absorption costing and variable costing net operating will be equal when
Absorption costing and variable costing net operating income will be equal when: The number of units produced equals the number of units sold There is no beginning and no ending inventory
Bart's Inc. operates retail stores in various cities. Segmented income statements are prepared for each store and for each product line in each store. The property tax for the store is a _______ fixed cost for the store, and a _______ fixed cost for each product line sold in the store.
Bart's Inc. operates retail stores in various cities. Segmented income statements are prepared for each store and for each product line in each store. The property tax for the store is a Traceable fixed cost for the store, and a Common fixed cost for each product line sold in the store.
Comfy Cozy Chairs makes and sells rockers. Each rocker requires $45 of direct materials and $37 of direct labor. Variable manufacturing overhead amounts to $8 per unit and fixed manufacturing overhead totals $58,000. Variable selling and admin costs amont to $15 per unit and fixed selling and admin costs totaled $102,000. During the period, 2,000 rockers were produced and 1,640 were sold. The unit product cost using absorption coasting is: $___
Comfy Cozy Chairs makes and sells rockers. Each rocker requires $45 of direct materials and $37 of direct labor. Variable manufacturing overhead amounts to $8 per unit and fixed manufacturing overhead totals $58,000. Variable selling and admin costs amont to $15 per unit and fixed selling and admin costs totaled $102,000. During the period, 2,000 rockers were produced and 1,640 were sold. The unit product cost using absorption coasting is: $119 Unit product cost = 45 + 37 + 8 + (58,000 / 2,000) = 119
Contribution format Income Statement Order Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income
Contribution format Income Statement Order Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income
Contribution margin computed using super-variable costing will be HIGHER than the contribution margin computed using traditional variable costing
Contribution margin computed using super-variable costing will be ______ than the contribution margin computed using traditional variable costing
Are LESS than units sold
Super-variable costing will have lower net operating income than variable costing when units are produced: Are ________ than units sold
The first major step with implementing an ABC system is:
The first major step with implementing an ABC system is: identify the activities
Cost allocation
Cost allocation does not impact the net income of the company as a whole Inappropriately discontinuing segments can lead to common costs not being covered
Costs should be allocated to segments for internal decision-making purposes:
Costs should be allocated to segments for internal decision-making purposes: Only when the allocation base actually drives the cost being allocated
Customer cost analysis using time-driven activity-based costing (TDABC):
Customer cost analysis using time-driven activity-based costing (TDABC): *Used estimates based on practical capacity *Assists with measuring customer profitability
Customer-level activities include:
Customer-level activities include: *Mailing Catalogs *Sales Calls
Blissful Breeze manufactures and sales ceiling fans. Variable selling and admin expenses is $11.50 per fan and fixed selling and admin expense is $7,800 per month. If blissful Breeze produces 900 fans and sells 842 fans this month, total selling and admin expenses will be $______
Blissful Breeze manufactures and sales ceiling fans. Variable selling and admin expenses is $11.50 per fan and fixed selling and admin expense is $7,800 per month. If blissful Breeze produces 900 fans and sells 842 fans this month, total selling and admin expenses will be $ 17,483 842 x 11.5 +7,800 = 17,483