MNGL Acc exam 2
weighted average
Equivalent units of production equals the number of units transferred to the next department (or finished goods) plus equivalent units in ending WIP.
Equivalent units
# of partially completed units x % completion
Variable expense % + Contribution margin % must equal
100%
Target cost =
Anticipated selling price - desired profit
Constraint
Anything that prevents you from getting what you want
Value based pricing
Est by selling prices based on the economic worth of benefits their goods and services provide to customers
Allocating common __________ costs can make a product line look less profitable than it really is
Fixed
Target profit
Fixed expense + target / cm unit
Break even units
Fixed expenses / cm unit
Break even $
Fixed expenses / cm%
A processing department produces:
Identical or homogeneous units
A joint product should be processed after the slit off if the:
Incremental revenue after split off exceeds the incremental processing cost after split off
Margin of safety % formula
Margin of safety $ / actual sales
Marg of safety units
Margin of safety in dollars / sales price
When considering decision alternatives under differential Cost approach which costs are included
Only relevant costs
Product markup is generally expressed as an ___________ of a cost
Percent
Bottleneck
Process step on the flow diagram with the lowest capacity (weakest link)
Deciding what to do with a joint product at the split off point is a:
Sell or process further decision
Step-down method
Service department costs are allocated to both operating departments and some, but not all, service departments.
When comparing the FIFO method of computing equivalent units to the weighted average method:
The weighted avg method blends together work and costs from prior periods with the current period whereas FIFO separates the two periods
Joint products
Two or more products produced from a common input
Profit =
Unit cm x Q - Fixed expenses
Cost plus pricing
Uses a predetermined markup percentage applied to a cost base to determine the selling price
FIFO is considered better than the weighted-avg method because:
• current performance is based on current period costs • it provides more up to date cost data
Process costing used for products that are:
• different and produced continuously • similar and produced continuously • individual units produced to customers specifications
Target costing approach was developed because
• most of the products cost is determined in the design stage • the market really determines prices
FIFO method
Based costs solely on the costs and outputs from the current period
Under the FIFO method, which inventory balances are used in the calculation of equivalent units
Beg WIP Ending WIP
Degree of leverage
Cm / NOI
Contribution margin ratio
Cm / sales
Contribution margin ratio unit
Cm margin per unit / selling price per unit
What is a example of s process costing company
Coca-Cola Kelog's
Weighted avg method
Combined costs and outputs from the current and prior periods
With actual MOH and applied MOH which do you credit and which do you debit
Debit : actual MOH Credit: applied MOH
Conversation cost
Direct labor cost plus MOH