Accouting 2037 Exam 1

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Financial accounting

the purpose is to prepare financial statements for the general public

Contribution margin

total sales - total variable costs

Which of the following types of accounting has the least number of formal rules/regulations to follow?

Cost/Managerial Acc

Fixed Cost

a cost that does not increase proportionally wth icreases in volume over the relevant range

Indirect Cost

a cost that is difficult to efficiently trace to a product

Process Costing

a method for keeping track of large amts of homogenous units during manufacturing process

Contribution margin per unit

amount by which a products unit selling price exceeds its variable cost per unit selling price per unit - total variable cost per unit

Relevant range of operations

companies normal operating range, exlcludes extremely high and low volumes not likely to occur.

a company that makes which of the following types of products would be best suited for a job costing system: -custom kitchen cabinets -soda -paper clips -pretzels

custom kitchen cabinets

A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

debit wip inventory, credit raw materials inventory

Fixed costs per unit will _____ as volume increases

decrease the TOTAL amount of fixed costs does not change as volume changes

Wesson Company sold 10,000 units of its only product in the first half of the year. If sales increase by 12% in the second half of the year, which cost will increase?

direct materials

materials requisition

document that orders materials into production (into the WIP account)

The variable cost per unit (increases/decreases/does not change) as volume changes

does not change. Total amount of variable cost changes with level of production, variable cost per unit does not

break-even point can be expressed as sales in _____ or _____

dollars or units

factory overhead costs may include include (EXCEPT)

factory rent, manufacturing abilities, indirect labor costs NOT = selling costs

T/f; total variable costs decrease as the volume increases

falso

Production supervisors salary is an example of a ______ cost

fixed

break even point in units formula

fixed costs / contribution margin per unit

Conventional CVP analysis requires management to classify all costs as either _________ or ________ with respect to production or sales volume

fixed or variable

Tax Accounting

follows rules developed by the internal revenue code

Cost-volume-profit analysis helps managers predict...

how changes in costs and sales levels affect income

adjustment for overhead that is over or under allocated can occur

in finished goods, cogs, or wip

A hourly wage + commision is an example of a _____ cost

mixed

a _____ cost includes both fixed and variable components

mixed

In CVP analysis, the relevant range of operations is the _______ operating range for a business.

normal

Contribution margin ratio is the percent ....

of a units selling price that exceeds total unit variable cost. percent of each sales dollar that remains after deducting the unit variable cost. contribution margin per unit / selling price per unit

Downside of ABC

takes more time and costs more money

period costs for a manufacturing company flow directly to

the income statement as an expense

over allocated manufacturing overhead means

there were fewer actual overhead costs than we applied or allocated to jobs

T/F: the premise of ABC is that activities are what cause costs to be incurred

true

a fixed cost remains (changed/unchanged) in amount when the volume of activity varies from period to period within the relevant range

unchanged

Production line workers pay (hourly wage) is an example of a _______ cost

variable

a ____ cost changes in proportion to changes in volume of activity

variable

the overhead cost applied to a job during a period is recorded with a crdit to factory overhead and a debit to

wip inventory


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