MNGL Acc exam 2

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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


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