Accouting 2037 Exam 1
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