ACIS 2116 CONCEPTS and FORMULA
TP analysis: Sales
(Fixed exp +TP) / CM ratio
TP analysis: units for target profit
(fixed exp + TP) / CM per unit
WIP journal entry
- Beg Wip +total MOH = Total Wip - ending wip = COGS manufac
BE in sales $
- Fx/CM ratio or - BE Units x selling price per unit
Moh accumulates ...
- actual VMOH - actual FMOH
If overapplied overhead, journal entry to dispose of it could include
- debit MOH - credit COGS - opposite is true for under applied
When and how is over or under applied OH calculated
- end of period - comparing actual MOH (recorded as debits incurred) to the applied overhead (reported as credits) .
MOS $:
Actual sales - break even sales
Margin of safety in units:
Actual units - BE units
Over or under applied OH is calculated by
Applied OH - Actual OH
CVP intersection of total sales line and toal profit =
BE Point
RM Journal entry
Beg raw m - +RM purch = rm available for use - ending rm = RM used in production
Total CM
CM per unit x Units Sold
Degree of operating leverage
CM/NOI
CM ratio =
CM/Sales = Sales - VC/ sales 0r total Cm/ total sales
conversion costs =
DL + MOH
MOH costs journal entry
DM + DL +AMOH
total job cost =
DM + DL + AMOH
COGS manufactured includes
DM + DL + AOH
WIP as a Balance sheet includes
DM costs, DL costs, and Applied MOH
T ACCOUNTS
Debit increases: assests, expenses Credits increases: Liabilits. equity, revenue
COGS is what type of account and where is it reported
Expense, and reported on income statement
Break even analysis in units
Fixed exp/CM per unit (vx - sales)
MOS %:
MOS/ Actual sales
Job order costing can be used by
Manufacturing and service companies
If company closes underpplied entirely to Cogs...
NOI will be lower than the NOI reported If company had closed it underapplied to WIP, FG, and COGS
Applied MOH =
POHR x ADLH
OH is applied by/ or Actual OH =
POHR x ADLH (AB)
Cost classifications used of rpreparing financial statements
Product and period costs
MOH accounts flow
RM -> WIP -> FG -> COGS
Main Inventory accounts on Balance sheet
Raw materials (DM/ID), WIP, and finished Good
Traditional Income statement format
Sales - COGS = Gross Margin - SGA = NOI NOI = sales - (COGs ) - SGA
Contribution Margin income statement format
Sales - Variable costs = CM Sales - VC - FC = NOI
Companies can close their MOH balances proportionally to
WIP, FG, and COGS exp - Never RM
absorption costing
assigns all manufacturing costs, both fixed and variable, to units of product.
FG journal entry, and cogs sold =
beg FG + COGS MANU - end FG = COGS
Cogs expense =
beg merch inventory + purchases - merch inventory
WIP journal entry, cogs MANUF =
beg wip + total MOH - end WIP
Overapplied is when ...
credits exceed debits in the MOH account - under applied is when debits exceed credits
POHR =
est total MOH (estm fixed MOH + (estm Variable MOH x ESt DLH )/ est DLH
period costs are recorded as..
expenses immediately incurred on income statement
Sucnk costs
happened in past, cannot be changes, have no impact on decison making (irrelevant)
Product costs are included in...
included in inventory (assets) as reported on balance assets
CM per Unit =
selling price per unit - VC cost per unit. which means CM not per unit has gotta be sales-VC
unit product cost =
total many costs (DM+DL+MOH)/Number of units produced
