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the segment margin is obtained by deducting the ___ fixed cost of a segment from the segments ____

traceable, CM

Absorption costing (def)

treats all manufactoring costs as product costs

the number of units produced does not affect NOI when using

varible costing

Cost volume profit analysis

we breka down costs of fixed and varible ----> easier to used varible costing

cost of a unit consists of

direct labor/mats and fixed and varible MOH

when using varible costing fixed moh is

expensed in the period incurred

the difference between reported net incoe on varible costing and absorption costing income statements is based on how

fixed oh is accounted for

a company with three segments has 10000 in common fixed expenses. all threee segments are at the break even point as a result the comany

has an overall NO loss of 10000

NOI under absorption costing is generally ____ net op income under varible costing in periods in which inventory increases

higher than

company wide break even sales will always be ___ the sum of the segment break even sales

higher than

Absorption costing

ignores varible and fixed distinctions

Absorption costing can lead managers to mistakenly believe that fixedMOH cost will ___ as the number of units produced increases

increases in total

A traceable fixed cost

is incurred bc of the existence of the segment

when inventory decreases cogs under absorption costing will be ___ cogs under varible costing

more then

Varible costing

only manufactoring costs that vary with output are treated as product costs EX direct mats/labor

Varible costing treats Fixed MOH as a

period cost

Fixed MOH is a

period cost and is reported as an expense each period

Varible fixed MOH is

period cost.. taken immediately to income statement as period expense

when allocatting MOH costs to units under absorption costing the total fixed OH costs must be divided by the number of units

produced

Absorption costing treats fixeed moh as a

product cost

a companies operations can be divided by product lines manufactoring plants which are known as

segments

when there is no change in inventory noi will be

the same under both absorption costing and varible costing

One mistake compaines make when preparing segmented income statements is arbitrarlly assigning ______ to segments

common fixed costs

Varible costing catagorizes expenses based on

cost behavior

segment margin

deducting traceable fixed costs of a segment from the segment's contribution margin

when inventory absorption costing noi is higher than varible costing net income due to the fixed MOH

deferred in the inventory account on the balence sheet

NOI often

differ

absorption costing is

-used by mostcompanies for internal and external reports _required by GAAP and IFRS

common fixed cost

A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments.

COGS does not contain

Fixed OH

units produced exceed units sold

NOI is higher in absorption than varible -bc domr fixed MOH is deffered

when units produced equals units sold

NOI would be the same

The 2 general costing approches used by manufactoring companies to prepare income statements are

Varible and absorption

Costs are seperated between varible and fixed expenses when using _____ costing, whereas ___ costing seperates costs between product and period

Varible, absorption

absorption fixed MOH is included in

WIP to FG only when units are sold do costs flow though income statement as COGS

traceable fixed cost

a fixed cost that is incurred because of the existence of the segment

Fixed MOH cost are expensed as units are sold as part of cogs under ______ costing and expensed in full with period costs under ______ costing

absorption varible

when using absorption costing and explaining changes in operating income fincacial staement users neeed to be aware of changes in

activity levels

allocates a portion of

both fixed and varible costs to each product


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