cost accounting test one
this is intended for future use and provides capacity for potential demand surges
unused capacity
advocates of throughput costing argue that
-only direct materials are truly variable -direct manu labor is relatively fixed -variable manu costs are period costs
includes fixed manufacturing overhead as an inventorial cost
absorption costing
sales volume variance using contriution margin
actual sales in units - budgeted sales in units * contribution margin per unit
to determine sales mix percentage
add budgeted sales in units use this as denominator and then put what ur looking for in units on numerator
the difference between operating incomes under variable costing and absorption costing centers on how to account for
both fixed manufacturing costs and variable manufacturing costs
these are demand based - based on the demand for the output of the plant
both master budget capitalization and normal capacity utilization
using a single cost pool, to divisions using one cost pool and then reallocating costs to products using multiple cost pools, using numerous individual cost pools
corporate overhead costs can be allocated by
costs incurred to process orders would MOST likely be classified as
customer batch level cost
categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the best cause and effect relationships
customer cost hierarchy
absorption costing is required in all of the following EXCEPT
determining a competitive selling price (so it is required for gaap, reporting to external shareholders, income tax reporting)
what is included in absorption costing?
direct labor, direct manu, variable manu, fixed MOH
costs that are inventoried when using variable costing
direct manufacturing costs, variable manufacturing costs (NOT marketing)
to allocate corporate costs to divisions, the allocation base used should
have the best cause and effect relationship with the costs
master budget capacity utilization
hides the amount of unused capacity
provides the lowest estimate of denominator level capacity
master budget capacity utilization
focuses on the demand side of production
master budget capitizalaton and normal capacity utilization
"expensed on the income statement"
means the units that were sold
all of the following are drawbacks of absorption costing EXCEPT
operating income solely reflects income from the sale of units and excludes the effects of manipulating production schedules
variable costing regards fixed manufacturing overhead as an
period cost
focuses on the supply side of production
practical and theoretical
reduces theoretical capacity for unavoidable operating interruptions
practical capacity
to provide information for encomium decisions to motivate managers and other employees to justify costs or compute reimbursement to measure income and assets for reporting to external parties
purposes of cost allocation
budgeted fixed manu costs of a product using practical capacity
represents the cost per unit of supplying capacity
to guide cost allocation decisions, the ability to bear criterion
results in subsidizing products that are not profitable
loss causing customers
should be evaluated for ways to become profitable customers
one possible means of determining the difference between operating incomes for absorption costing and variable costing is by
subtracting fixed MOH in beginning inventory from fixed MOH in ending inventory
an unfavorable production volume variance occurs when
the denominator level (the level at which the factory produces maximum possible)exceeds production
more insight into the static-budget-variance can be gained by subdividing it into
the flexible budget variance and the sales volume variance
more insight into the sales quantity variance can be gained by subdividing it into
the market share variance and the market size variance
the most likely reason for NOT allocating corporate costs to divisions include that
these costs are not controllable by division managers
ti improve customer profitability, companies should
track discounts by customer, and track discounts by sales person
