BA6601 COMPREHENSIVE EXAMINATION Dr. Surasakdi Prugsamatz
|
|
- Amie Charles
- 6 years ago
- Views:
Transcription
1 Assumption University Graduate School of Business Guideline for Written Comprehensive Examination Professional MBA Evening Managerial Accounting (MA) Dr. Surasakdi Prugsamatz Part 1 TOPIC 1 : Classifications of Accounting: 1. Financial Accounting: to record business transactions in the books of accounts. 2. Cost Accounting: formal mechanism -costs of products or services are ascertained and controlled. 3. Management Accounting: use of accounting data collected for the purpose of policy formulation, planning, control, and decision making by the management. Cost Classification: 1. Product cost : Costs that are related to the finished products are called Product costs or unexpired costs. Characteristics of Product costs: a. It is treated as Assets. b. It is recorded as Inventory. Illustration : Merchandise Firm: Sales $75,000 Less cost of goods sold: Merchandise inventory Jan.1 $ 6,000 Add: Merchandise purchases 40,000 Total merchandise available for sale $46,000 Less: Merchandise inv. Dec.31 4,000 Cost of goods sold 42,000 Gross margin $33,000 Manufacturing Firm: Sales $75,000 Less cost of goods sold: Finished goods inventory Jan.1 $ 6,000 Add: Cost of goods manufactured 40,000 Total finished goods available for sales $46,000 Less: Finished goods inv. Dec.31 4,000 1
2 Cost of goods sold 42,000 Gross margin $33, Period costs : treated as expenses when incurred in the same period are called Period costs. Period costs are also called expired costs. Cost of goods sold, operating expenses. 3. Noninventorable unexpired costs: Costs that are treated as assets when incurred and become expenses when consumed but are not recorded as inventory are called noninventorable unexpired costs. Supplies, Prepaid rent, prepaid insurance. Characteristics: a. It is an asset. b. It is not an inventory. 4. Manufacturing costs. Manufacturing costs or production costs can be classified into: a. Raw materials: Direct materials refer to costs that can be traced or identified for one finished goods. Indirect materials: Costs that cannot be traced or difficult to trace them. b. Labor. Direct labor :costs that can be traced or identified for one finished goods. Indirect labor :costs which does not directly contribute to production. Idle time :the amount paid to workers for unproductive time. Overtime premium: amount paid in excess of normal rate. c. Factory Overhead: All manufacturing costs are classified as production costs except direct materials and direct labor. In order to control it, the management needs to set a yardstick or a benchmark for it under Traditional Costing System(TCS) which is known as standard factory overhead rate or estimated factory overhead rate, or pre-determined factory overhead rate, or a single plant-wide predetermined overhead rate. Therefore: Standard factory overhead rate is = Total estimated factory overhead costs * Selected appropriate activity base *Activity bases that are commonly used in the business consist of (Traditional system) 1. Direct labor hours worked. (DLH) 2. Direct labor costs. 2
3 3. Production volume. 4. Machine hours. 5. Prime cost and conversion costs Prime costs : They are the sum of direct materials and direct labor. Conversion costs: They are the sum of direct labor and factory overhead. Total costs = DM + DL + FOH = Prime costs + FOH = DM + Conversion costs 6. Incremental costs Incremental costs are also known as Differential costs. A differential cost is the amount by which the cost differs between two alternatives. 7. Average costs and Marginal costs Average cost per unit = Total cost of goods manufactured Number of units produced Marginal cost is the extra cost of production incurred when one more unit is produced. 8. APPRAISAL COSTS (Inspection costs ) --- Costs that are in curred to identify defective products before the products are shipped to customers. Example: Test and inspection of incoming materials Final product testing and inspection Maintenance of test equipment Supervision of testing and inspection activities 9. EXTERNAL FAILURE COSTS ---- Costs that are incurred when a product or service that is defective is delivered to a customer. Example: Warranty repairs and replacements Liability arising from legal action against a company Lost sales arising from a reputation for poor quality. 10 INTERNAL FAILURE COSTS ---- Costs that are incurred as a result of identifying defective products before they are shipped to customers. ( scrap, rejected products, reworking of defective units) Example: Re-inspection of reworked products Re-testing of reworked products Rework labor and overhead 11. PREVENTION COSTS --- Costs that are incurred to keep defects fro m occurring. Example: Systems development Quality training Quality engineering Quality circles 3
4 12. Cost Behavior Cost behavior can be classified into five common patterns namely: a. Variable costs(vc) b. Fixed cost(fc) c. Mixed cost (MC) d. Semi-fixed cost(step fixed cost) a. Variable cost (VC) Cost that changes in direct proportion to the activity but the cost per unit remains constant is called Variable cost. Characteristics: 1. Variable cost per unit (VCU)is constant. 2. Total variable cost(tvc) changes in direct proportion to the activity. b. Fixed cost Fixed costs are costs that do not change according to the level of activity but the fixed cost per unit changes inversely with the changes in volume of activity. Characteristics: 1. Total fixed cost(tfc) is constant. 2. Fixed cost per unit(f CU) changes invers ely with the changes in volume of activity. Committed fixed cos ts refer to costs that cannot be easily or quickly eliminated. Usually these costs incurred in maintaining the operating facilities and organization. Discretionary Fixed costs are costs that can be discontinued at management s discretion in a relatively short time in comparison with committed fixed costs. These costs directly reflect the top management policies and can be reduced or eliminated, if the circumstances so required. c. Mixed cost Mixed cost is the sum of total variable cost plus total fixed cost. VCU= Difference in costs Difference in activity Based on High-Low method: TFC = Total cost - Total variable cost vcu = Highest cost - Lowest cost Highest activity - Lowest activity TFC = Total costs - Total variable costs d. Semi- fixed cost 4
5 When there is an intermittent jump in the fixed cost is called semi-fixed cost. Range of activity Total fixed costs 1 unit 3,000 units $ 20,000 3,001 units - 5,000 units $25, units - 9,000 units $50,000 9,001 units - 14,000 units $120,000 RM Purchases = (LIST PRICE TRADE DISCOUNT) + freight-in PRA - PD RM used= RM BB + Net purchases RM EB RM USED = DM used+ IDM CGM = WIP INV. BEG. + DM USED + DL + FOH - WIP INV. EDING CGS = FG. Inventory beginning + CGM - FG. Inventory ending *inventory ending cost may be determined First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted average. Schedule of Cost of goods manufactured Raw materials inventory Jan. 1 $0 Purchases $122,000 Add: Freight-in 10,000 Less: Purchases return & allowances (20,000) Purchases discount (12,000) Net purchases $100,000 Total raw materials available for use $100,000 Less: Raw materials inventory Dec 31. $ 15,000 Total raw materials used (DM + IDM) $ 85,000 Direct materials (used) $ 75,000 Direct labor 90,000 Factory overhead: IDM $10,000 IDL 50,000 Others 36,000 96,000 Total manufacturing costs incurred $261,000 Add: Work-in-process inventory Jan.1 0 Less: Work-in-process inventory Dec.31 (61,000) Total cost of goods manufactured (CGM) $200,000 ABC Company Income Statement for the year ended December 31,1999. Sales $500,000 Less: sales return & allowance $23,000 sales discount 30,800 53,800 Net sales $446,200 Less: Cost of goods sold: Finished goods inventory Jan.1 $ 1,500 Add: Cost of goods manufactured 200,000 Total finished goods available for sale $201,500 5
6 Less: Finished goods inventory Dec ,000 Cost of goods sold $189,500 Gross margin $256,700 Less operating expenses: 167,700 Income before other items and tax $ 89,000 Add: Other income $-0- Less: Other expenses Income before tax $ 89,000 Less: Income tax 26,700 Net income $ 62,300 COST VOLUME PROFIT ANALYSIS (CVP) Objectives: to study target profit and break-even point. relationship or the trade-off between cost, volume, and profit. Costs refer to : Manufacturing costs : direct materials; direct labor; variable factory overhead; fixed factory overhead. Operating expenses: variable selling and administrative expenses; fixed selling and administrative expenses. Variable costs: DM; DL; V.FOH; V. Selling and administrative expenses. Fixed cost: F. FOH; F. selling and administrative expenses. Volume refers to: 1. Sales volume in units. 2. Total sales value. Target profit : profit earned before taxes. PBT = NI 1 - tax rate Tax rate = Tax amount PBT Break-even point: BEP is a point where there is no profit no loss. 6
7 It is considered as an indicator as it helps the management to avoid loss operation. Equation method: TOTAL REVENUE = TOTAL VARIABLE EXP. + TOTAL FIXED EXP Contribution Margin (CM) method: CM = total sales - total variable expenses. CM is the profit earned before deducting all fixed expenses. All fixed expenses are treated as period costs(expired). Fixed expenses cannot become product costs in any circumstances or conditions. Produced and sold all Produced and sold some all FC become expenses Produced and sold nothing Therefore: 1. if TCM = TFC, it is at BEP. 2. if TCM > TFC, it is a profit. 3. if TCM <TFC, it is a loss. Formula: Per unit: CMU = SP - VCU CM% = SP - VCU x 100 SP = CMU x 100 SP VC% = VCU x 100 TOTAL: SP TCM = Total Sales - Total Variable costs CM% = TS - TVC X 100 TS = TCM X 100 TS VC% = TVC X 100 TS ****CMU = Difference in net income 7
8 Equation Method: Difference in activity Total Sales - TVC - TFC = PBT Contribution Margin method X = Total fixed expenses + PBT CMU $ (Bahts) sales: X = Total fixed expenses + PBT CM% Margin of Safety (MS) MS is the excess of budgeted (or actual) sales over the break-even volume of sales. It indicates the amount by which sales can drop before losses begin to incur. The margin of safety can be expressed in amount and in percentage. M/S in amount = Total sales - Total break-even sales M/s in percentage = Total sales - Total break-even sales Total sales Operating Leverage(OL) Leverage explains how one is able to achieve a large increase in profits with only a small increase in sales and/or assets. OL refers to the ability of the firm to generate an increase in net income when sales revenue increases. It is a measure of the use of fixed costs in an organization. OL is high in companies that have a high proportion of fixed costs in relation to variable costs and the profit will be very sensitive to changes in sales. OLF = Contribution Margin Net Income Sales Mix Sales mix refers to the relative proporti on in which a company s products are sold. OVERALL VC% = OVERALL VARIABLE 8
9 OVERALL SALES OVERALL CM% = OVERALL CM OVERALL SALES Units sold: Weighted average CMU = (cmu of A x SMR of A) + (cmu of B x SMR of B) + BEP = Fixed expenses Weighted average CMU Therefore: Units sold of product A at BEP = SMR of A x BEP units Units sold of product B at BEP = SMR of B x BEP units Dollars( bahts) sales: Overall CM% = Total overall CM Total overall sales BEP in amount = Fixed expenses Overall CM ratio CVP Analysis ( under ABSORPTION COSTING) BEP = TFC + Profit + (Qs- Qp) x fixed OH rate CMU.. 9
10 Activity-based-costing System. (ABC) ABC is a cost planning system. It identifies the activities and the cost of the resources needed to perform. It then assigns the cost of the activities to product or service that uses them. It has been designed to show the relationship between the company's activities and the resources needed to carry them out. It concentrates on the activities rather than the costs. It focuses on indirect costs especially factory overhead costs. As a result, managers can identify the greatest value added activities for efficient productions and eliminate the non-value added activities. Comparison of Conventional and Activity- Based Costing System Conventional Costing System 1. Single unit based cost driver Activity Based Costing System 1. Multiple unit and Non unit based driver 2. Tracing Intensive 2. Allocation Intensive 3. Narrow and Rigid Product Costing 4. Managing cost 5. Inadequate Information 3. Boarder and Flexible Product Costing 4. Managing Activities 5. Detailed Activity Information 6. Financial and Non-Financial Measure of Performance 6. Financial Measure of Performance 10
11 Step 1 : Identify Activity 1. Developing test programs 2. Making test cards 3. Inserting circuit 4. Testing products 5. Engineering design 6. Handling materials 7. Setting up batches 8. Purchasing materials 9. Receiving materials 1O. Paying suppliers 11. Providing utilities 12. Cleaning space Step 2 : Assigned cost to the activity Activity Budgeted Activity Cost(USD) 1. Developing test programs 300,000 11
12 2. Making test cards 3. Inserting circuit 4. Testing products 5. Engineering design 6. Handling materials 7. Setting up batches 8. Purchasing materials 9. Receiving materials 10. Paying suppliers 11. Providing utilities 12. Cleaning space 160, , , ,000 90, , , , ,000 20,000 10,000 Step 3 : Activity Level Classification Product Forming Process Procurement Process Sustaining Process Unit level activities: Inserting circuit 225,000* Testing products 275,000 Batch level activities: Setting up batches 120,000 Handling materials 90,000 Product level activities: Developing test programs 300,000 Making test cards 160,000 Engineering design 130,000 Batch level activities: Purchasing materials 200,000 Receiving materials 320,000 Product level activities: Paying suppliers 180,000 Facility-level activities: Providing utilities 20,000 Cleaning space 10,000 Step 4: Cost Driver Classification Activity Level Activity Driver Activity Cost Product Forming Process Unit level activities: Pool 1: 12
13 Inserting circuit Numbcr of circuits $ 225,000 Testing products Number of circuits 275, * Batch level activities: Pool 2: Setting up batches Number of batches 120,000 Handling materials Number of batches 90, ,000* Product level activities: Pool 3: Developing test programs Number of products Making test cards Number of products ,000 Pool 4: Engineering design Number of change orders 130,000* Activity Level Activity Driver Activity Cost Procurement Process Batch level activities: Pool 5: Purchasing materials Number of purchase orders Receiving materials Number of purchase orders 200, , ,000* Product level activities: Pool 6: Paying suppliers Number of parts 180,000* Sustaining Process Facility-level activities: Pool 7: Providing utilities Direct labor hours 20,000 Cleaning space Direct labor hours 10,000 30,000* Step 5: Identify the total cost driver volume(3 products) as a whole and as an individual (one product= M1). Cost Driver Total Cost Driver Volume M1; M2;M3 Cost Driver Volume for M1* 13
14 Number of circuits Number of batches Number of products Number of change orders Number of purchase orders Number of parts Direct labor hours 30, ,000 Inserting 4,000 Testing 2, Paying Supplier 10 Providing Utilities 1,800 Cleaning Space 600 *M1 is one of the company s product lines = 1,000 units. Product Forming Process Unit level activities: Pool 1: Inserting circuit ( Numbcr of circuits) $225,000 Testing products ( Number of circuits) 275, * Pool rate = $500,000 / 30,000 circuits = $ / circuit Pool cost : Inserting circuit = 4000 circuits x $ = $66667 Testing products = 2000 circuits x $ = $ Pool cost /unit = $ 100,000 / 1000 units =$ 100 / unit Pool 2 Setting up batches (Numbcr of batches) $120,000 Handling materials (Number of batches) 90, * Pool rate = $210,000 / 15 batches = $ 14,000 / batch Pool cost = 4 batches x $14,000/ batch = $56,000 Pool cost /unit = $ 56,000 / 1000 units =$ 56 / unit Pool 3: Developing test programs Number of products $ Making test cards Number of products $ 460,000* Pool rate = $460,000 / 3 products = $ 153,333 / product Pool cost : = 1 product x $ = $ Pool cost /unit = $153,333 / 1000 units =$ / unit 14
15 Pool 4: Engineering design Number of change orders 130,000* Pool rate = $130,000 / 13 orders = $10000 / order Pool cost : Engineering design = 0 order x $10000 = $0 Pool cost /unit = $0 / 1000 units =$ 0 / unit Pool 5 Purchasing materials Number of purchase orders 200,000 Receiving materials Number of purchase orders 320, ,000* Pool rate = $520,000 / 80 orders = $ 6500 / order Pool cost : = 10 orders x $6500 = $65000 Pool cost /unit = $65,000/ 1000 units =$ 65 / unit Pool 6 Paying suppliers Number of parts 180,000* Pool rate = $ / 50 orders = $3600 / order Pool cost : Paying supplier= 10 orders x $3600 = $36000 Pool cost /unit = $36,000 / 1000 units =$ 36 / unit Pool 7 Providing utilities Direct labor hours 20,000 Cleaning space Direct labor hours 10,000 30,000* Pool rate = $30,000 / hours = $ 2 / hour Pool cost : Providing utilities = 1800 hours x $2 = $3600 Cleaning space = 600 hours x $ 2 = $1200 Pool cost /unit = $4800 / 1000 units =$ 4.8 / unit Therefore, overhead cost per one unit of M1 is = $ ACTIVITY-BASED MANAGEMENT (ABM) ABM = ABC + VALUE ADDED ACTIVITES Objectives of Activity-based Management To improve the performance of processes, activities, and measurement system. 15
16 To select and examine those key activity work processes critical to the success of the organization. Activities are defined, analyzed, and cost to determine the situation. To monitor the result of improvement initiatives. To provide the feedback necessary sustains improvement initiatives. To evaluate outsourcing of activities To effect strategy deployment. To determine value-added and non-value-added activity cost. To cut cost / downsize or restructures operations. To budget and support the expected sales volume or other requirements of the business. To determine and optimize activity capacity of each key and significant activity performed. To isolate / eliminate cost driver To estimate / bid on customer work to meet the customer s requirement would be identified first. Benefit of Activity-Based Management Enhance efficiency. I ncrease the efficiency of your o rganization s resources by using operational ABM. Lower costs. One way to lower costs is to consolidate purchasing. Enhance asset usage. Leverage your equipment and people to get better usage of their talents. Improve or eliminate faulty activiti es or processes. Look at the speed at which a purchased product can get to your members. Eliminate unprofitable products / services. Expand demand of profitable products and services. Choose suppliers that are low-cost, not just low-price. Activity-Based Management is co mmon sense, systematic method of planning controlling and improving labor and overheard cost. ABM s purpose is to control co sts and profits for a project a nd activity Weaknesses of Activity-based Management Time consuming. To implement an ABM system will be wasted if no one uses or takes action on the information provided The value and benefit of ABM can be difficult to quantify. 16
17 SPECIAL DECISION: 2 alternatives non-recurring (less frequent occurance) short term decision: Management needs INFORMATION: QUANTITATIVE (OBJECTIVE)******* QUALATATIVE (SUBJECTIVE)***GIVEN*** There TWO types of information namely: RELEVANT COSTS INFORMATION (RC) IRRELEVANT COSTS INFORMATION (IRC) RELEVANT COST (RC): Characteristics: 1. It must be related to the future events. 2. It should differ among alternatives. Example: AVOIDABLE COST OPPORTUNITY COST IRRELEVANT COST(IRC): Characteristics: 1. It is related to the past or the present events. 2. It is the same among alternatives. Example: Sunk cost, unavoidable cost, capacity cost, allocated cost (joint costs), committed costs. COSTS: VC (VCU is constant) AND FC (TFC is constant) UNDER NORMAL CONDITIONS: 17
18 TVC are classified as RC. TFC are classified as IRC. Exception: TVC will become IRC when TVC remain constant. TFC will become RC when TFC change. TYPES OF DECISION MAKING: 1. MAKE OR BUY DECISION. 2. SPECIAL ORDER DECISION. 3. JOINT PRODUCTS DECISION. 4. ADD OR DROP DECISION. 5. Profit maximization through capacity utilization 1. MAKE OR BUY DECISION: Make or b uy decision refers to the parts or components of a finished product. The final decision depends upon the COST SAVING. The alternative that yield the highest cost saving will be selected. COST OF INDIFFERENT POINT: COST OF MAKE = COST OF BUY 2. SPECIAL ORDER DECISION: Management will decide whether to accept or to reject the special order or not, depends upon : Profit earned from the special order. Adequate of idle capacity. Characteristics: 1. One time potential buyer in large quantity. 2. Will not affect the regular market. 3. It s not for reselling. It is meant for personal use. 4. Price requested by potential buyer w ill be much low er than the curren t normal selling price.(price OFFERED) STEP 1: Relevant VC CMU = Price offered - (DM +DL + V.FOH + V. Operating) = $ = $ STEP 2: TCM = CMU x Special order quantity = $ x units = $ STEP 3 PROFIT = TCM - Relevant TFC = $ - $ = $ 18
19 3. JOINT PRODUCTS DECISION: When 2 or more prod ucts are produced simultaneously in a single process, we called it as JOINT PRODUCTS. SPLIT OFF POINT is a point where the individual product can be identified. JOINT COSTS (common costs or combine d costs) ---refer to co sts that are incurred for 2 or more products that produced simultaneously in a single process. SEPARABLE COSTS refer to additional costs incurred for processing the individual product further. Product Sell at SOP Sell after SOP Profit= Sales - SC Profit = Sales SC C (at sop) Profit after joint cost = gross profit Separable cost = variable CGS Joint costs = fixed CGS = IRC JOINT COSTS ALLOCATION: (based on production volume) 1. PHYSICAL (production) UNITS METHOD: A : B : C 7000 UNITS : 5000 UNTIS : 8000 UNITS(production) 7 : 5 : 8 A s JC = 7/20 x $220,000 = $77,000 B s JC = 5/20 x $220,000 = $55,000 C s JC = 8/20 x $220,000 = $88, Relative sales value (of production vol ume) at split off point: (production volume x sp) A : B : C 7000 UNITS x $20 : 5000 UNTIS x $12 : 8000 UNITS x $16 =$ 140,000 =$60,000 = $128, : 60 : 128 A s JC = 140/328 x $220,000 = $ 93,902.4 B s JC = 60/ 328 x $220,000 = $40,243.9 C s JC = 128/ 328 x $220,000 = $85,
20 4. ADD OR DROP DECISION: As consumers change their preferences, the business firms have to decide whether to add or to drop a product or product line. The management s decisio n depend upon the profit of the company w hich can be det ermined by determine an income statement contribution margin approach. Note: 1. If TCM is positive Don t drop or Add 2. If TCM is negative -----Drop or Don t Add 3. If I/S is profit Add or Don t drop 4. If I/S is loss and if TCM > Relevant TFC Don t drop 5. If I/S is loss and if TCM < Relevant TFC-----Drop 5. Profit maximization through utilization of capacity decision Normally the capacity of any organization is limited. Therefore management needs to determine alternatives that can yield the maximum profit with limited capacity. Ex 1: Total capacity available = 10,000 mh. Company can utilized the capacity to produce either Product A, B, or C. Product A Product B Product C Selling price $15 $23 $30 DM $4 $5 $6 DL V.FOH Total VCU $9 $18 $21 DMH per unit 1 hour 2 hours 3 hours Product A Product B Product C CMU 15-9= $6 $23 18= $5 $30-21= $9 CM/hr. $6/1hr= $6 $5/ 2hrs. = $2.50 $9/ 3hrs.= $3 FEXIBLE BUDGET AND VARIANCE ANALYSIS Characteristic of Performance report: a. Report must be prepared according to the assigned responsibilities and authority. b. Clearly differentiated between controllable and noncontrollable items for fair measurement. c. Timely report. d. Comparison of actual results and planned results. Current period Year-to-date Costs Actual Budget Variance Actual Budget Variance 20
21 DM DL V.FOH F. FOH Total Standard Cost Standard costing is a technique of cost accounting which compares the standard cost of each product or service with actual cost in order to determine the efficiency of the operation and any remedial action may be taken immediately. The purpose of setting Standard costs is for controlling costs, pricing decision, performance appraisal, cost awareness, and management by objective. So the current attainable standard can be determined by using previous period actual result + adjustments required and can be subdivided into standard quantity and standard price. Flexible Budget Performance Report Actual Flexible Budget Variance Production 1,200 units 1,200 units ---- Direct Materials Direct labor FOH Analysis of Budget Variances APV x actual DM used/unit x actual DM price/lb 1,200 units x 4.2 lbs x $4.90/lb =$24,696 FBPV x Std DM used/unit x std DM price/lb 1,200 units x 4lb x $5/lb = $24,000 =$696 U Advantages of Variance Analysis: 1. Aid in inventory costing. 2. Assist in decision making. 3. Selling price formulation based on what costs should be. 4. Aid in coordinating by having all departments focus on common goals. 5. Set and evaluate enterprise objectives. 6. Cost control and performance evaluation by comparing actual to budgeted figures. 21
22 7. Highlight problem areas through the management by exception principle. 8. Pinpoint responsibility for undesirable performance so that corrective action may be taken. 9. Act in motivating employees to accomplish predetermined goals. 10. Facilitate communication within the organization such as between top management and supervisors. 11. Assist in planning by forecasting needs such as cash requirements. 12. Establish bid prices on contracts. 13. Simplify bookkeeping procedures by keeping the records at standard costs. Direct material Variance (DMV) 1. Direct material price variance (DMPV) DMPV = (Actual price x Actual DM qty purchased) - ( Standard Price x Actual DM qty purchased) 2. Direct material quantity (efficiency) variance(dmqv) Actual DM qty used = Actual level of activity x Actual DM qty used per unit Standard DM qty used = Flexible budget level of activity x Standard DM qty used per unit DMQV=(Actual qty used x Standard price) - (Standard qty used x Standard price) Therefore : DMV = DMPV + DMQV Reasons for material price and quantity variances: 1. Overstated price paid. 2. Failure to take discounts. 3. Improper specifications. 4. Use of a lower grade material purchased to economize on price. 5. Uneconomical size of purchase orders. 6. Failure to obtain an adequate supply of a needed variety. 22
23 7. Purchase at an irregular time or sudden and unexpected purchase required. 8. Poor mix of materials, poorly trained workers, improper adjusted machines. 9. Substitute of nonstandard materials, poor product design or production technique. 10. Lack of proper tools or machines, carelessness in not returning excess materials to storeroom, unexpected changes in volume. 11. Failure to detect defective goods. 12. Inefficient labor, poor supervision, or waste on the production line. 13. Inaccurate standard price. 14. Excessive transportation charges or too small a quantity purchased. 15. Insufficient quantity bought because of a lack of funds. Direct Labor Variance (DLV) 1. Direct Labor Rate Variance (DLRV) AH = Actual level of activity x Actual direct labor hour per unit SH = F.B. level of activity x Standard direct labor hour per unit BH = M.B. level of activity x Standard direct labor hour per unit DLRV =(Actual DL rate/ hour x AH) - (Std DL rate/ hour x AH) 2. Direct Labor Usage(Efficiency) Variance (DLUV) DLUV = (AH x Std DL rate/ hr) - ( SH x Std DL rate/ hr) Therefore: Total DLV = DLRV + DLUV Reasons for Direct labor rate and usage variances: 1. Increase in wages. 2. Poor scheduling of production resulting in overtime work. 3. Use of workers commanding higher hourly rates than expected. 4. Poor supervision. 5. Use of unskilled workers paid lower rates or the wrong mixture of labor for a given job. 6. Use of poor quality machinery. 7. Improperly trained workers. 8. Poor quality of materials requiring more labor time in processing. 9. Machine breakdowns. 10. Employee unrest. 11. Production delays due to power failure. 12. Use of overpaid or excess number of workers. 13. Overtime and poor scheduling of production. Variable Factory Overhead Variance (VFOH. V) 23
24 1. Variable factory overhead spending variance (VFOH. SV.) VFOH. SV. = Total actual VFOH paid - ( AH x Std VFOH rate/ hr) 2. Variable factory overhead efficiency variance (VFOH. EV.) VFOH. EV. = (AH x Std VFOH rate/hr) - (SH x Std VFOH rate/hr) *Std VFOH rate/hr applied = Total VFOH cost budget MBPV x Std dl hr/unit Controllable (Budget) Variance Total Budget variance = VFOH. SV. + VFOH. EV. 3. V. factory overhead volume (denominator) variance (VFOH. VV.) VFOH. VV. = (Std VFOH rate/hr based on FB.) - (Std VFOH rate/hr applied MB. ) x SH =(Std VFOH rate/hr x SH) - (Std VFOH rate/hr x SH) Total VFOH variance = VFOH. SV. + VFOH.EV. + VFOH.VV. Fixed Factory Overhead Variance (FFOH.V) 1. Fixed factory overhead spending variance (FFOH.SV.) total actual direct labor hour. FFOH.SV.= Total actual FFOH costs - Total FB.FFOH costs based on AH 2. Fixed factory overhead efficiency variance (FFOH. EV) FFOH. EV. = FB.FFOH. based on AH - FB.FFOH. based on SH = Zero 3. Fixed factory overhead volume(denominator) variance (FFOH.VV) *Std FFOH rate/hr applied = Total FFOH cost budget MBPV td DLH/ x S unit F.FOH VV. = F.FOH BUDGET ( SH x Std F.FOH rate per hour) 24
25 Reasons for factory overhead spending, efficiency and volume variances: 1. Buying the wrong size plant. 2. Improper scheduling. 3. Insufficient orders. 4. Shortages in material. 5. Machinery failure. 6. Long operating time. 7. Inadequately trained workers. $%$%$%$%$%$%$%$ 25
Chapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationChapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationChapter 2--Cost Terminology and Cost Behaviors
Chapter 2--Cost Terminology and Cost Behaviors TRUE/FALSE 1. A cost object is anything for which management wants to collect or accumulate costs. ANS: T PTS: 1 DIF: Easy OBJ: 2-1 2. A production plant
More informationCHAPTER ONE: OVEVIEW OF MANAGERIAL ACCOUNTING
CHAPTER ONE: OVEVIEW OF MANAGERIAL ACCOUNTING The Basic Objectives of Accounting Basic objective of accounting is to provide stakeholders with useful information about a business enterprise in order to
More informationCost Accounting. Multiple Choice Questions:
Multiple Choice Questions: 1- The Value Chain a- Involves external companies as well as internal activities. b- Is the sequence of business functions in which customer usefulness is added to products or
More informationCHAPTER THREE: COST VOLUME PROFIT ANALYSIS (PART TWO)
CHAPTER THREE: COST VOLUME PROFIT ANALYSIS (PART TWO) Margin of Safety Margin of safety: o Excess of budgeted (or actual) sales over the break even volume of sales o Amount by which sales can drop before
More informationMona Loa Malaysian Manufacturing cost per bag... $6.00 $5.00 Add markup at 30% Selling price per bag... $7.80 $6.50
Case 8-24 1. a. The predetermined overhead rate would be computed as follows: Expected manufacturing overhead cost $3,000,000 = Estimated direct labour-hours 50,000 DLHs =$60 per DLH b. The unit product
More informationCost Behavior. Material Cost: Direct material: 1. seen in the final product 2. economic/visible to trace Indirect Material:
1 Chapter 2 Introduction to Cost Terms and Purposes Cost A cost is the value of economic resources (e.g., money) sacrificed or used up to achieve a particular objective (e.g., produce a product or perform
More informationChapter 1 Info Systems and Relevant info in Management Decision Making
Chapter 1 Info Systems and Relevant info in Management Decision Making Cost accounting: involves the process of tracking, recording, analyzing and determining the cost of an organization s project, process
More informationChapter 2 Cost Terms, Concepts, and Classifications
Multiple Choice Questions 16. Indirect labor is a part of: A) Prime cost. B) Conversion cost. C) Period cost. D) Nonmanufacturing cost. Answer: B Level: Medium LO: 1,2 Source: CPA, adapted 17. The cost
More informationChapter 02 Cost Terminology and Cost Behaviors. Lecture Outline. LO.1 Why are costs associated with a cost object? A. Introduction
Solution Manual for Cost Accounting Foundations and Evolutions 8th Edition by Kinney and Raiborn Link full download of Solution Manual: https://digitalcontentmarket.org/download/solution-manual-for-costaccounting-foundations-and-evolutions-8th-edition-by-kinney-and-raiborn/
More informationCOST AND MANAGEMENT ACCOUNTING
EXECUTIVE PROGRAMME COST AND MANAGEMENT ACCOUNTING SAMPLE TEST PAPER (This test paper is for practice and self study only and not to be sent to the institute) Time allowed: 3 hours Maximum marks : 100
More informationWhich of the following is correct? Select correct option: Units sold=opening finished goods units + Units produced Closing finished goods units Units
Which of the following is correct? Units sold=opening finished goods units + Units produced Closing finished goods units Units Sold = Units produced + Closing finished goods units - Opening finished goods
More informationAGENDA: JOB-ORDER COSTING
TM 3-1 AGENDA: JOB-ORDER COSTING A. The documents in a job-order costing system. 1. Materials requisition form. 2. Direct labor time ticket. 3. Job cost sheet. B. Applying overhead using a predetermined
More informationFull file at
Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice made to acquire it. True False 2. An expense is an expired cost matched with revenues in a specific
More informationFull file at
Chapter 2 Cost Concepts and Behavior rue/false Questions F 1. he cost of an item is the sacrifice made to acquire it. Answer: rue Difficulty: Simple Learning Objective: 1 F 2. A cost can either be an asset
More informationCOST C O S T COST 1/12/2011
Chapter 3 COST CONCEPT AND DESIGN ECONOMICS C O S T Ir. Haery Sihombing/IP Pensyarah Fakulti Kejuruteraan Pembuatan Universiti Teknologi Malaysia Melaka COST Cost is not a simple concept. It is important
More informationCOST OF GOODS MANUFACTURED & SOLD STATEMENT
COST OF GOODS MANUFACTURED & SOLD STATEMENT In order to understand the financial and cost statement of a concern we should clear about the procedure adopted by trading concern and manufacturing concern
More information1. The cost of an item is the sacrifice of resources made to acquire it. 2. An expense is a cost charged against revenue in an accounting period.
Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice of resources made to acquire it. True False 2. An expense is a cost charged against revenue in an accounting
More information1). Fixed cost per unit decreases when:
1). Fixed cost per unit decreases when: a. Production volume increases. b. Production volume decreases. c. Variable cost per unit decreases. d. Variable cost per unit increases. 2). Prime cost + Factory
More informationInventory Cost Accounting Tips and Tricks. Nick Bergamo, Senior Manager Linda Pei, Senior Manager
1 Inventory Cost Accounting Tips and Tricks Nick Bergamo, Senior Manager Linda Pei, Senior Manager 2 Disclaimer The material appearing in this presentation is for informational purposes only and is not
More informationANIL SHARMA S CLASSES
ANIL SHARMA S CLASSES {Marks: 100} (COSTING PAPER-FULL) {Time: 3 Hours} ----------------------------------------------------------------------------------------------------- Q-1: What is meant by cost
More informationCOST C O S T COST. Cost is not a simple concept. It is important to distinguish between four different types - fixed,, variable, average and marginal.
Ir. Haery Sihombing/IP Pensyarah Fakulti Kejuruteraan Pembuatan Universiti Teknologi Malaysia Melaka Chapter 3 DIRECT COST Chapter 4 INDIRECT COSTS C O S T COST Cost is not a simple concept. It is important
More informationACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems
Page 1 ACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems This is an independent effort. Do your own work! The ACE tutors and the SI may not assist you on this sample exam prior
More informationQuestion Paper Accounting For Decision Making - II (MB2D2): January 2009
Question Paper Accounting For Decision Making - II (MB2D2): January 2009 1. Prime cost plus variable overheads is Answer all 70 questions. Marks are indicated against each question. Total Marks : 100 Total
More informationFull file at
Full file at https://fratstock.eu Chapter 2 Job-Order Costing and Modern Manufacturing Practices QUESTIONS 1. Manufacturers need product costing systems in order to measure and record the cost of manufactured
More informationChapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows
Chapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?
More information532 Principles of Cost Accounting
GLOSSARY A Absorption (or full) costing. A method of accounting for manufacturing costs that charges both fixed and variable costs to the product. Account analysis method. See Observation method. Accounting
More informationCOST ACCOUNTING QUESTION ONE
QUESTION ONE COST ACCOUNTING a) Briefly explain the term limiting factor A limiting factor is a binding constraint upon the organization. It prevents indefinite expansion or unlimited profits. It may be
More informationFull file at
CHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS QUESTIONS 1. The term cost is used to refer to so many different concepts that an adjective must be attached to identify which particular type of cost is being
More informationTHE PROFESSIONALS ACADEMY OF COMMERCE Mock Exam, Summer-2015 Management Accounting (Solution)
THE PROFESSIONALS ACADEMY OF COMMERCE Mock Exam, Summer-2015 Management Accounting (Solution) Answer to Q-1 Minimum price for making 500 units of AK 100 Materials: Rs. X (500 units 4kg) Rs.8 16,000 Y (500
More informationChapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows
Chapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?
More informationOf the following manufacturing operations, which is the best suited to the utilization of a job order system?
Current Quiz MGT 402 Solved by Atif Ghafoor For more help contact with at (ofakatif@yahoo.com) Page 1 Of the following manufacturing operations, which is the best suited to the utilization of a job order
More informationA325 Exam 1 review Spring, 2010
A325 Exam 1 review Spring, 2010 The exam is seven problems (each with subsidiary questions) and you have ONE HOUR AND FIFTEEN minutes (1:15) to complete it. You are permitted to bring one page of notes
More information2. Standard costs imply a) Predetermined cost for a period b) Incurred cost c) Conversion cost d) Incremental cost
QUESTION BANK PAPER: COST ACCOUNTING COURSE: B.Com (Semester IV) MCQs 1. The basic objective of cost accounting is a) Recording of cost b) Reporting of cost c) Cost control d) EarningProfit 2. Standard
More informationFull file at
Full file at https://fratstock.eu CHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS QUESTIONS 1. The term cost is used to refer to so many different concepts that an adjective must be attached to identify
More informationDecision Making Using Cost Concepts and CVP Analysis
2 Decision Making Using Cost Concepts and CVP Analysis Question 1 Panchwati Cement Ltd. produces 43 grade cement for which the company has an assured market. The output for 2004 has been budgeted at 1,80,000
More informationBasic Cost Management Concepts. M. En C. Eduardo Bustos as
Basic Cost Management Concepts M. En C. Eduardo Bustos Farías as 1 Objectives 1. Explain what is meant by the word "cost." 2. Distinguish among product costs, period costs,, and expenses. 3. Describe the
More informationTime: 60 Minutes Record : 10 Skill Test : 20 Total Marks : 30 Note: Problems are to be solved by using computers (Excel or any accounting package).
Computer Lab - Practical Question Bank FACULTY OF COMMERCE, OSMANIA UNIVERSITY ----------------------------------------------------------------------------------------------------- B.Com (General) III
More informationCOMM 294 FINAL REVIEW SESSION QUESTIONS
COMM 294 FINAL REVIEW SESSION QUESTIONS BY LINH VO TABLE OF CONTENT I. Introduction II. Budgeting (Chap. 9) III. Standard Costing, Operational Performance Measure (Chap. 10) --------------BREAK--------------
More informationChapter 2--Cost Terminology and Cost Behaviors
Chapter 2--Cost Terminology and Cost Behaviors Student: 1. A cost object is anything for which management wants to collect or accumulate costs. 2. A production plant could be a cost object. 3. A specific
More informationInstitute of Certified Management Accountants of Sri Lanka Operational Level November 2015 Examination
Copyright Reserved Serial No Institute of Certified Management Accountants of Sri Lanka Operational Level November 2015 Examination Examination Date : 21 st November 2015 Number of Pages : 06 Examination
More informationChapter 2. Job Order Costing and Analysis QUESTIONS
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More informationInstitute of Certified Management Accountants of Sri Lanka Operational Level November 2018 Examination. Management Accounting (MA / OL 1-201)
Copyright Reserved Serial No Institute of Certified Management Accountants of Sri Lanka Operational Level November 2018 Examination Examination Date : 17 th November 2018 Number of Pages : 06 Examination
More informationMGT402 Cost and management accounting. All online solved quiz by Fahid Mehmood (22/2/2014)
MGT402 Cost and management accounting All online solved quiz by Fahid Mehmood (22/2/2014) Figure 1 Hope this file will help you n remember me in your prays Ist quiz solved by Fahid Mehmood (11/11/2013)
More informationTHE PUBLIC ACCOUNTANTS EXAMINATION COUNCIL OF MALAWI 2013 EXAMINATIONS FOUNDATION STAGE PAPER 3 : MANAGEMENT INFORMATION
EXAMINATION NO. THE PUBLIC ACCOUNTANTS EXAMINATION COUNCIL OF MALAWI 2013 EXAMINATIONS FOUNDATION STAGE PAPER 3 : MANAGEMENT INFORMATION WEDNESDAY 4 DECEMBER 2013 TIME ALLOWED : 3 HOURS 9.00 AM - 12.00
More informationCOMM 294 MIDTERM REVIEW SESSION QUESTIONS BY LINH VO
COMM 294 MIDTERM REVIEW SESSION QUESTIONS BY LINH VO TABLE OF CONTENT I. Introduction II. Cost terms, concepts, classification and Cost Behaviour (Chap. 2, 3) III. Job-order Costing (Chap. 5) --------------BREAK--------------
More informationTopic 2: Accounting Information for Decision Making and Control
Learning Objectives BUS 211 Fall 2014 Topic 1: Introduction Not applicable Topic 2: Accounting Information for Decision Making and Control State and describe each of the 4 items in the planning and control
More informationLECTURE 10 DECISION MAKING
LECTURE 10 DECISION MAKING INTRODUCTION TO DECISION MAKING Characteristics of Decision Information Information accumulated for decision-making will include many characteristics, but also some that are
More informationMULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR
STUDENT IDENTIFICATION NO MULTIMEDIA COLLEGE JALAN GURNEY KIRI 54100 KUALA LUMPUR SECOND, FOURTH SEMESTER FINAL EXAMINATION, 2014/2015 SESSION FIN2033 INTRODUCTION TO MANAGERIAL ACCOUNTING DMGW-E-F-2/13,
More informationACCT3310 Fall 20xx Exam #1 Dr. Bailey
Sample exam for Spring 2014 students. The purposes of this practice exam are (1) to familiarize you with my testing style, and (2) to allow you to pre-test yourself after you have studied and feel ready.
More informationChapter 2--Cost Terminology and Cost Behaviors
Cost Accounting Foundations and Evolutions 9th Edition Kinney Test Bank Full Download: http://testbanklive.com/download/cost-accounting-foundations-and-evolutions-9th-edition-kinney-test-bank/ Chapter
More informationCHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements
CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 K 8. 2 K 15. 2 K 22.
More informationPAPER 3: COST AND MANAGEMENT ACCOUNTING QUESTIONS
Material Cost PAPER 3: COST AND MANAGEMENT ACCOUNTING QUESTIONS 1. Aditya Brothers supplies surgical gloves to nursing homes and polyclinics in the city. These surgical gloves are sold in pack of 10 pairs
More informationHUM 211: Financial & Managerial Accounting
Chapter 20 HUM 211: Financial & Managerial Accounting Lecture 08: Managerial Accounting (Concepts & Principles) Masud Jahan Department of Science and Humanities Military Institute of Science and Technology
More information6. Refer to the Michael's Manufacturing, Inc. information above. Raw materials used for July is:
Review II NUMBER 1. Which of the following is a characteristic of managerial accounting? a. It is used primarily by external users. b. It often lacks flexibility. c. It is often future-oriented. d. The
More informationChapter 2 - Basic Managerial Accounting Concepts
1. It is beneficial to assign indirect costs to cost objects. True 2. Price must be greater than cost in order for the firm to generate revenue. False 3. Accumulating costs is the way that costs are measured
More informationChapter 7 Condensed (Day 1)
Chapter 7 Condensed (Day 1) I. Valuing and Cost of Goods Sold (COGS) II. Costing Methods: Specific Identification, FIFO, LIFO, and Average Cost III. When managers use FIFO, LIFO, and Average Cost IV. Lower-of-Cost-or-Market
More informationChapter 2--Cost Terminology and Cost Behaviors
Test Bank For Cost Accounting Foundations and Evolutions 9th Edition by Kinney and Raiborn Link full download: http://testbankcollection.com/download/test-bank-for-cost-accounting-foundationsand-evolutions-9th-edition-by-kinney/
More informationFINANCIAL STATEMENTS
FINANCIAL STATEMENTS Key Topics to Know Cost of good sold statement is prepared from the finished goods inventory account. Cost of goods sold statement has the same format as in financial accounting. Cost
More informationPart 1 Study Unit 6. Cost Allocation Techniques Jim Clemons, CMA
Part 1 Study Unit 6 Cost Allocation Techniques Jim Clemons, CMA Absorption versus Variable Costing You need to be able to answer the following: Under absorption costing, which cost are considered product
More informationFull file at Chapter 02 - Basic Cost Management Concepts
CHAPTER 2 BASIC COST MANAGEMENT CONCEPTS Learning Objectives 1. Explain what is meant by the word cost. 2. Distinguish among product costs, period costs, and expenses. 3. Describe the role of costs in
More informationTest Bank For Cost Accounting A Managerial Emphasis Fifth Canadian 5th Edition By Horngren Foster Datar And Gowing
Test Bank For Cost Accounting A Managerial Emphasis Fifth Canadian 5th Edition By Horngren Foster Datar And Gowing Link full download: https://digitalcontentmarket.org/download/test-bank-for-cost-accounting-amanagerial-emphasis-fifth-canadian-5th-edition-by-horngren-foster-datar-andgowing/
More informationCHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More information70% of total manufacturing costs for the period
Midterm Review Class #1.1- COGM; Income Statement, Cost Behaviour On January 30, 2013, the manufacturing facility of Trucks R Us was severely damaged by a fire. As a result, the company s direct materials,
More informationCOST ACCOUNTING B.com-2 Regular Annual Examination 2015
B.com-2 COST ACCOUNTING Compiled & Solved By: JAHANGEER KHAN Q.1: MANUFACTURING CONCERN: Record of Muqeem and Baber shows the following information for 2015: Sales 500 T.V Sets Material Purchased Direct
More information1 Cost Accounting - Basic Concepts & Treatment of Special Items
1 Cost Accounting - Basic Concepts & Treatment of Special Items This Chapter Includes: Cost Accounting : Necessity & Importance; Cost Department, Costing System, Design of Forms & Records, Treatment of:
More informationChapter 2. Job Order Costing and Analysis QUESTIONS
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More informationChapter 17. Objectives PRBA007 TOPIC TWO C. 1of 13. Unit costs for decision-making
17-0 17-1 Chapter 17 Unit costs for decision-making Objectives 17-2 Once you have completed this part of the topic, you should be able to: 1. Explain the importance of unit costs. 2. Identify the costs
More informationTYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR
18-11 C 2 Cost TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR Cost Activity Activity Cost Cost behavior refers to how a cost will react to changes in the level of business activity. Total fixed
More informationMGT402 Cost Accounting
MGT402 Cost Accounting Which of the following statement measures the financial position of the entity on particular time? Income Statement Balance Sheet Cash Flow Statement Statement of Retained Earning
More informationFull file at https://fratstock.eu
CHAPTER 2 QUESTIONS 1. The two major objectives of materials control are (1) physical control or safeguarding the materials and (2) control of the investment in materials. 2. The controls established for
More informationACCT* 2230 Practice Midterm
ACCT* 2230 Practice Midterm Short Answer Questions 1. (4 marks) During the month of May, Bennett Manufacturing Company purchases $43,000 of raw materials. The manufacturing overhead totals $27,000 and
More informationTHE PUBLIC ACCOUNTANTS EXAMINATION COUNCIL OF MALAWI 2009 EXAMINATIONS FOUNDATION STAGE PAPER 3 : MANAGEMENT INFORMATION
Examination No. THE PUBLIC ACCOUNTANTS EXAMINATION COUNCIL OF MALAWI 2009 EXAMINATIONS FOUNDATION STAGE PAPER 3 : MANAGEMENT INFORMATION WEDNESDAY 9 DECEMBER 2009 TIME ALLOWED : 3 HOURS 9.00 AM - 12.00
More informationEXCEL PROFESSIONAL INSTITUTE 2.2 MANAGEMENT ACCOUNTING LECTURES 2 HOLY KPORTORGBI
EXCEL PROFESSIONAL INSTITUTE 2.2 MANAGEMENT ACCOUNTING LECTURES 2 HOLY KPORTORGBI Requirements CA Textbook Excel 2.2 Management Revision Kit Punctuality in class Weekly assignments Mocks Common mistakes
More informationThe Examiner's Answers Specimen Paper. Performance Management
The Examiner's Answers Specimen Paper P2 - SECTION A Answer to Question One The Value Chain is the concept that there is a sequence of business factors by which value is added to an organisation s products
More informationComposed & Solved Hafiz Salman Majeed Vu Askari Team
MGT402 Current Online Quiz#3.Nearly 300 MCQ s Solved. Question # 1 of 15 ( Start time: 03:53:53 AM ) Total Marks: 1 A chemical process has normal wastage of 5% of input. In a period, 3,500 Kg of material
More informationCost concepts, Cost Classification and Estimation
Cost concepts, Cost Classification and Estimation BY G H A N E N DR A F A G O Cost Concepts Cost refers the amount of expenses spent to generate product or services. Cost refers expenditure that may be
More informationCHAPTER 8. Valuation of Inventories: A Cost-Basis Approach 1, 2, 3, 4, 5, 6, 7, 8, 11, 12, 14, 15, 16
CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Inventory accounts; determining
More informationACCT323, Cost Analysis & Control H Guy Williams, 2005
Costing is a very interesting area because there are many different ways to come up with cost for something. But these principles are generally applicable across the board. Because at any point once you
More informationCHAPTER 2 QUESTIONS (1) (1) (2) (3)
CHAPTER 2 QUESTIONS 1. The two major objectives of materials control are (1) physical control or safeguarding the materials and (2) control of the investment in materials. 2. The controls established for
More informationChapter 8 Inventories: Measurement
Chapter 8 Inventories: Measurement QUESTIONS FOR REVIEW OF KEY TOPICS Question 8 1 Inventory for a manufacturing company consists of (1) raw materials, (2) work in process, and (3) finished goods. Raw
More informationPart 3 : 11/11/10 07:42:55. MultiFrame Company has the following revenue and cost budgets for the two products it sells.
Question 1 - CMA 1290 4-4 - Decision Making MultiFrame Company has the following revenue and cost budgets for the two products it sells. Plastic Frames Glass Frames Budgeted unit sales 100,000 300,000
More information2 Cost Concepts and Behavior
2 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An expense is
More information- Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose:
Introduction: - Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose: o In financial accounting; Used to value inventory and
More informationProblem Exercise 3-12
Exercise 3-12 1. The overhead applied to Ms. Miyami s account would be computed as follows: 2002 2001 Estimated overhead cost (a)... $144,000 $144,000 Estimated professional staff hours (b)... 2,250 2,400
More informationASSIGNMENT SOLUTIONS GUIDE ( ) E.C.O.-10
1 ASSIGMET SOLUTIOS GUIDE (2016-2017) E.C.O.-10 Elements of Costing Disclaimer/Special ote: These are just the sample of the Answers/Solutions to some of the Questions given in the Assignments. These Sample
More informationChapter 02 Cost Concepts and Behavior
Chapter 02 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An
More informationChapter 02 Cost Concepts and Behavior
Chapter 02 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An
More informationCMA Part 2 Financial Decision Making. Study Unit 9 - Decision Analysis and Risk Management Ronald Schmidt, CMA, CFM
CMA Part 2 Financial Decision Making Study Unit 9 - Decision Analysis and Risk Management Ronald Schmidt, CMA, CFM Objectives of the Class Use Marginal Analysis for Decision Making Calculate effect on
More informationAn Introduction to Cost Terms and Purposes
CHAPTER 2 An Introduction to Cost Terms and Purposes Overview This chapter introduces the basic terminology of cost accounting. Communication among managers and management accountants is greatly facilitated
More informationDECISION MAKING. Key Topics to Know
DECISION MAKING Key Topics to Know Relevance refers to whether a revenue or cost will change as the result of the decision made. Relevant revenues or costs always change as the result of the decision.
More informationManagement Accounting
Management Accounting Suggested Solutions to Practice Questions Professional, Practical, Proven www.accountingtechniciansireland.ie Table of Contents Part 1:... 2 Part 2:... 8 Part 3:... 14 Part 4:...
More information2 Cost Concepts and Behavior
2 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An expense is
More informationPart 1 Study Unit 4. Cost Management Concepts Patricia Burnett, CMA Ronald Schmidt, CMA, CFM
Part 1 Study Unit 4 Cost Management Concepts Patricia Burnett, CMA Ronald Schmidt, CMA, CFM 1 Remember most common reasons for missing questions! 1. Misreading the requirement (stem) Read the question
More informationCost concepts for decision making. Management Accounting Fundamentals. Part 1. Topic 9.1
Management Accounting Fundamentals Module 9 elevant costs for decision making and inventory management Lectures and handouts by: Shirley Mauger, MBA, HB Comm, CGA Part 1 2 3 N/A 3 4 5 6 7 8 9 10 Module
More informationIFRS Training. IAS 2 Inventories. Professional Advisory Services
IFRS Training IAS 2 Inventories Table of Contents Section 1 Overview 2 Scope 3 Definitions 4 Measurement 5 Perpetual Versus Periodic 6 Cost Formulas 7 Net Realizable Value 8 Recognition 9 Disclosure Section
More informationP2 Performance Management
Performance Pillar P2 Performance Management Examiner s Answers SECTION A Answer to Question One (a) The standard cost of the actual hours worked was 3,493-85 = 3,408. At 12 per hour the actual hours worked
More information