1 Flashcards
Why is it absorption costing will always have a higher Ending finished goods inventory?
absorption costing involves all cost associated with the manufacturing process using total direct costs and overhead costs associated with the manufacturing of a product as the cost base.
what is the most important criterion in accurate cost allocations ?
Homogeneous cost pools are more accurate and are a group of overhead costs associated with activities that can utilize the same cost driver.
what is resource cost?
also called as overhead. Is assigned to cost pools using resource cost assignment and then, based on how a cost object uses resources, transfer costs from cost pools to cost objects such as products, services or customers.
what is a continuous or rolling budget?
is one that is revised regularly by dropping the current period and adding another. The budget period could be a week, month, quarterly, or year.
what is strategic planning process
is a part of the long-term planning of the firm that focuses on the long-term goals and objectives of a firm. During this process, the strengths and weaknesses of the firm are addressed and utilized to develop a strategy to improve the firm.
explain authoritative budget( top-down budget)?
top management sets everything from strategiv goals down to the individual items of the budget for each department and expects lower managers and employees to adhere to the budget and meet the goals.
explain participative budget (bottom-up or self-imposed budget)
managers at all levels and certain key employees cooperate to set budgets for their areas, and top management usually retains final approval.
what is the ideal budgetting system?
Combination of authoritative and participative budget.
what is the computation of variable overhead spending variance
is the difference between actual variable overhead and actual inputs times the budgeted rate.
which allocating method is generally considered the most acceptable method of allocating service department cost
the reciprocal method fully recognized all interdepartmental service costs, allocating all costs to other affected departments using complex algorithms
what are the shortcomings of learning curve analysis?
- the most new employees will improve at their task 2. the learning curve is not as effective when robotics perform repetitive task. 3. the learning rate is assumed to be constant, but actual learning rate and declines in production times are not constant.
what is an application controls?
application controls consist of controls over input, processing, and output. Controls necessary to assure the accuracy of system output are called application controls.
what is the most appropriate control to verify that a user is authorized to execute a particular online transaction
compatibility check
what are the tasks that the audit committee performs
- reviews the company’s internal control structure 2. Aids in the choice of accounting methods and policies 3. review quarterly reports 4. chooses the auditor and approves auditor compensation 5. reviews the audit plan 6. reviews the auditoe’s suggestions for improved internal control 6. reviews the audit report and the audited annual report.
