BEC 3

Question 1

product costs

Answer 1

DM, DL, MOH (not expensed until sold)

Question 2

Period costs

Answer 2

SG&A, interest expense (expensed when incurred)

Question 3

prime costs

Answer 3

DM + DL

Question 4

conversion costs

Answer 4

DL + MOH

Question 5

overapplied overhead

Answer 5

credit balance

Question 6

underapplied overhead

Answer 6

debit balance

Question 7

Cost of Goods Manufacted

Answer 7

DM + DL + MOH

Question 8

when to use process costing

Answer 8

large number of homogeneous items

Question 9

when to use job costing

Answer 9

relatively few units, each of them are unique

Question 10

Equivalent Units Using FIFO

Answer 10

Units = beginning WIP * % TO BE completed + (completed - beginning WIP) + ending WIP * % complete

Equivalent Unit Cost = current cost / EU

Question 11

Equivalent Units Using Weighted Average

Answer 11

Equivalent Units = Units Completed + ending WIP * %

Equivalent Units Cost = beg. cost + current cost / EU

Question 12

partial productivity ratios

Answer 12

quantity of output / quantity of single input used

Question 13

total productivity ratios

Answer 13

quantity of output / cost of all inputs used

Question 14

contribution margin

Answer 14

Revenue - VC

Question 15

Controllable Margin

Answer 15

CM - controllable fixed costs

Question 16

Balanced Scorecard Success Factors

Answer 16

Financial, internal business processes, customer satisfaction, advancement of innovation (learning and growth)

Question 17

conformance costs

Answer 17

preventive and appraisal

Question 18

nonconforming costs

Answer 18

internal failure and external failure

Question 19

Return on Investment

Answer 19

ROI = profit margin x investment turnover

profit margin = income / sales

investment turnover = sales / invested capital

Question 20

Return on Assets

Answer 20

ROA = net income / average assets

Question 21

DuPont Analysis of ROE

Answer 21

ROE = net profit margin * asset turnover * financial leverage

net profit margin = net income / sales

asset turnover = sales / assets

financial leverage = assets / equity

Question 22

Extended DuPont Model

Answer 22

Breaks out net profit margin

net profit margin = tax burden x interest burden x EBIT margin

tax burden = net income / pretax income

interest burden = pretax income / EBIT

EBIT margin = EBIT / Sales

Question 23

Residual Income

Answer 23

Net Income - Required Return

Required Return = Book Value of Equity * hurdle rate

Question 24

Economic Value Added

Answer 24

= NOPAT - required return

required return = investment * WACC