Cost Accounting Flashcards Preview

Audti > Cost Accounting > Flashcards

Flashcards in Cost Accounting Deck (36):
1

Cost Accounting is a component of GAAP that records Ending Inventory on the Balance Sheet for
o Direct Materials
o Direct Labor
o Work in Process
o Finished Goods

Cost Accounting also records for the Income Statement

Cost Accounting

2

Cost Accounting - External Focus- GAAP

Managerial Accounting - Internal Focus- Not GAAP

Cost Accounting

3

Prime Costs

Conversion Costs

Cost Accounting

4

Direct Material USED - Have become part of the product or had a direct impact on the product

Direct Labor Used - Employees who worked on product and had direct impact

Cost Accounting

5

All factory costs except for DM and DL used in production- including Spoilage (except for abnormal spoilage- which is a period cost and not included in OH).

Cost Accounting

6

FFO : Estimated Costs / Normal Capacity

Uses Normal Activity

Examples of Fixed Factory OH: Depreciation (SL)- Utilities- Taxes

Under/Over-applied Fixed OH always goes to COGS

Cost Accounting

7

VO : Estimated Activity / Actual Activity

Uses Actual Activity

Examples of Variable Factory OH: Deprecation (Units of Prod)- Indirect materials (supplies & insignificant items)- Indirect labor (factory foreman- janitors- machine maintenance)

Cost Accounting

8

If Immaterial - Goes to COGS

If Material - Goes to WIP- Finished Goods- or COGS- based on their Ending Balance

Cost Accounting

9

It always goes to COGS

Cost Accounting

10

Under-applied overhead.

If it's Fixed OH- under-applied goes to COGS.

If it's Variable OH- under-applied goes to COGS if immaterial- but is allocated to WIP- FG or COGS based on ending balances.

Cost Accounting

11

A credit balance indicates over-applied overhead.

If Fixed overhead- it is corrected from COGS.

If Variable overhead- it is corrected through COGS if immaterial- but if material overage is allocated to WIP- FG or COGS based on ending balances.

Cost Accounting

12

Beginning Balance
DR Net purchases (plus freight-in)
CR Direct Materials Used
: Ending balance (goes to BS)

Cost Accounting

13

Beginning Balance (End Bal of Previous WIP)
DR Direct Materials Used
DR Direct Labor Used (Conversion Cost)
CR COGM
DR Factory Overhead Applied (Conversion Cost)
: Ending Balance (Goes to BS)

Cost Accounting

14

Beginning Balance
DR COGM
: COGAS (Cost of Goods Avail for Sale)
CR COGS
: Ending Balance (Goes to BS)

Cost Accounting

15

Inventory (Product) Cost

Part of DM Purchases

Cost Accounting

16

Selling (Period) Cost

Not part of inventory

Cost Accounting

17

Used when costs are easily connected to a specific product or product line

Can also be applied to services

Calculation is the same as normal cost accounting - just use your T Accounts
- DM to WIP to FG to COGS
- You're likely going to be solving for the last job in the queue

Cost Accounting

18

No services allocated between service departments- even if they serve each other. Only allocate to product(s)

Cost Accounting

19

Services can be allocated to both other service departments and the product(s)

Cost Accounting

20

Beginning Inventory
+ Units Started
- Ending Inventory
: No. Units Shipped

Cost Accounting

21

FIFO

Weighted Average

Cost Accounting

22

Equivalent Units of Production

Cost Accounting

23

EFU FIFO will always be LESS than EFU Weighted Avg (unless Beginning Inventory is Zero)

Cost Accounting

24

Beginning Inventory + Current Costs / EFU WA

Cost Accounting

25

Beginning Inventory + Current Costs / EFU WA

Cost Accounting

26

Units Shipped
+ EI x % Complete DM
: EFU (Weighted Average Method)

- Beginning Inventory x % Complete
: EFU (FIFO)

Cost Accounting

27

Units Shipped
+ EI x % Complete CC
: EFU (Weighted Average)

- Beginning Inventory x % Complete
: EFU (FIFO)

Cost Accounting

28

Current Costs / EFU FIFO

Note: FIFO method uses Current Period costs only and ignores Beginning Inventory

Cost Accounting

29

Current Costs / EFU FIFO

FIFO method uses Current Period costs only and ignores Beginning Inventory

Cost Accounting

30

Beginning balance (DM- DL- OH)
+ Current Costs (DM- DL- OH)
- COGM (Goes to Finished Goods)
+ DM EFU x Cost per DM EFU
+ CC EFU x Cost per CC EFU
: Ending WIP

Cost Accounting

31

Net Sales
- Product Costs
: Gross Margin
- Period Costs
: Operating Income

Cost Accounting

32

Focuses on eliminating non-value-added activities for poor quality and inventory and things customers don't want or don't care about

Inventory is expensive to store and storing something is not a value-added expenditure

Uses Cost Pools - Different departments can have different OH rates

Uses Several OH rates based on Activity - Cost Pool / Cost Driver

Cost Accounting

33

Cost Pools and Allocations increase compared to a traditional costing system

Cost Accounting

34

Connected to Just-in-Time Production- which is part of Activity-Based Costing and Total Quality Management (TQM)

- Works backward to flush out COGS
- Mostly GAAP

Cost Accounting

35

Usually immaterial and common costs aren't allocated to them
Low Market Value
Can be valued at NRV
Can be treated as a contra expense and netted against COGS - Can be treated as a contra sale and netted against Sales
Recognition rules are very flexible with valuing and classifying by-products

Cost Accounting

36

Measure how costs change relative to activity levels

High-Low Method

Change in Cost (High-Low pts) / Change in Activity (High-Low pts)

Cost Accounting