Cost Measurement & Assignment (M46) Flashcards Preview

BEC > Cost Measurement & Assignment (M46) > Flashcards

Flashcards in Cost Measurement & Assignment (M46) Deck (131):
1

What is the primary objective of the cost accountant?

To compute the cost/unit for financial statement presentation of COGS on the income statement and Ending Inventories on the BS

2

What are the 3 components of Manufacturing Costs?

1) Direct Materials 2) Direct Labor 3) Factory Overhead, (Variable Overhead & Fixed Overhead)

3

Essentially, the Cost of Goods Manufactured statement is a summary of what 2 accounts?

1) Direct Materials 2) Work in Process

4

The result of the CGM statement is used in the _____ statement or the ____ section of the income statement

Cost of Goods Sold Statement CoGS

5

T/F Freight out is a cost of goods sold

FALSE Freight Out is a selling cost

6

T/F Freight in is a cost of goods sold

TRUE

7

What is the difference between the Direct Method & the Step Method when allocating support department costs?

The Direct Method ignores costs between service departments. The Step method recognizes costs between service departments, but only from the department with the highest costs to the departments with the lower costs. The lower cost departments ignore the costs between service departments.

8

What is the difference between the Step Method & the Reciprocal Method when allocating support department costs?

The Step method recognizes costs between service departments, but only from the department with the highest costs to the departments with the lower costs. The lower cost departments ignore the costs between service departments. The Reciprocal Method provides a way to adjust for the reciprocal services provided among the service departments.

9

These are inferior goods either discarded or sold for disposal value

Spoilage (Scraps)

10

These are inferior goods reworked and sold as a normal product

Defective Units

11

Normal spoilage is a necessary cost in the production process and therefore is considered ____

A Product Cost (Inventoriable Cost)

12

Abnormal spoilage is a ____

Period Cost

13

This considers fixed manufacturing overhead to be a product cost

Absorption (full) costing

14

This is a cost system that focuses on activities, determines their cost, and then uses appropriate cost drivers to trace costs to the products based on the activities

Activity-Based Costing

15

This integrates ABC with other concepts such as total quality management and target costing to produce a management system that strives for excellence through cost reduction, continuous process improvement, and productivity gains

Activity-based management (ABM)

16

This is the level of production actually occurring for the period

Actual activity level

17

This is a costing system that omits recording some or all of the journal entries to track the purchase and production of goods. goods are costed after they have been completed

Backflush costing

18

This is a highly automated an integrated production process that is controlled by computers

Computer integrated manufacturing (CIM)

19

These include direct manufacturing labor and manufacturing overhead. They are the cost of converting direct materials into finished products

Conversion costs

20

This encompasses both cost tracing and cost allocation. The cost object is the item for which the cost is being determined

Cost assignment

21

This is assignment of direct costs to a cost object

Cost tracing

22

This is assignment of indirect cost to the cost object

Cost allocation

23

This is an item (either a product, department, or process) for which cost is being determined

Cost object

24

This is a factor that causes it cost to be incurred. It may be volume related and/or transaction related

Cost driver

25

This is the examination of past relationships of costs and level of activity to determine predictions of future costs

Cost estimation

26

This is a planning and control system that measures the cost of significant activities, identifies non-value added costs, and identifies activities that will improve organizational performance

Cost management system (CMS)

27

These are groupings of related costs accumulated together to the allocated to a product or some other cost object

Cost pools

28

This is the time required to complete a good from the start of the production process until the product is finished

Cycle time or throughput time

29

These are costs easily traced to a specific business segment

Direct costs

30

This is the cost of labor directly transforming a product. This theoretically should include fringe benefits, but frequently does not

Direct manufacturing labor

31

This is the cost of supporting labor

Indirect manufacturing labor

32

This includes the cost of materials awaiting entry into the production system

Direct materials inventory

33

This is the cost of materials directly and conveniently traceable to a product. Minor material items are not deemed conveniently traceable

Direct materials

34

These items, along with production supplies and minor material items, are not deemed conveniently traceable to a product

InDirect materials

35

This is determined from industrial engineering studies that examine how activities are performed and if or how performance can be improved

Engineered costs

36

This normally includes indirect manufacturing labor costs, supplies costs, and other production facility costs such as plant depreciation, taxes, etc. It is comprised of all manufacturing costs that are not direct materials or direct manufacturing labor

Factory manufacturing overhead

37

This includes the cost of units completed but unsold

Finished goods inventory

38

These are costs that do not vary with the level of activity within the relevant range for a given period of time, usually one year. for example: plant depreciation

Fixed costs

39

This is a series of computer-controlled manufacturing processes that can be easily changed to make a variety of products

Flexible manufacturing system (FMS)

40

This is a system that blends the characteristics of both the job order and process costing system. Firms using the system typically produce large numbers of closely related products

Hybrid costing

41

These costs are not easily traceable to specific segments and include factory overhead

Indirect costs

42

This is a system for allocating cost to groups of unique products made to customer specifications

Job order costing

43

These are cost common to multiple products that emerge at a split off point

Joint costs

44

This is a system of assigning joint costs to joint products who's overall sales values are relatively significant

Joint costing

45

This is a function that demonstrates how productivity improves as workers become more proficient at producing the product

Learning curve

46

These are costs that have a fixed component and a variable component. These components are separated by using the scattergraph, high-low, or linear regression methods

Mixed costs (semi-variable)

47

This is a cost function that is not described by a straight line over the relevant range

Non-linear cost function

48

This is the cost of activities that can be illuminated without the customer perceiving a decline in product quality or performance

Non-value added costs

49

This is the production level expected to be achieved over a number of periods or seasons under normal circumstances

Normal activity level

50

These are cost that cannot be associated or matched with manufactured goods. Period costs become expenses when incurred

Period Costs

51

These costs are easily traceable to specific units of production and include direct manufacturing labor and direct materials

Prime costs

52

This is a system for allocating cost to homogenous units of a mass produced products

Process costing

53

These costs can be associated with the production of specific goods. These costs attach to a physical unit and become an expense in the period in which the unit to which they attach is sold. They normally include direct manufacturing labor, direct materials, and factory overhead

Product costs

54

This tracks the accumulation of costs that occur starting with the research and development for product and ending with the time at which sales and customer support are withdrawn

Product lifecycle costing

55

This is the operating range of activity in which cost behavior patterns are valid. It is the production range for which fixed costs remain constant

Relevant range

56

This is the sequence of business functions in which value is added to a firms products or services. This sequence includes research and development, product design, manufacturing, marketing, distribution, and customer service

Value chain

57

This is the cost of activities that cannot be eliminated without the customer perceiving a decline in product quality or performance

Value added cost

58

This costing considers all fixed manufacturing overhead as a period cost rather than as a product cost

Variable (direct) costing

59

This includes the cost of units being produced but not yet completed

Work in process inventory

60

These costs are fixed over relatively short ranges of production levels.

Stepped costs or semi fixed costs

61

What is entailed in the Direct Materials or Raw Materials T-Account?

62

What is entailed in the Direct Labor T-Account, aka Payroll Account?

63

What is entailed in the Variable & Fixed Factor Overhead T-Account?

64

What is entailed in the Work in Process T-Account?

65

What is entailed in the Finished Goods Inventory T-Account?

66

What are the 4 steps in a Process-Costing Problem? (Equivalent Units of Production, EUPs, or Equivalent Finished Units, EFUs)

1) Calculate the # Shipped (in whole units)

2) Calculate the Equivalent Finished Units

3) Calculate the Cost per EFU

4) Complete the WIP T-Account

67

The first step in a process-costing problem is to calculate the number shipped (in whole units). How do you do that?

Beginning Inventory 
+ Units Started
= Units to be Accounted For
- Ending Inventory
= Units Shipped

68

The second step in a process-costing problem is to calculate the equivalent finished units. How do you do that using the FIFO method?

Units Shipped
+ End Inv (EFUs)

- Beg Inv (EFUs)
= FIFO EFUs

69

The second step in a process-costing problem is to calculate the equivalent finished units. How do you do that using the weighted average method?

Units Shipped
+ End Inv (EFUs)

= W/A EFUs

70

The third step in a process-costing problem is to calculate the cost per EFU. How do you do that using the FIFO method?

Cost per EFU = Current Costs Only / EFUs

71

The third step in a process-costing problem is to calculate the cost per EFU. How do you do that using the Weighted Average method?

Cost per EFU = [Beg Inv + Curent Costs] / EFUs

72

The fourth step in a process-costing problem is to complete the WIP T-Account. What do you do?

Using the number of Ending Inventory EFUs from Step 2 & Cost per EFU in Step 3, calculate the $ value of ending inventory in WIP 

Plug the CoGM

73

Abnormal spoilage is a ____ (period/product) cost.

Period Cost. Do not include in WIP

74

Normal Spoilage is a _____ (period/product) cost. 

Product Cost. The costs are spread over the good units, usually as part of OH

75

What do the Traditional Cost Flows look like?

76

What is the Backflush Costing Method I?

JIT Inventory Methods with Vendors/Suppliers. Combine DM & WIP, Combine DL & OH

77

What does the Backflush Costing Method I look like?

78

What is the Backflush Costing Method II?

JIT Inventory Methods with Vendors/Suppliers. Same as Method I, but also no FGI

79

What does the Backflush Costing Method II look like?

80

In the Traditional Cost Flow system, what is the JE when Purchasing Raw Materials?

Dr: Materials

Cr: A/P

81

In the Backflush Method I, what is the JE when Purchasing Raw Materials?

Dr: Materials & In-Process
Cr: A/P

82

In the Backflush Method II, what is the JE when Purchasing Raw Materials?

Same as Method I:

Dr: Materials & In-Prcess

Cr: A/P

83

In the Traditional Cost Flows Method, what is the JE when issuing materials to production?

Dr: WIP
Cr: Materials

84

In the Backflush Method I, what is the JE when issuing materials to production?

None

85

In the Backflush Method II, what is the JE when issuing materials to production?

Same as Method I: None

86

In the Traditional Cost Flow Method, what is the JE when incurring direct labor costs?

Dr: WIP
Cr: Payroll

87

In the Traditional Cost Flow Method, what is the JE when incurring overhead costs?

Dr: Variable OH Control

Dr: Fixed OH Control

Cr: A/P

88

In the Backflush Method I, what is the JE when incurring direct labor costs?

This is combined with the entry when incurring overhead costs: 
Dr: Conversion Cost Control
Cr: Payroll
Cr: A/P

89

In the Backflush Method I, what is the JE when incurring overhead costs?

This is combined with the entry when incurring direct labor costs:
Dr: Conversion Cost Control
Cr: Payroll
Cr: A/P

90

In the Backflush Method II, what is the JE when incurring direct labor costs?

Same as Method I, this is combined with the entry when incurring overhead costs: 
Dr: Conversion Cost Control
Cr: Payroll
Cr: A/P

91

In the Backflush Method II, what is the JE when incurring overhead costs?

Same as Method I, this is combined with the entry when incurring direct labor costs:
Dr: Conversion Cost Control
Cr: Payroll
Cr: A/P

92

In the Traditional Cost Flows Method, what is the JE when applying overhead?

Dr: WIP
Cr: Variable OH Control
Cr: Fixed OH Control

93

In the Backflush Method I, what is the JE when applying overhead?

None

94

In the Backflush Method II, what is the JE when applying overhead?

Same as Method I - None

95

In the Traditional Cost Flows Method, what is the JE when completing goods?

Dr: FGI
Cr: WIP

96

In the Backflush Method I, what is the JE when completing goods?

Dr: FGI
Cr: Conversion Cost Control
Cr: Materials & In-Process

97

In the Backflush Method II, what is the JE when completing goods?

This is combined with the entry when selling goods. 
Dr: CoGS
Cr: Conversion Cost Control
Cr: Materials & In-Process

98

In the Traditional Cost Flows Method, what is the JE when selling goods?

Dr: CoGS
Cr: FGI

99

In the Backflush Method I, what is the JE when Selling Goods?

Same as Traditional Cost Flows - 
Dr: CoGS
Cr: FGI

100

In the Backflush Method II, what is the JE when selling goods?

This is combined with the entry when completing goods?Dr: CoGS
Cr: Conversion Cost Control
Cr: Materials & In-Process

101

In the Traditional Cost Flows Method, what is the JE when recognizing overhead variance (underapplied)

Dr: CoGS
Cr: Overhead Control

102

In the Backflush Method I, what is the JE when recognizing overhead variances (underapplied)

Dr: CoGS
Cr: Conversion Cost Control

103

In the Backflush Method I, what is the JE when recognizing overhead variances (underapplied)

Same as Method I.
Dr: CoGS
Cr: Conversion Cost Control

104

This is the Cost Measurement & Assignment method that is not following US GAAP

Direct or Variable Costing

105

This is the Cost Measurement & Assignment method that is following US GAAP

Absorption or Full Costing

106

This is the Cost Measurement & Assignment method that is used for internal decision making

Direct or Variable Costing

107

This is the Cost Measurement & Assignment method that is used for external financial reporting

Absorption or Full Costing

108

This is the Cost Measurement Method that treats FMOH as a Period Cost

Direct or Variable Costing

109

This is the Cost Measurement Method that treats FMOH as a Product Cost

Absorption or Full Costing

110

This is the Cost Measurement Method that has this Income Statement Outline

Direct or Variable Costing

111

This is the Cost Measurement Method that has this Income Statement Outline

Absorption or Full Costing

112

When Production is > Sales, then Ending Inventory Increases. How does this affect Net Income in the Direct or Variable Costing Method?

Lower NI than Absorption or Full Costing

113

When Production is > Sales, then Ending Inventory Increases. How does this affect Net Income in the Absorption or Full Costing Method?

Higher NI than Direct or Variable Costing

114

When Production is less than Sales, then Ending Inventory decreases. How does this affect Net Income in the Direct or Variable Costing Method?

Higher NI than Absorption or Full Costing

115

When Production is less than Sales, then Ending Inventory decreases. How does this affect Net Income in the Absorption of Full Costing Method?

Lower NI than Direct or Variable Costing

116

When Production is = Sales, then Ending Inventory does not change. How does this affect Net Income in the Direct or Variable Costing Method?

Same NI as Absorption or Full Costing

117

When Production is = Sales, then Ending Inventory does not change. How does this affect Net Income in the Absorption of Full Costing Method?

Same NI as Direct or Variable Costing

118

How do you calculate the difference in NI between the Direct or Variable Costing and the Absorption of Full Costing?

Difference in NI = Change in Ending Inventory * (FMOH/Unit)

119

T/F 

The cost of electricity for a manufacturing plant, whether fixed or variable, is included in factory overhead and therefore is a product cost

TRUE

120

In a job-costing system, issuing indirect materials to production will increase and decrease what accounts?

Increase: Manufacturing Overhead Control
Decrease: Materials Control

121

In a job-costing system, issuing direct materials to production will increase what account?

Increase: Work in Process Control
 

122

In a job-costing system, Manufacturing Overhead Allocated is _____ (dr/cr) when overhead is allocated to WIP and ______ (dr/cr) when it is closed out at the end of the period

Credited

Debited

123

When an ABC sysem replaces a traditional cost system, what is the normal effect on the number of cost pools?

Increase

124

When an ABC sysem replaces a traditional cost system, what is the normal effect on the number of allocation bases?

Increase

125

T/F 

ABC should not be used with process or job costing

FALSE

126

T/F 

ABC can be used with either process or job costing

TRUE

127

T/F 

In an ABC system, a single cause-and-effect relationship should be used to assign a department's manufacturing overhead costs to procuts produced in varying lot sizes

FALSE

128

T/F 

In an ABC system, multiple cause-and-effect relationships should be used to assign a department's manufacturing overhead costs to procuts produced in varying lot sizes

TRUE

129

T/F 

ABC systems are founded upon cause-and-effect allocation of costs to products

TRUE

130

The formula used in developing the variable rate for the high-low method of analysis is....

Cost at high point - Cost at low pont / 
High activity point - Low Activity Point 
= Variable Rate

131

In regression analysis, the ____ (higher/lower) Rsquared, (the coefficient of determination), the _____ the correlation

Higher
Better