Exam 2 Flashcards Preview

ACCT 230 Allen > Exam 2 > Flashcards

Flashcards in Exam 2 Deck (13):
1

2 reasons you should use Activity Based Costing?

-when one product requires more resources than other
-when you sell one product a lot more(volume) than other

2

3 differences between ABC costing and Traditional costing methods

-ABC may assign non-manufacturing costs to products
-ABC may not assign some manufacturing costs to inventory
-ABC uses different activities to drive up costs of multiple products

-Traditional ONLY assigns manufacturing costs

3

4 categories of Activities under ABC costing? Give examples of each

Unit-level activities
-DL
-DM
-Indirect Material or OH
-electricity

Batch-level activities
- set-up costs
-purchasing/receiving costs

Product-level activities
-product design
-re-design
-product level advertising

Facility-level (organization-sustaining) activities
-cleaning offices
-maintaining the plant
-costs MAY not be assigned to inventory

4

CVP

Cost-Volume-Profit
-Short Range
-Study change of effects in costs and volume of profits

5

CVP studies the ___

Inherent/Interrelationships

6

5 things CVP studies

Volume of Activity
Unit Selling Prices
Variable Cost per Unit
Total Fixed Costs
Sales Mix

7

4 Assumptions the Cost Volume Profit Analysis makes

Costs/Revenue are LINEAR in their relevant range
Sales Mix remains constant
All units Produced will be Sold
Costs can be classified as Variable/Fixed

8

Sensitivity Analysis

-studies effect of change in variable on profit
-called "What if Analysis"

9

What costs are included to find the unit product costs under Absorption and Variable?

Absorption
-DL
-DM
-Variable OH
-Fixed OH / Units produced

Variable
-Dl
-Dm
-Variable OH

10

If Production < Sales Volume, which cost system will report the highest Net Income?

Variable Costings

11

If Production > Sales Volume, which cost system will report the highest Net Income?

Absorption

12

Which is required by GAAP and IFRS? Which is used for Internal Purposes only?

Absorption
-GAAP and IFRS

Variable
-Internal purposes only

13

2 Advantages to using a Variable Cost system?

-NI is unaffected by changes in production levels
-Variable costing is consistent with CVP analysis


Sales
-VC
CM
-Direct FC
SEGMENT MARGIN
-Common FC
Division Income