Exam 3 (Ch 20, 21, 22) Flashcards Preview

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Flashcards in Exam 3 (Ch 20, 21, 22) Deck (41)
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1

FORMULA: Conversion Cost

= DL + MOH

2

A short-term financial plan used to coordinate the activities needed to achieve the short-term goals of the company

operational budget

3

Method used to determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs

Weighted-Average Method

4

A report prepared by a processing department for equivalent units of production, production costs, and the assignment of those costs to the completed and in process units.

Production Cost Report

5

Used to measure the amount of materials added to or work done on partially completed units and expressed in terms of fully completed units.

Equivalent Units of Production (EUP)

6

An accounting system that accumulates costs by process;

Used by companies that manufacture identical units through a series of uniform production steps or processes.

Process Costing System

7

The cost to convert raw materials into finished goods.

Conversion Costs

8

A method used to separate mixed costs into their variable and fixed components, using the highest and lowest activity level.

High-Low method

9

Costs that were incurred in a previous process and brought into a later process as part of the product's cost.

Transferred-in Cost

10

FORMULA: (4 variations of the equation)

Contribution Margin Ratio

= CM / T.R. = (TR - TVC) / TR = (P - V) / P = CM per unit / P

11

FORMULA: (both for units and dollars)

Sales req'd to earn desired profit

(Units) = (TFC + desired profit) / CM per unit

OR

(Dollars) = (TFC + desired profit) / CMR

12

FORMULA:

Variable cost per unit

= Chg in tot. cost / Chg in volume of activity

= (Hi cost - Lo cost) / (Highest volume - Lowest volume)

13

An accounting system that accumulates costs by job;

Used by companies that manufacture unique products or provide specialized services.

Job Order Costing System

14

A planning tool that expresses the relationships among costs, volume and prices and their effects on profits and losses.

Cost-Volume-Profit (CVP) Analysis

15

FORMULA:

Contribution Margin per unit

= Price - Volume

16

A budget prepared for only one level of sales volume.

static budget

17

FORMULA:

Margin of safety in units

= expected sales - breakeven sales

18

A cost that increases or decreases in total in direct proportion to increases or decreases in the volume of activity.

Variable Cost

19

FORMULA:

Margin of safety ratio

= margin of safety in units / expected sales in units

20

FORMULA:

Breakeven (units)

= TFC / CM per unit

21

A financial plan that managers use to coordinate a business's activities.

Budget

22

Contribution Margin Ratio

The ratio of contribution margin to net sales revenue.

23

FORMULA:

Cost per EUP for transferred in

= Tot transferred in costs / Equivalent units of production for transferred in

24

The sales level at which operating income is zero;

Total revenue = Total cost

Breakeven

25

FORMULA:

Margin of safety in dollars

= margin of safety in units x sales price per unit

26

FORMULA:

Total fixed cost

= Total mixed cost - Total variable cost

= Total mixed cost - (variable cost per unit x # of units)

27

The budget that details how the business expects to go from the beginning cash balance to the desired ending cash balance.

cash budget

28

The amount that contributes to covering the fixed costs and then to providing operating income.

Contribution margin

29

FORMULA:

Cost per EUP for direct materials

= Tot. DM Cost / Equivalent units of production for DM

30

A cost that remains the same in total, regardless of changes over wide ranges of volume of activity.

Fixed Cost