Midterm

Question 1

Total cost of Work In Progress (WIP)

Answer 1

Beginning work in progress inventory + Total manufacturing costs

Question 2

Cost of Goods Sold (COGS)

Answer 2

Beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory

Question 3

Cost of Goods Manufactured (COGM)

Answer 3

Total cost of work in progress inventory - ending work in progress inventory

Question 4

Predetermined Overhead Rate

Answer 4

Estimated annual overhead costs / Estimated annual operating activity

Question 5

Contribution margin per unit

Answer 5

Unit selling price - unit variable costs

Question 6

Contribution margin ratio

Answer 6

Contribution margin per unit / price per unit

Question 7

Break-even point in units

Answer 7

Total fixed costs / unit contribution margin

Question 8

Break-even in dollars

Answer 8

Total fixed costs / contribution margin ratio

Question 9

Required sales in units for target operating income

Answer 9

(Total fixed costs + target operating income) / contribution margin per unit

Question 10

Target operating income

Answer 10

Operating income after taxes / (1-tax rate)

Question 11

Degree of operating leverage

Answer 11

Contribution margin / oprerating income

Question 12

Margin of safety in dollars

Answer 12

Actual (or expected) sales - break-even sales

Question 13

Margin of safety ratio

Answer 13

Margin of safety in dollars / actual (or expected) sales