Notes Flashcards
(55 cards)
Prime cost
DM + DL
Conversion Cost
DL + MOH
Total Cost function
FC + VC per cost driver (units of cost driver)
High low method
Difference in $$/Difference in hours
CM
SP-VC
Breakeven point in $
FC/CM ratio
Breakeven Point in units
FC/CM
$ value of revenue required for breakeven
FC + Pretax Profit/ CM ratio
of units required for a specif revenue
FC + Pretax profit/CM per unit
Pretax Profit
After tax profit / (1-tax rate)
Margin of safety
Total sale - BE sale
OH rate
OH costs (estimated or actual)/ Allocation base
For Absorption costing what do product costs and period costs consist of?
Product cost= DM, DL, VOH, FOH
Period cost= Variable and fied non production costs
For variable costing what do product costs and period costs consist of?
Product cost= DM, DL, VOH
Period Costs= FOH production costs and varaible and fixed non production
Absorption income statement
Revenue (units sold x price per unit)
- COGS (units sold x (variable production cost per unit + allocated fixed production costs per unit)
Gross margin
- Non production costs (selling, admint and other)
Operating Income
Variable Costing Income statemetn
Revenue (Units sold x price per unit)
-Variable costs: Production (units sold x variable production cost/unit), Non production (units sold x varaible non production cost per unit, such as sales commissions)
CM
-Fixed costs (production and non production)
Operating Income
Relationship between production and sales under absorption and variable costing
Relationship BW Effect on inventory Relationship BW
Production & Sales Var. & Abs. OI
Production > Sales Inv. Increases Absorption > Variable
Production < Sales Inc. decreases Absorption < Variable
Production = Sales No Change Absorption = Variable
Equivalent units in process costing: how many methods
2 methods
WA and FIFO
In equivalent units, if not beginning inventory exists:
Both methods will producve the same method
WA consideres what costs?
Total costs/ Total Equivalent Unit
FIFO considers what costs?
Cost incurred this period/ Units actually worked on this period
For joint product costing what is the NRV method?
Final Sales price - Separable costs= NRV
Varianve Analysis of DM and DL
PURE DADS
DM Price variance AQ (SP-AP)
DM Usage variance SP( SQ-AQ)
DL Rate Variance AH(SR-AR)
DL Efficiency Variance SR(SH-AH)
How to calculate tax shield?
Expected sales
- Cash operating expenses
Pretax Operating income
-Income taxes (tax rate x pretax operating income)
After tax operating income
+depreciation tax shield (depreciation x tax rate)
Total after tax inflows
