Operations Management Flashcards
What does PIE stand for?
Product Costing
Income Determination
Efficiency
Prime Costs =
Direct Materials + Direct Labor
Conversion Costs=
Direct Labor + OH
Product Costs=
Direct Material + Direct Labor + Manufacturing OH Applied
What is the best cost driver to use in activity based costing?
The driver with the highest correlation with the incurrence of manuf overhead
Electricity costs are most likely considered what type of costs?
Overhead costs, not direct materials or prime costs
What is the formula for FIFO method equivalent units?
units completed + % ending inventory - % Beginning Inventory
What are conversion costs made up of?
=LABOR + OH
What is the weighted average method equivalent units calculation?
Units completed + % of ending inventory
To calculate weighted average cost per equivalent unit?
total costs (beginning cost + current costs)/equivalent units (units completed + % of ending inventory
What is another way to calculate conversion costs other than Labor + OH?
Cost of goods manufactured - materials
How do you calculate cost of good manufactured?
= COGS + Ending Inventory - Beginning Inventory
OR
= Beg WIP + Raw Materials used + Direct Labor + OH Applied - Ending WIP
What does the financial scorecard acronym CRPI stand for?
C - costs
R - revenue generating
P - profit generating
I - investment returns
What does the financial scorecard acronym FICA stand for?
F - CRPI (financial)
I - Internal business processes (non-financial)
C - customer satisfaction (non-financial)
A - advancement of innovation and human resources (non-financial)
What is the cost of quality acronym stand for? APIE
Conformance: A - appraisal costs to detect
Conformance: P - prevention
Non-Conformance: I - internal failure
Non-Conformance: E - external failure
What is ABSOLUTE CONFORMANCE in relation to cost of quality?
The most rigorous standard. Zero defects
What is the difference between contribution margin and controllable margin?
Contribution margin is revenue - variable costs, controllable margin is contribution margin - controllable fixed costs
Responsibility accounting is associated with what type of performance reporting?
Reports that focus on revenues and costs that are within the control of the manager being evaluated.
What is the breakeven units formula?
breakeven units =
total fixed costs/Contribution Margin per unit
The correlation coefficient can only be between
-1 and 1
The coefficient of determination will always be a number between
0 and 1
Under the absorption method what is the calculation for COGS?
Direct Materials +
Direct Labor +
Variable OH +
Fixed OH
How is variable costing different than absorption costing in reference to fixed product costs?
Fixed costs under variable costing are immediately expensed, treated as period costs.
What is the formula for breakeven $?
Fixed Costs/Contribution Margin Ratio
CM Ratio = CM/Revenue
