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WVU ACCT 202 - Comprehensive ExamStudyOutline(4)

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Acct 202 Spring 2016Comprehensive Exam Review (Sample Questions refer to questions from previously posted review materials)Chapter 13 - 3 Activities (in order)o Operating - day to day profit making activities Includes interest paid and received, dividends receivedo Investing - buying or selling long-term assetso Financing- generate capital or pay it back (debt or equity)- Direct vs. Indirect methodo Only operating section differso Identify items that will be shown on statement using each methodSample Questions: 1, 3, 4, 5, 6, 9, 13, 14,16Chapter 14Horizontal Analysis- Percentage changes in comparative financial statements- Be able to calculate percentage change on various financial statement itemsVertical Analysis- Analysis that convert items in a financial statement to percentages of a base- Usual base for income statement and balance sheetSample Questions: 1, 2, 3, 7, 9Chapter 1 Managers Responsibilities- Planning, Directing, Controlling- Decision-making – occurs during all of the aboveFinancial vs. Managerial AccountingSample Questions: 1, 2, 3, 6, 10Chapter 2Direct and Indirect CostsPeriod and Product (Inventoriable) CostManufacturing Costs- Direct materials, direct labor, manufacturing overheadFlow of costs in manufacturing Inventories for a manufacturer and flow of costs- Raw material, work in process, finished goodsSunk CostsCost behavior – fixed and variable costsSample Questions: 3, 4, 5, 8, 9, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22Chapter 3Job Costing or Process CostingDetermining cost of a job- Direct materials- Direct labor- Allocated overheadAllocating Overhead- Allocation Base – cost driverPredetermined Overhead Rate = Total Estimated Overhead / Total Estimated Allocation BaseAllocating overhead to jobs: POHR x Actual Amount of Allocation BaseDisposing of overallocted or underallocated overhead if not material and must of inventory has been soldSample Questions: 1, 2, 3, 4, 5, 6, 7, 8, 12, 13, 14, 16Chapter 4Departmental overhead rates- Use predetermined overhead rate from Ch 3 but calculate separate rate for each departmentActivity-Based Costing- Breaks overhead into activities- Calculate an activity cost rate or each activity- Allocate to cost object (products) using activity rate and actual amount of cost driverSample Questions: 3, 4, 5, 9, 10Chapter 6Variable Costs and Fixed Costs - Know behavior in total and per unit with changes in the activity level (volume)- Be able to identify behavior of various costs (account analysis)Mixed Costs - consists of a variable and fixed portionTotal Costs = Total Variable Costs + Total Fixed Costs or Y = vx + fBe able to identify graphs of cost behaviorContribution Margin Income Statement vs. Functional (GAAP) Income Statement- Know Formats: Sales Sales - Variable Costs - Cost of Goods Sold Contribution Margin Gross Margin- Fixed Costs - Operating ExpensesOperating Income Operating Income- CM = Sales – Variable Costso Can be expressed in total or per unitSample Questions: 1, 2, 3, 4, 5, 6, 7, 11, 12, 15Chapter 7Cost-Volume-Profit (CVP) AnalysisContribution Margin per Unit CM per unit = SP per unit – VE per unit- Once a company reaches breakeven, each additional unit sold increases profit by this amountContribution Margin Ratio (CMR)CMR = CM / Sales - Can be calculated using per unit or total amounts- % of sales dollars that is available to cover fixed costs and provide a profitBreakeven point: where profit = 0CVP Formulas:SP(x) – VE(x) – FE = Operating IncomeTarget Profit or Breakeven sales in units: FE + OI / CM per unitTarget Profit or Breakeven sales in $: FE + OI / CMRMargin of Safety- “Cushion” – how far sales can decrease before incurring a lossM of S = Budgeted or Actual Sales – Breakeven Sales- Expressed per unit or in dollars of sales Operating Leverage- Measures risk; higher with more fixed costs in cost structureOL Factor = Total Contribution Margin / Operating Income- OL Factor from above multiplied by the % change in sales = % change in profitSample Questions: 1, 2, 3, 5, 6, 7, 8, 9, 11, 12, 14, 17, 18, 19Chapter 8Relevant Information- Future oriented- Differs between alternativesIrrelevant Information- Do not differ between alternatives- Sunk Costs – incurred in past and cannot be changedKnow how to analyze:- Dropping a Product Lineo Allocated common costs are NOT relevant- Special Order Decisionso One-time order at reduced sales price; analyze impact on profito Existing fixed costs may not be relevant- Outsourcing (Make or Buy)o Opportunity costs – benefit foregone by selecting one alternative over another- Sell As-is or Process FurtherOpportunity costsSample Questions: 1, 2 ,3, 4, 7, 9, 11, 12, 14Chapter 12Capital Budgeting - Most methods use cash flows; know how convert to net cash inflows from operating income Payback Period- If annuity; Payback Period = Investment / Annuity Amount- If not annuity – must sum each year until cost is recovered; portion of last year may have to be calculated- Screening tool; shorter the payback period, the betterTime Value of Money – tables will be provided; know how to use- Future Value of $1 table and Future Value of Annuity table- Present Value of $1 table and Present Value of Annuity tableInterest rate, hurdle rate, required rate of return, discount rate, minimum rate of return – used interchangeablyNet Present Value (NPV)- Determine the present value of all future net cash inflows- Sum the present values determined above- Subtract the initial investment- If + or 0: acceptable- If (-): not acceptableInternal Rate of Return (IRR)If an annuity: PVA factor = Investment / Annuity Amount (same formula as payback period)- Then, look up closest factor to the above amount on PVA table for the number of years given in the problemo If NPV > 0; IRR will be > Required Rate of Return (Acceptable)o If NPV = 0; IRR = Required Rate of Return (Acceptable)o If NPV < 0; IRR is less than Required Rate of Return (Unacceptable)Sample Questions: 1, 3, 4, 6, 7, 9, 11, 12, 13, 14, 15Chapter 9Master budget and its components; order of preparation- Operating Budget – know all componentso Sales Budgeto Production BudgetUnits of sales + Desired Ending Inventory – Beginning Inventory = Units to Produceo Direct Materials Purchases Budget – calculate purchases in units and $ o Direct Labor, Manufacturing Overhead, and Operating Expense budgets- Financial Budget– know all componentso


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