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GSU ACCT 2102 - Final Exam Study Guide

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ACCT 2102 - Final Exam Study Guide (Fall 2019)Chapter 1:- Understand the benefits and characteristics of managerial accounting. - Managerial accounting : financial and nonfinancial data from operations is processed by decision makers leading to a decision and an action.(planning, controlling, evaluating, decision making) - Characteristics : more internal focus, less rules than GAAP, focus on operating regiments, focus on futures, emphasis on timelines - Understand the differences between managerial and financial accounting. - Managerial: internal use, no mandated rules, reporting units are in segments (divisions, locations, product line), looks at past and future results, information given on a as needed bases even if not accurate- Financial: external use (investors & creditors) follows rules of GAAP, reportsto the whole organization, looks at past results only, information timing is after the end of the accounting periodChapter 2:- Understand and identify the behavior of variable, fixed, mixed, and step costs. - Variable Cost : cost per unit remains constant with changes in volume but total cost varies proportionately with changes in volume. ○ Ex: hotel chains buying soap bars- each soap bar is $1, but if they buy 10 their total cost is $10 - Fixed Cost : total cost remains constant, cost per unit decreases. Types: discretionary: short term. Committed: long term. ○ Ex: monthly membership fee at the gym is $10, never changes - Step Variable Cost : cost remains fixed in total over small range of volume or activity. ○ Ex: $10,000 paid employee per 30 students. Any number of students over 30 results in hiring more employees by range of 30 students. - Mixed Costs : cost contains both fixed & variable components, total and unit costsvary with change in volume. ○ Ex: $200 room rental fee plus $10 per person for meal; fixed= room rentalfee, variable= $ for meal per person. - Estimate cost(s) using the “high-low” method. - Step 1 : find highest & lowest points of activity and NOT $. 1- Step 2 : calculate variable cost per unit or “m” by taking highest & lowest pointsand doing: ((Change in total cost (high-low$))/(Change in activity (high- low))) - Step 3 : calculate fixed cost or “b” by using either the highest point or the lowest point and plugging it in with variable cost to the equation: o (Variable cost per unit X # of units) + fixed cost = total cost- Step 4 : complete the cost equation by plugging in the m and b values you solved for. Chapter 3 - Understand cost-volume-profit relationships.- Cost-Volume-Profit is a tool to determine the impact of changes in sales volume, costs, or sales mix on net income, useful for evaluating decision alternatives - Understand and apply to concept of “breakeven” and related formulas to a given set of sales and cost information. Break-even point is where total revenues = total expenses and profit is $0. In dollars (If you know the break-even in units): price per unit X units If not known: (total fixed expenses)/(contribution margin ration) In units: (total fixed expenses)/(contribution margin per unit) -- Understand and apply the concept of “markup” and “cost-plus” pricing. - Adding to the cost of the product or service to cover operating costs & add to profits. - Markup is the plus amount added to the selling price- Cost + markupSales price- Markup % = (sales price - cost) / cost - Calculate fixed costs, given a level of breakeven in sales.2- Break even = Fixed cost - contribution margin- Determine operating income given a set of sales and cost information. - Sales price x (units sold) – variable cost x (units sold) – fixed cost = operating income Chapter 4- Understand and identify inventory accounts and inventory cost flows. - Raw materials: accumulates purchased & used raw materials in the production process (increases with materials purchased & decreases with materials used)- WIP: cost of all products started but not complete (increases with D. materialsused, D. labor, & manufacturing overhead)- Finished goods: all production costs of completed products (increases with COGS manufactured & decreases the COGS- Understand the impact of transactions on inventory accounts and cost of goods sold. - Raw materials, work in process, finished goods-Chapter 5- Calculate budgeted direct labor cost.- DL wage/hr X Qty made/hr = DL cost- Calculate projected cash collections. Available cash to spend - Cash budget+short term financingEnding cash balance- Calculate standard material cost. - DM price X DM quantity = DM standard costChapter 6 - Understand the definition of a “standard” cost and how it is calculated.- The expected cost to produce one unit of product Standard qty x standard price = standard cost- Calculate direct material price variance, direct material quantity variance, direct labor rate variance, and direct labor efficiency variance.- direct materials price- flexible budget variance when actual prices differ from standard prices. AQpurchased (AP - SP) SP=AQpurchased X AP, AP=AQpurchased X SP3- direct material quantity- flexible budget variance using more or less materials than standard qty. allowed for actual productionSP X (AQused - SQ)AQused = AQused X SP, SQamount = SQamount X SP- direct labor rate- actual wage rate differs from standard wage rateAQ(AP- SP)AP= AQ X AP, SP= AQ X SP- direct labor efficiency- caused by using more or less direct labor than standard allowsSP(AQ - SQ)AQ= AQ X SP, SQ= SQ X SP- fixed overhead variances- the difference between actual overhead cost and budgetedfixed overhead cost.actual FOH - Budgeted FOHremember if actual  standard: unfavorable if actual  standard: favorableChapter 7- Allocate overhead using activity-based costing.1. Identify activities2. Develop activity cost pools 3. Calculate activity cost pool rates Total activity cost pool resources Total activity driver volume = activity rate(per unit)4. Allocate costs to products or servicesActivity rate X activity driver consumption = allocated cost5. Calculate unit product costsTotal overhead cost Total unit number = price per unit- Understand the concept of identifying different activities that drive overhead costs. Further, understand how “activity cost pools” and “activity drivers” are used to determine an activity cost rate. Even further, understand how an activity cost rate is used to determine the amount of activity pool cost that


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