Chapter 1 1 question 1 conceptual ACG2071 FINAL STUDY GUIDE Managerial accounting for internal users managers future oriented non GAAP Financial accounting for external users investors complies with GAAP Chapter 2 3 questions 1 conceptual Cost Behavior Variable costs varies in total as the cost driver changes but stays constant per unit o Ex fabric cost for store coffee beans for Starbucks hard drives for computer store Fixed costs fixed in total as the cost driver changes but varies per unit o Ex rent depreciation manager s salary advertising costs Step costs remains constant for small range of activity but changes abruptly once outside that range o Ex costs of packages consisting of 100 cups must buy an entire pack even for 1 more cup o Can be variable graph with small steps or fixed graph with long steps Mixed costs has both a fixed and variable component o Ex phone bill has a flat rate plus 10 cents per minute Cost Estimations Functions Total Cost Y M X B VC per unit of units Total Fixed Costs Scatter graph visual fit method eyeballing where a line would fit best using points on a graph High Low method use highest and lowest data points based on activity o Slope m change in cost change in activity o Plug in either the high or low point to find B total fixed costs o Plug in estimated of units for X to find Y total costs Regression analysis uses statistical software to derive a cost function from all the historical data available Most precise to least precise regression analysis scattergraph high low method Income Statement Formats Contribution Margin Format Sales revenue Variable Costs Contribution Margin Fixed Costs Operating Income GAAP Format Sales revenue Costs of Goods Sold Gross Margin Sales Administrative Expenses Operating Income Chapter 3 4 questions 1 conceptual Cost Volume Profit Analysis Break even point when revenues equal expenses and income is equal to zero o Equation Method Sales Variable Costs Fixed Costs 0 Sales X VC per unit X FC 0 X units needed to break even Units X sales price per unit total sales needed to break even o Contribution Margin Technique Fixed Costs CM per unit Break even point in units Fixed Costs CM Break even point in dollars Margin of Safety how much money we can drop before starting to lose money o Current Sales Break Even Sales Margin of Safety Target operating income o Sales VC FC Target OI o FC Target OI CM per unit units that must be sold to earn target OI o FC Target OI CM sales in dollars needed to earn target OI Target net income What if analysis o Operating income Net Income 1 tax rate o If VC per unit decreases CM increases and break even point decreases o If VC per unit increases CM decreases and break even point increases o If SP sales price per unit decreases CM decreases and break even point increases o If SP per unit increases CM increases and break even point decreases o If FC increases break even point increases Multiproduct CVP analysis o CM for Product 1 X CM for Product 2 X CM for Product 3 X FC OI Chapter 4 3 questions 1 conceptual Direct costs can be easily traced to product VC o Direct material leather for car company food in microwavable dinners foam for sofa o Direct labor factory workers wages Indirect costs not easily traced back to product VC FC o Manufacturing overhead cleaning crew for factory utilities costs depreciation factory property tax Product costs don t show up on income statement until product is sold and becomes a period cost VC FC o Prime costs DM DL Conversion costs DL M OH Period costs associated with selling of the product and administration of business VC FC o S A costs advertising shipping commission wages of security at store Product cost flows o Raw materials inventory Work in process Finished goods inventory CGS on inc statement DM DL M OH Total Manufacturing Costs Beg Work in Process Ending Work in Process Costs of Good Manufactured Beg Finished Goods Inventory Ending Finished Goods Inventory Costs of Goods Sold Applying overhead o Predetermined Overhead Rate Budgeted OH Cost Budgeted Activity Base Level o Predetermined OH Rate X Amount Applied OH Costs Applied Disposing of under or over applied overhead o If M OH has debit balance there is under applied OH and must increase CGS o If M OH has credit balance there is over applied OH and must decrease CGS CGS XX M OH Control XX M OH Control XX CGS XX o The applied not actual OH is debited to the WIP inventory o If amount over under applied is large must prorate allocate amount to all accounts WIP FG CGS Chapter 7 1 question Activity Based Costing make one allocation rate for each cost pool unlike ch 4 s general rate o Individual Activity Allocation Rate Activity Cost Activity Level Units all products together o Activity rate X Cost driver Allocated OH for that activity of that product o Total OH allocation of units OH cost per unit o OH cost per unit DL per unit DM per unit unit product cost Chapter 8 5 questions 1 question for each decision Special Order Pricing must have excess capacity o Compare incremental CM amount firm would make from special order relevant costs o If the incremental CM is positive then accept the special order Outsourcing make or buy only use relevant information o Compare OI of making product include avoidable opportunity costs and OI of buying it o If OI of making it OI of buying it then make the product and vice versa Allocating Constrained Resources like cash hours or facilities o Prioritize the activities based on highest CM per constrained resource CM per constrained resource CM per activity hours required o Allocate as many constrained resources as you can towards the activity with the highest CM per constrained resource then to the 2nd etc until resources are exhausted Keep or Eliminating Operations o Find the Segment Margin CM Direct Avoidable Fixed Costs o If segment margin is negative eliminate operation o If elimination leads to expansion of other segment Incremental CM from expansion segment margin of operation being eliminated If it is negative do not eliminate Sell As Is or Process Further only use relevant information doesn t make a dif if FC are included or not o Change in sales price of as is and processed further Change in costs o If it is positive then process further if it is negative then sell as is Chapter 5 4 questions Master Budget Cash Budget What Goes In Ending Beginning What You Need Sales budget budgeted unit sales X budgeted sales price Production Budget budgeted sales ending inventory
View Full Document
Unlocking...