Exam 1 review

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Exam 1 review

• This review does not cover every thing, use it
  with your books, notes, handouts, and quizzes.

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Chapter 1

• Accounting is .

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Chapter 1

• The difference between financial accounting and
  cost accounting is

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Chapter 1

• What is a budget?

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Chapter 1

• Value chain is..

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Chapter 1

• What are the four professional ethics standards?

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Chapter 2

• Definitions you need to know
• Cost
• Actual cost
• Cost object
• Direct costs and indirect costs
• Examples on direct and indirect costs
• Variable and fixed costs
• Cost driver
• Relevant range
• Cost behavior

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Chapter 2

• You need to know how to graph total fixed costs,
  per unit fixed costs, total variable costs and
  per unit variable cost.

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Chapter 2

• You need to know the difference between tracing a
  cost and allocating a cost.
• You need to know the difference between
  manufacturing firms and service firms in terms of
  the inventory accounts they maintain.

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Chapter 2

• You need to know the difference between
  inventoriable costs and period costs.
• Prime costs ??
• Conversion costs ??
• You need to know how to calculate overtime
  premium.

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Chapter 2

• These are important equations, there will be
  several applications on how to calculate DM used,
  COGS, COGM, and gross margin
• DM used DM Beginning Inventory DM purchased -
  DM Ending inventory
• Cost of Goods manufactured Beginning WIP
  Inventory (DM DL MOH) Ending WIP Inventory
• Cost of Goods Sold Beginning Finished Goods
  Inventory Cost of Good Manufactured Ending
  Finished Good Inventory
• Gross margin Sales revenue Cost of Goods Sold

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• Questions

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Chapter 2

• 2-1 When 10,000 units are produced, fixed costs
  are 14 per unit. Therefore, when 20,000 units
  are produced fixed costs
• a. will increase to 28 per unit.
• b. will remain at 14 per unit.
• c. will decrease to 7 per unit.
• d. will total 280,000.

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Chapter 2

• 2-2 Tire and Spoke Manufacturing currently
  produces 1,000 bicycles per month. The following
  per unit data apply for sales to regular
  customers
• Direct materials 50
• Direct manufacturing labor 5
• Variable manufacturing overhead 14
• Fixed manufacturing overhead 10
• Total manufacturing costs 79
• The plant has capacity for 3,000 bicycles and is
  considering expanding production to 2,000
  bicycles. What is the per unit cost of producing
  2,000 bicycles?

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Chapter 2

• 2-3 The West Company manufactures several
  different products. Unit costs associated with
  Product ORD203 are as follows
• Direct materials 40
• Direct manufacturing labor 8
• Variable manufacturing overhead 12
• Fixed manufacturing overhead
  23
• Sales commissions (2 of sales)
  6
• Administrative salaries 9
• Total 98

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Chapter 2

• What are the variable costs per unit associated
  with Product ORD203?
• What are the fixed costs per unit associated with
  Product ORD203?
• What are the inventoriable costs per unit
  associated with Product ORD203?
• What are the period costs per unit associated
  with Product ORD203?

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Chapter 2

• 2-4 The following information pertains to Scotts
  Production Company
• Beginning finished goods, 1/1/20x3 40,000
• Ending finished goods, 12/31/20x3 33,000
• Cost of goods sold 250,000
• Sales revenue 600,000
• Operating expenses 120,000

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Chapter 2

• What is cost of goods manufactured for 20x3?
• What is gross margin for 20x3

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Chapter 2

• 2-5 Within the relevant range, if there is a
  change in the level of the cost driver then
• a. fixed and variable costs per unit will
  change.
• b. fixed and variable costs per unit will remain
  the same.
• c. fixed costs per unit will remain the same and
  variable costs per unit will change.
• d. fixed costs per unit will change and variable
  costs per unit will remain the same.

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Chapter 4

• Definitions you need to know
• Cost pool.
• Cost allocation base.

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Chapter 4

• You need to know how to calculate the overhead
  allocation rate.

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Chapter 4

• You need to know in what cases job costing system
  is used and in what cases process costing system
  is used.

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Chapter 4

• You need to know the difference between actual
  costing, normal costing and standard costing.

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Chapter 4

• You need to know three approaches to disposing
  underallocated or overallocated overhead.

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Chapter 4

• Questions

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Chapter 4

• 4-1 XYZ is a manufacturing company that uses job
  order costing system. Its job costing system has
  two direct cost categories, DM and DL, and one
  indirect-cost pool. The indirect costs are
  allocated at a rate of 30 per machine-hour. The
  following data in millions pertain to operation
  of 2004

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Chapter 4

• Material control, Dec 31, 2003 12
• WIP control, Dec 31, 2003 2
• Finished Goods Control, Dec 31, 2003 6
• Material and supplies purchase on account 150
• Direct material used 145
• Indirect material issued to various production
  department 10
• Direct manufacturing labor 90
• Indirect manufacturing labor 30
• Depreciation on plant and equipments 19
• Other manufacturing OH incurred 9
• Manufacturing OH allocated (2,100,000 MHs) ?
• Cost of goods manufactured 294
• Revenue 400
• Cost of goods sold 292
• Required
• Journal entries, posting, and ending balance of
  WIP.

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Chapter 4

• 4-2 The Dougherty Furniture Company manufactures
  tables. In March, the two production departments
  had budgeted allocation bases of 4,000
  machine-hours in Department 100 and 8,000 direct
  manufacturing labor-hours in Department 200. The
  budgeted manufacturing overheads for the month
  were 57,500 and 62,500, respectively. For Job
  A, the actual costs incurred in the two
  departments were as follows

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Chapter 4

• Department 100 Department 200
• Direct materials purchased on account 110,000 17
  7,500
• Direct materials used 32,500 13,500
• Direct manufacturing labor 52,500 53,500
• Indirect manufacturing labor 1,000 9,000
• Indirect materials used ,500 4,750
• Lease on equipment 16,250 3,750
• Utilities 1,000 1,250

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Chapter 4

• Job A incurred 800 machine-hours in Department
  100 and 300 manufacturing labor-hours in
  Department 200. The company uses a budgeted
  overhead rate for applying overhead to
  production.
• Required
• a. Determine the budgeted manufacturing overhead
  rate for each department.
• b. Prepare the necessary journal entries to
  summarize the March transactions for Department
  100.
• c. What is the total cost of Job A?

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Chapter 4

• Answer
• a. Manufacturing overhead rate Department 100
  57,500/4,000 hours
• 14.375 per machine-hour
• Manufacturing overhead rate Department 200
  62,500/8,000 hours
• 7.8125 per labor-hour

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Chapter 4

• b. Materials Control Department 100 110,000
• Accounts Payable Control 110,000
• Work-in-Process Control Department 100 32,500
• Manufacturing Overhead Control Department
  100 7,500
• Materials Control Department 100 40,000
• Work-in-Process Control Department 100 52,500
• Manufacturing Overhead Control Department
  100 11,000
• Wages Payable Control 63,500
• Manufacturing Overhead Control Department
  100 17,250
• Leaseholds Payable Control 16,250
• Utilities Payable Control 1,000
• Work-in-Process Ctrl Dept. 100 (14.375 x 800
  hrs)11,500
• Manufacturing Overhead Allocated 11,500

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Chapter 4

• c. Job A
• Direct materials Dept. 100 32,500
• Direct materials Dept. 200 13,500
• Direct manufacturing labor Dept. 100 52,500
• Direct manufacturing labor Dept. 200 53,500
• Manufacturing OH Dept. 100 (14.375 x 800)
  11,500
• Manufacturing OH Dept. 200 (7.8125 x 300)
  2,344
• Total
  165,844

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Chapter 17

• You need to know examples of industries that
  would use process costing.
• You need to know the principal difference between
  process costing and job order costing.

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Chapter 17

• What are the equivalent units ?

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Chapter 17

• Questions

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Chapter 17

• 17- 1The following information pertains to XYZ
  company
• Beginning WIP (DM 100, Conversion cost 60) 225
  units
• Units started in the current period 275 units
• Units complete in the current period 175 units
• Ending WIP (DM 100, Conversion 50) 100 units
• Cost DM Conversion
• Beginning WIP 18,000 8,100
• Costs incurred in the current period 19,800 16,3
  80
• Required
• Calculate the cost of complete and ending WIP.

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Chapter 17

• 17-2 Which one of the following statements is
  true?
• a. In a job-costing system, individual jobs use
  different quantities of production resources.
• b. In a process-costing system each unit uses
  approximately the same amount of resources.
• c. An averaging process is used to calculate
  unit costs in a job-costing system.
• d. Both (a) and (b) are true.

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Chapter 17

• 17-3 In a process-costing system, the calculation
  of equivalent units is used for
• a. calculating the dollar amount of ending
  inventory.
• b. calculating the dollar amount of the cost of
  goods sold for the accounting period.
• c. calculating the dollar cost of a particular
  job.
• d. both (a) and (b).

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• Please email me if you have a question.
• Good luck.