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17 Cards in this Set
- Front
- Back
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What is a Differential Cost? |
Difference between the cost of two alternative decisions, or of a change in output levels.The concept is used when there are multiple possible options to pursue, and a choice must be made to select one option and drop the others. |
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How does one calculate the Contribution Margin? |
Revenues - Variable Expenses = Contribution Margin
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What does the Contribution Margin Reveal? |
The contribution margin reveals how much of a company's revenues will be contributed to the company's fixed expenses and net income. |
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Within the relevant range, variable cost per unit will... |
Remain Constant |
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How to Calculate the Cost of Goods Sold (COGS)? |
Beginning Inventory + Purchases - Ending Inventory = COGS |
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What is a Work-in-Process-Inventory? |
Work-in-process inventory are materials that have been partially converted through the production process. These items are typically located in the production area. The valuation of this inventory may be stored in a separate work-in-process account in the general ledger. |
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In a job-order costing system, the use of direct materials that have been previously purchased is recorded as a debit to: |
Work in Process Inventory |
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The balance in the Work in Process account equals: |
the balances on the job cost sheets of uncompleted jobs. |
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Which of the following accounts is debited when direct labor is recorded? |
Work In Process |
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Which of the following is the correct formula to compute the predetermined overhead rate? |
Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. |
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In a job-order costing system, direct labor cost is ordinarily debited to: |
Work in Process |
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What is an Account Analysis? |
This is when each account is analyzed and classified as either fixed or variable based on the analyst's knowledge of how the account behaves. |
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What is the Engineering Approach? |
This classifies costs based upon an industrial engineer's evaluation of production methods, material, labor and overhead requirements. |
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The variable cost per hour is equal to: |
the change in cost divided by the change in hours/units. |
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What is an opportunity cost? |
It is the potential benefit that is given up when one alternative is selected over another. |
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How does one calculate Cost Of Goods Manufactured (COGM)? |
Direct Material, Direct Labor, Manufacturing Overhead = Manufacturing costs + Beginning Work-in-Process - Ending Work-in-Process Inventory. |
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What are Sunk Costs? |
These costs have already been incurred and cannot be changed now or ever. These should be ignored when making a decision. |
