Accounting Test 3

Front 1

conversion costs

Back 1

consists of direct labor and factory overhead; costs of converting the materials into a finished product

Front 2

direct materials

Back 2

costs of any material that is an integral part of the finished product

Front 3

factory overhead

Back 3

costs other than direct materials and direct labor that are incurred in the manufacturing process.

Examples:

Heating and lighting the factory, repairing and maintaining factory equipment, property taxes on factory buildings and land, insurance on factory buildings, depreciation on factory plant and equipment

Front 4

product costs

Back 4

consists of manufacturing costs: direct materials, direct labor, and factory overhead

Front 5

overhead rate

Back 5

= estimated total factory overhead costs / estimated activity base

Front 6

dispose of FO

Back 6

debit -cost of goods sold

credit - FO

Front 7

cost behavoir

Back 7

manner in which a cost changes as a related activity changes. Useful for knowing how costs behave allows managers to predict profits as sales and production volumes changes.

Front 8

Relationship among cost volume and price method

Back 8

examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits.

Front 9

contribution margin

contribution margin ratio

Back 9

= sales - variable costs

= contribution margin / sales

Front 10

calculate operating profit

Back 10

sales

variable costs (minus)

cont. margin (minus)

fixed costs (minus)

income from op.

Front 11

Calculate income change with sales increase

Back 11

= change in sales units * unit contribution margin

Front 12

Calculate break-even units

Back 12

= fixed costs / unit contribution margin

Front 13

Calculate variable change and new break-even

Back 13

compare current vs. propesed;

= fixed costs / unit contribution margin

Front 14

Calculate break-even point multiple products

Back 14

units * % listed

Front 15

calculate overall unit contribution margin

Back 15

= manufacturing margin - variable selling and administrative expenses

Front 16

Variable vs absorption costing

Back 16

variable = direct materials, direct labor, variable factory overhead

absorption = direct materials, direct labor, variable factory overhead, fixed factory overhead

Front 17

calculate flexible budget; variable total and fixed

Back 17

variable costs - direct labor

fixed costs - salaries

Front 18

identify type of budget

Back 18

operating budgets : sales, cost of goods sold, production, Dm purchases, DL cost, FO, Selling and admin. expenses

Financial budgets : cash and capital expenditures

Front 19

planning for capital expenditures is necessary

Back 19

because machinery get worn out or becomes obselete

Front 20

budget reports

Back 20

report that summarizes actual costs, standard costs, and the differences for the units produced

Front 21

calculate direct material price variance

Back 21

= (actual price - standard price) * actual quantity

Front 22

calculate direct material quantity variance

Back 22

= (actual quantity - standard quantity) * standard price

Front 23

calculate direct labor time variance

Back 23

= (actual direct labor hours - standard direct labor hours) * standard rate per hour

Front 24

calculate direct labor rate variance

Back 24

= (actual rate per hour - standard rate per hour) * actual hours

Front 25

entry for purchase of direct materials with variance

Back 25

debit - work in process

debit - DM quantity variance

Credit - Materials