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15 Cards in this Set
- Front
- Back
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What is an actual cost?
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The cost incurred (a historical or past cost).
A cost that already occurred. |
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What is a budgeted cost?
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A predicted or forecasted cost. (a future cost).
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What is a cost object?
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Anything for which a measurement of costs is desired.
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What is Cost-volume profit (CVP) analysis?
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Studies the behavior and relationship among these elements as change occur in the units sold, the selling price, the variable cost per unit, or the fixed costs of a product.
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What is the contribution margin (CM)?
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Indicates why operating income changes as number of units sold changes.
Total revenues - Total variable costs. |
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How do you find the operating income?
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CM - Fixed costs = Operating Income.
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What is the Contribution Margin % or ratio?
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Contribution Margin per unit / Selling Price.
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What is the formula for breakeven/target # of units?
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Target Income + Fixed Costs/ Contribution Margin per unit
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How do you calculate margin of safety?
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Budgeted Revenue - Breakeven Revenue.
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How do you find the single plant-wide overhead rate?
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Step 1: Determine direct cost per unit for each product (DM, then DL.)
Step 2: Compute total direct costs (multiply by # of units produced) Step 3: Total overhead/ Total direct costs = Single plant-wide OH rate! |
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What is product undercosting?
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Consumes a high level of resource but is reported to have a low cost per unit.
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What is product overcosting?
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Consumes low level of resource but reported to have high cost/unit.
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What's the formula for the expected production of units to be sold?
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Budget sales in units
+ Target ending finished goods ____________________________________ Total required units Deduct: Beginning finished goods inventory ____________________________________ Units of finished goods to be produced. |
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What's the formula for purchases of direct materials to be made in the Direct materials purchases budget?
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Direct Materials used in production + Target ending inventory of direct materials - Beginning inventory of direct material = Purchases of direct materials
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How do you find the breakeven point in revenue sales?
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Fixed Costs/ CM % (CM ratio)
CM Ratio = [CM/Sales] or CM/unit divided by Sales price. |
