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15 Cards in this Set

  • Front
  • Back
What is an actual cost?
The cost incurred (a historical or past cost).

A cost that already occurred.
What is a budgeted cost?
A predicted or forecasted cost. (a future cost).
What is a cost object?
Anything for which a measurement of costs is desired.
What is Cost-volume profit (CVP) analysis?
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.
What is the contribution margin (CM)?
Indicates why operating income changes as number of units sold changes.

Total revenues - Total variable costs.
How do you find the operating income?
CM - Fixed costs = Operating Income.
What is the Contribution Margin % or ratio?
Contribution Margin per unit / Selling Price.
What is the formula for breakeven/target # of units?
Target Income + Fixed Costs/ Contribution Margin per unit
How do you calculate margin of safety?
Budgeted Revenue - Breakeven Revenue.
How do you find the single plant-wide overhead rate?
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!
What is product undercosting?
Consumes a high level of resource but is reported to have a low cost per unit.
What is product overcosting?
Consumes low level of resource but reported to have high cost/unit.
What's the formula for the expected production of units to be sold?
Budget sales in units
+ Target ending finished goods
Total required units
Deduct: Beginning finished goods inventory
Units of finished goods to be produced.
What's the formula for purchases of direct materials to be made in the Direct materials purchases budget?
Direct Materials used in production + Target ending inventory of direct materials - Beginning inventory of direct material = Purchases of direct materials
How do you find the breakeven point in revenue sales?
Fixed Costs/ CM % (CM ratio)

CM Ratio = [CM/Sales] or CM/unit divided by Sales price.