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Managerial Accounting 202 Final-Exam Study Guide

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Managerial Accounting 202 Final-Exam Study Guide Powered By Docstoc
					Exam c ACC 202 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 1 1 1 1 2 2 2 2

150 pts

Identify & explain the differences between financial and Identify & describe the 3 major management activities. Name the US organization that issues standards of ethical Identify, and give examples of, the 4 broad areas in which Identify the 6 key aspects of the Sarbanes Oxley Act.

Identify the 3 manufacturing cost categories and the types of Identify the 2 components of Prime Cost. Identify the 2 components of Conversion Cost. Identify the 3 inventory accounts used by a manufacturer, Calculate Cost of Goods Manufactured and describe how & Describe how Variable and Fixed Costs behave, in total and Distinguish between Direct and Indirect Costs, and give Define the term Opportunity Cost, and identify the amount in Define the term Sunk Cost, and identify the amount in a 2 Identify, and give examples of, the 4 types of quality costs. 3 3 3 3 3 3 3 3 Describe the differences and similarities between Job Order Understand the journal entries needed to depict the flow of Describe how the Manufacturing Overhead account Define the term Cost Driver and how it is used in the Calculate a Predetermined Overhead Rate and use it to Calculate the over- or under-applied overhead in a Write the necessary journal entry to [a] close MOH to COGS Calculate the effect on COGS and on Net Income of closing

24 4 Calculate Equivalent Units at month-end, for a processing 25. Exam 4 Calculate Cost Per Equivalent Units at month-end, for a 26 4 Using the inventory formula calculate the number of units 27 28 29 30 31 32 33 34 35 36 37 38 39 5 5 5 5 5 5 6 6 6 6 6 6 6 Understand the difference between, and give examples of, Understand what is meant by the phrase ―cost structure‖. Describe and give an example of a step-variable cost. Describe and give an example of a mixed cost. Analyze a mixed cost using the high low method and Calculate total cost using the mixed cost equation. Calculate contribution margin in total and on a per unit Know the formula for and calculate contribution margin ratio. Calculate break-even sales units and break-even sales Calculate target profit sales units and target profit sales Describe what margin of safety means, and calculate it in Calculate the degree of operating leverage, understand Perform incremental ―what if‖ analysis to determine the

40 7 Identify the single element that is treated differently under 41 7 Explain when FMOH is deferred in inventory and when it is 42 7 Calculate net income under absorption and variable costing, 43 8 Describe the purpose of an ―activity cost pool‖. 44 8 Calculate the balance in an activity cost pool as a result of

45 8 Calculate an activity rate given the relevant data. 46 8 Assign costs to a cost object by performing second stage 47 Calculate a product margin &/or a customer margin given 48 49 50 51 52 53 54 55 56 57 58 9 9 9 9 9 9 # # # # Which part of a master budget must be prepared first? Calculate expected cash collections from sales. Compute targeted ending inventory in units given the Calculate the required production level in units given the Calculate budgeted cash disbursements for variable selling What is the direct labor budget is based on? Calculate the standard measure of cost for fixed Calculate applied overhead in a standard cost system. Calculate and interpret price and quantity variances for Identify the person or job title most likely to be responsible Calculate the standard quantity allowed for the actual level

59 # Describe the purpose of a flexible budget. 60 # Calculate both variable and fixed cost flexible budget data. 61 # Calculate flexible budget variances. 62 Compute and interpret the fixed overhead budget and 63 Compute and interpret the variable overhead spending and 64 Calculate Predetermined Variable & Fixed Overhead Rates. 65 66 67 68 69 70 71 72 73 74 75 76 # # # # # # # # # # Identify the 3 types of responsibility centers and the Define traceable and common fixed costs, explain how they Describe the usefulness of the measure called segment Properly identify, calculate and use segment margin in a Calculate total company net income using the CM income Calculate ROI, including Margin and Turnover. Identify and explain the primary disadvantage of using ROI Calculate Residual Income. Explain the primary advantage of using Residual Income to Explain the primary disadvantage of using Residual Income Identify the selling division’s lowest acceptable transfer price # Identify the buying division’s highest acceptable transfer

a. b. c. d.

77 # Identify the relevant costs in various decision scenarios 78 # Determine if a division should be maintained or discontinued 79 Determine if a company should make or buy a part by 80 Determine if a company should accept or reject a special 81 Prepare calculations to identify which product to prioritize, 82 Define the following terms: Joint costs Joint products Split off point Separate product costs 83 # Determine if a company should sell or process a product 84 A Describe the concept of price elasticity. 85 Calculate a selling price using cost-plus pricing based on an 86 Calculate a mark-up percentage given the necessary 87 A Calculate the target cost using the target costing process

Final-Exam Study Guide Role of management accountants within an organization - (CMA) Planning - Directing and Motivating - Controlling IMA - Institute of Management Accountants 1.Competence, 1CEO & CFO certify F/S & disclosures Direct Materials (DM) Direct Labor (DL) Manufacturing Overhead Direct Material Direct Labor Direct Labor Manufacturing Overhead Raw Materials (RM) Work in Process (WIP) Finished Goods (FG) Beginning finished goods inventory - Add: Cost of goods Direct Costs can be easily & conveniently traced to a particular The potential benefit given up when one alternative is selected Costs that have already been incurred and cannot be changed. Prevention costs - Appraisal costs - Internal failure costs - External

Identify the main ―driver‖ of MOH costs (cost driver) Estimated predetermined overhead rate (POHR) = Estimated total

"Long-term & cannot be significantly reduced in the short term refers to the relative proportion of fixed and variable costs in an A resource obtainable only in large chunks (such as maintenance A mixed cost has both fixed and variablecomponents. Y = a + bX

CM units = Unit CM/Unit selling price CM Ratio = Total CM/Total sales Sales = Variable expenses + Fixed expenses + Sales = Variable expenses + Fixed expenses + Profits or Unit The excess of budgeted (or actual) sales over the break-even Degree of operating leverage = Contribution margin/Net income

fix MOH production exceeded sales. Fixed manufacturing overhead was

ABC uses more cost pools than traditional cost systems that often

actvity rate = total cost/total activity is the products sles and the direct and indirect cost that product Sales Budget which is a detailed schedule showing the expected

production budget

production manager

is responsible for the quantity of raw

A budget that can be used to estimate what costs should be for

1. Cost Center - A segment whose manager has control over Traceable costs arise because of the existence of a particular The segment margin is a valuable tool for assessing the long-run Segment margin = contribution margin – traceable fixed costs ROI = Net operating income/Average operating assets A manager who is evaluated based on R O I may reject Residual income measures net operating income earned less the The residual income approach encourages managers to make It cannot be used to compare the performance of divisions of

drop the digital watch segment only if its profit would increase. not in powerpoint A special order is a one-time order that is not considered part of

Costs that are incurred up to the split-off point in a process that Two or more products that are produced from a common input. (p. That point in the manufacturing process where some or all of the

The price elasticity of demand measures the degree of change in The first step in the absorption costing approach to cost-plus Markup % = (Required ROI × Investment) + SG&A expenses / Target cost = Anticipated selling price – Desired profit

F08

4 3 3 3 5 5 5 5 4 5 5 5 5 5 3 3 5

"Can be altered in the short-term by current

5 5 5 4 4

5 5

5

For example, the landing fee paid to land an

Average operating assets givie?n

csubject

# r d 2 0

defintion -Identify & explain the differences between financial and managerial accounting. -Identify & explain the differences between financial and managerial accounting. -Identify & describe the 3 major management activities. -Name the US organization that issues standards of ethical conduct for management accountants. -Identify, and give examples of, the 4 broad areas in which management accountants have ethical -Identify the 6 key aspects of the Sarbanes Oxley Act.

Financial AccountingManagerial Accounting Planning - Directing and Motivating - Controlling IMA - Institute of Management Accountants 1.Competence, 1CEO & CFO certify F/S & disclosures

c subject 2 Cost

# 5

req de 0 5

defintion Identify the 3 manufacturing cost categories and the types of cost included in each.

Identify the 3 manufacturing cost categories and the types of cost included in each. -Identify the 2 components of Prime Cost. -Identify the 2 components of Conversion Cost. -Identify the 3 inventory accounts used by a manufacturer, and what makes each increase & decrease. -Calculate Cost of Goods Manufactured and describe how & when it is used. -Describe how Variable and Fixed Costs behave, in total and on a per-unit basis, as production volume changes, and -Distinguish between Direct and Indirect Costs, and give examples of each. -Define the term Opportunity Cost, and identify the amount in a decision scenario. -Define the term Sunk Cost, and identify the amount in a decision scenario. -Identify, and give examples of, the 4 types of quality costs.

Direct Materials (DM) Direct Labor (DL) Manufacturing Overhead (MOH) Direct Material Direct Labor Direct Labor Manufacturing Overhead Raw Materials (RM) Work in Process (WIP) Finished Goods (FG) Beginning finished goods inventory - Add: Cost of goods manufactured - Cost of goods Direct Costs can be easily & conveniently traced to a particular cost object - Indirect Costs The potential benefit given up when one alternative is selected over another. Costs that have already been incurred and cannot be changed. They should be ignored Prevention costs - Appraisal costs - Internal failure costs - External failure costs

System

-Describe the differences and similarities between Job Order and Process Costing Systems, and the

-Describe the differences and similarities between Job Order and Process Costing Systems, and the -Understand the journal entries needed to depict the flow of costs through both Job Order and -Describe how the Manufacturing Overhead account functions (i.e. what is recorded on the debit -Define the term Cost Driver and how it is used in the overhead application process. -Calculate a Predetermined Overhead Rate and use it to apply overhead in a manufacturing -Calculate the over- or under-applied overhead in a manufacturing scenario. -Write the necessary journal entry to [a] close MOH to COGS or [b] allocate the over- or under-Calculate the effect on COGS and on Net Income of closing MOH to COGS.

Which of the following companies would

Identify the main ―driver‖ of MOH costs (cost driver) predetermined overhead rate (POHR) = Estimated total

PearCo’s incurred 2,000 actual direct labor PearCo’s MOH costs are primarily driven by PearCo’s actual overhead for the year was What effect will closing the overapplied

Job WR53 at NW Fab, Inc. required $200

4 System

2

1

1

-Calculate Equivalent Units at month-end, for a processing department, given all the

-Calculate Equivalent Units at month-end, for a processing department, given all the -Calculate Cost Per Equivalent Units at month-end, for a processing department, given -Using the inventory formula calculate the number of units transferred to the next

Equivalent units Costs for the

For the current

Cost Behavior:

-Understand the difference between, and give examples of,

-Understand the difference between, and give examples of, -Understand what is meant by the phrase ―cost structure‖. -Describe and give an example of a step-variable cost. -Describe and give an example of a mixed cost. -Analyze a mixed cost using the high low method and determine the -Calculate total cost using the mixed cost equation.

"Long-term & cannot be significantly reduced in the short refers to the relative proportion of fixed and variable costs in A resource obtainable only in large chunks (such as A mixed cost has both fixed and variablecomponents. Y = a high cost – low cost \ If your fixed

Cost–V

-Calculate contribution margin in total and on a per unit basis.

-Calculate contribution margin in total and on a per unit basis. -Know the formula for and calculate contribution margin ratio. -Calculate break-even sales units and break-even sales dollars. -Calculate target profit sales units and target profit sales dollars. -Describe what margin of safety means, and calculate it in dollars, in -Calculate the degree of operating leverage, understand what it -Perform incremental ―what if‖ analysis to determine the change in net

CM units = Unit CM/Unit selling price CM Ratio = Total CM/Total sales CVP Equation method Sales = Variable expenses + Fixed expenses + Profits The excess of budgeted (or actual) sales over the breakDegree of operating leverage = Contribution margin/Net

Coffee Klatch is an espresso stand in a Coffee Klatch is an espresso stand in a Coffee Klatch is an espresso stand in a Coffee Klatch is an espresso stand in a Coffee Klatch is an espresso stand in a What is the profit impact if Racing can increase unit What is the profit

What is the profit

At Coffee Klatch

Variable Costing:

-Identify the single element that is treated differently under absorption and variable

-Identify the single element that is treated differently under absorption and variable -Explain when FMOH is deferred in inventory and when it is released from inventory -Calculate net income under absorption and variable costing, and explain in

fix MOH production exceeded sales. Fixed manufacturing Variable costing net operating income $90,000

Activit

-Describe the purpose of an ―activity cost pool‖.

-Describe the purpose of an ―activity cost pool‖. -Calculate the balance in an activity cost pool as a result of -Calculate an activity rate given the relevant data. -Assign costs to a cost object by performing second stage -Calculate a product margin &/or a customer margin given the

ABC uses more cost pools than traditional cost actvity rate = total cost/total activity is the products sles and the direct and indirect cost

Define activities, activity cost pools, & activity

Profit Planning

-Which part of a master budget must be prepared first?

-Which part of a master budget must be prepared first? -Calculate expected cash collections from sales. -Compute targeted ending inventory in units given the -Calculate the required production level in units given the -Calculate budgeted cash disbursements for variable selling What is the direct labor budget is based on?

Sales Budget

production

Royal Company is preparing budgets for the quarter At Royal Company, five pounds of material are Management at Royal Company wants ending Royal pays $0.40 per pound for its materials. At Royal, each unit of product requires 0.05 hours (3

# Stand

-Calculate the standard measure of cost for fixed manufacturing overhead.

-Calculate the standard measure of cost for fixed manufacturing overhead. -Calculate applied overhead in a standard cost system. -Calculate and interpret price and quantity variances for direct material and -Identify the person or job title most likely to be responsible for the direct -Calculate the standard quantity allowed for the actual level of production

Standard Costs & The Balanced Scorecard

L01 Explain how direct materials standards and direct labor standards are L02 Compute the direct materials price and quantity variances and explain L03 Compute the direct labor rate and efficiency variances and explain L04 Compute the variable manufacturing overhead spending and efficiency Summary A standard is a benchmark or "norm" for measuring performance. Standards are normally set so that they can be attained by reasonable, When standards are compared to actual performance, the difference is Not all variances require management time or attention. Only unusual or Traditional standard cost variance reports are often supplemented with A balanced scorecard consists of an integrated system of performance

For variable manufacturing overhead, we use a rate The standard price per unit for direct materials should production manager is responsible for the quantity of

If we desire a profit of three thousand Instead of the terms price and quantity used

Price Variance Quantity Variance

Glossary Balanced scorecard An integrated set of performance Delivery cycle time The elapsed time from receipt of a Ideal standards Standards that assume peak efficiency Labor efficiency variance The difference between the Management by exception A management system in Manufacturing cycle efficiency (MCE) Process (valueMaterials price variance The difference between the Materials quantity variance The difference between the Practical standards Standards that allow for normal Standard cost card A detailed listing of the standard Standard cost per unit The standard quantity allowed of Standard hours allowed The time that should have been Standard hours per unit The amount of direct labor time

(AQ × AP) – (AQ (AQ × SP) – (SQ

Chapter 11: Flexible Budgets and Overhead

LO1Prepare and understand a A flexible budget approach L02 Prepare a performance report for Understand various overhead Variable overhead efficiency

Budget variance The difference Denominator activity The level of Flexible budget A budget that can be Static budget A budget created at the Volume variance The variance that

SUMMARY When analyzing overhead costs, it is A flexible budget shows what costs The two variances for variable Two variances for fixed overhead are The sum of all four overhead

# Flexibl

-Describe the purpose of a flexible

-Describe the purpose of a flexible A budget that can be used to -Calculate both variable and fixed -Calculate flexible budget variances. -Compute and interpret the fixed -Compute and interpret the variable Spending variance = AH(AR -Calculate Predetermined Variable & The predetermined overhead

Variable overhead = AH(AR — SR)

ColaCo’s actual production for the period required 3,200 What is the variance for indirect material when the Spending Variance-Results from paying moreor less than

Chapter 12: Segment Reporting, Decentralization, & Transfer Pricing

Prepare a segmented income statement (contribution format) Work with traceable fixed costs, common fixed costs, & segment L04 (Appendix 12A) Determine the range, if any, within which a L02 Compute return on investment (ROI) and show how changes L03 Compute residual income and understand its strengths and

summary For purposes of evaluating performance, business units are Segmented income statements provide information for evaluating Return on investment (ROI) and residual income and its cousin glossary Common fixed cost A fixed cost that supports more than one Cost center A business segment whose manager has control Decentralized organization An organization in which decisionEconomic Value Added (EVA) A concept similar to residual ments may be made to GAAP financial statements for ments in operating assets. (p. 518) Margin Net operating income divided by sales. (p. 532) Net operating income Income before interest and income taxes Profit center A business segment whose manager has control Residual income The net operating income that an investment Responsibility center Any business segment whose manager has Return on investment (ROI) Net operating income divided by Segment Any part or activity of an organization about which Segment margin A segment's contribution margin less its margin available after a segment has covered all of its own Traceable fixed cost A fixed cost that is incurred because of the segment and that would be eliminated if the segment were

Turnover Sales divided by average operating assets. (p. 532) 543

# Segment

-Identify the 3 types of responsibility centers and the measures

-Identify the 3 types of responsibility centers and the measures -Define traceable and common fixed costs, explain how they are -Describe the usefulness of the measure called segment margin. -Properly identify, calculate and use segment margin in a -Calculate total company net income using the CM income -Calculate ROI, including Margin and Turnover. -Identify and explain the primary disadvantage of using ROI to -Calculate Residual Income. -Explain the primary advantage of using Residual Income to -Explain the primary disadvantage of using Residual Income to -Identify the selling division’s lowest acceptable transfer price -Identify the buying division’s highest acceptable transfer price.

gl

ROI = Net operating income divided by

ROI

LOS (Appendix 12B) Charge operating

1. Cost Center - A segment whose Traceable costs arise because of the The segment margin is a valuable tool for Segment margin = contribution margin – ROI = Net operating income/Average A manager who is evaluated based on R Residual income measures net operating The residual income approach encourages It cannot be used to compare the

How much of the common fixed cost of Suppose square feet is used as the basis

13 Relevant Costs

5

4

Chapter 13: Relevant Costs

LO1Identify L02 Should a L03 Prepare a L04 Should a L05 Determine L06 Prepare an

Relevant costs: Differ among Include avoidable Irrelevant costs: Include Include sunk Include future Constraint A time or raw is synonymous Joint costs Costs Joint products Make or buy Relaxing (or source. Relevant cost A avoidable cost Sell or process Special order A Split-off point Sunk cost Any Vertical

1 -Identify the

appendix

Pricing

2

Appendix A: Pricing Markup

Understand the Calculate a Compute the

Markup is the Markup is usually Cost-plus pricing problem Handy Appliance a selling price of approximately an investment of the company Let see how we Projected sales Desired profit Target cost for Target cost per (40,000 units × ($2,000,000 × $1200000. 300000 $900000. $22.5

($900,000 ÷

2

0 -Describe the

For the current a. 10,000 b. 11,500 c. 13,500 d. 15,000

ch 5 If your fixed

ch6 Coffee Klatch is a. 1.319 b. 0.758 c. 0.242 d. 4.139

What is the profit

What is the profit

What is the profit (1) cuts its selling (2) increases (3) increases What is the profit pays a $15 sales (2) increases unit

If Racing has an

Coffee Klatch is 872 cups b. 3,611 cups c. 1,200 cups d. 1,150 cups

Coffee Klatch is a. $1,300 b. $1,715 c. $1,788 d. $3,129

Coffee Klatch is

a. 3,363 cups b. 2,212 cups c. 1,150 cups d. 4,200 cups

Coffee Klatch is a. 3,250 cups b. 950 cups c. 1,150 cups d. 2,100 cups

Coffee Klatch is a. 2.21 b. 0.45 c. 0.34 d. 2.92 At Coffee Klatch If sales increase a. 30.0% b. 20.0% c. 22.1% d. 44.2%

Beginning work A. $1160000. B. $ 910,000 C. $ 760,000 D. Cannot be

Which of the (may be more a. Scott Paper b. Architects. c. Heinz for d. Caterer for a e. Builder of

PearCo’s MOH PearCo Calculate Predetermined PMOH Rate =

If Manufacturing Overhead is . . .

Alternative 1 Close to Cost of Goods Sold

Alternative 2 Allocation

UNDERAPPLIED INCREASE Cost of Goods (Applied OH is than actual OH)

INCREASE Work in Process Finished Goods Cost of Goods

OVERAPPLIED (Applied OH is than actual OH)

DECREASE Cost of Goods

DECREASE Work in Process Finished Goods Cost of Goods

PearCo’s Calculate the Overhead Applied MOH =

PearCo’s actual How much MOH a. Net operating Was MOH over b. Net operating Under / (Over) c. Net operating Applied MOH = Actual MOH -

Job WR53 at NW a. $200. b. $350. c. $380. d. $730.

What effect will

from 1 2 3 4 5 6 7 8 9 10 11 12 13 appe

subject # of re d Managerial 2 0 2 Cost Terms, 5 0 5 System 3 2 1 System 2 1 1 Cost Behavior: 2 0 2 Cost–Volume4 3 1 Variable 2 1 1 Activity Based 1 1 0 Profit Planning 3 3 0 Standard 5 4 1 Flexible 5 4 1 Segment 9 5 4 Relevant Costs 5 4 1 Pricing 2 2 0

defintion -Identify & explain the differences between financial and managerial accounting. Identify the 3 manufacturing cost categories and the types of cost included in each. -Describe the differences and similarities between Job Order and Process Costing Systems, and the type of product -Calculate Equivalent Units at month-end, for a processing department, given all the relevant data. -Understand the difference between, and give examples of, committed and discretionary fixes costs. -Calculate contribution margin in total and on a per unit basis. -Identify the single element that is treated differently under absorption and variable costing, & describe how it is -Describe the purpose of an ―activity cost pool‖. -Which part of a master budget must be prepared first? -Calculate the standard measure of cost for fixed manufacturing overhead. -Describe the purpose of a flexible budget. -Identify the 3 types of responsibility centers and the measures used to evaluate each one. -Identify the relevant costs in various decision scenarios (make or buy, drop or keep, etc.) -Describe the concept of price elasticity.


				
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