Top PDF Cost Accounting, Chapter 1 11ch01

Cost Accounting, Chapter 1 11ch01

Cost Accounting, Chapter 1 11ch01

Budget Actual Variance Revenues $59,000 $60,000 $1,000 F Cost of goods sold 42,000 43,400 1,400 U Wages 6,700 7,000 300 U General 1,300 900 400 F Fixed costs 5,000 5,000 0 Operating income $ 4,000 $ 3,700 $ 300 U

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Test Bank Cost Accounting 6e by Raiborn and Kinney  2 chapter

Test Bank Cost Accounting 6e by Raiborn and Kinney 2 chapter

A variable cost is one that remains constant on a per-unit basis but varies in total with changes in activity. Examples of variable costs include direct material, direct labor, and (possibly) utilities. A fixed cost is one that remains constant in total but varies on a per-unit basis with changes in activity. Examples of fixed costs include straight-line depreciation, insurance, and the supervisor's salary. DIF: Moderate OBJ: 2-1

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Test Bank Cost Accounting 14E by Horngren  7 chapter

Test Bank Cost Accounting 14E by Horngren 7 chapter

14) The textbook discusses three levels of variances, Level 0, Level 1, Level 2, and Level 3. Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels. Answer: A Level 0 variance is simply the difference between actual operating income and planned operating income in the static budget.

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Test Bank Cost Accounting 14E by Horngren  21 chapter

Test Bank Cost Accounting 14E by Horngren 21 chapter

Answer: The four methods are: 1. Net Present Value (NPV); 2. Internal Rate of Return (IRR); 3. Payback; and 4. Accrual Accounting Rate of Return (AARR). NPV has advantages in that it uses discounted cash flows, and can deal with uneven cash flows, considers the inflows and outflows of the project. A disadvantage of NPV is that the results indicate if it achieves a particular cost of capital or not, but it does not indicate what the rate of return actually is. The IRR method generates an expected rate of return for the investment given the time of the project and the discounting of cash flows. A disadvantage of the IRR is that the results are expressed in the form of a percentage rather than in dollars and it is difficult to use when the project has uneven cash flows. The payback is simple to use, and adapts to both even and uneven cash flows. It also highlights the liquidity of a project. A disadvantage to the payback is that it does not consider either the time value of money, or the cash flows that occur after the payback time period. The AARR method uses the information that is most often found in financial statements including net income and depreciation. A drawback is that the method does not take into account the time value of money or the cash flows of the project.
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Cost Accounting, Chapter 7 11ch07

Cost Accounting, Chapter 7 11ch07

Steps in Developing Flexible Budgets Steps in Developing Flexible Budgets Step 1: Determine budgeted selling price, variable cost per unit, and budgeted fixed cost... Steps in Devel[r]

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Test Bank Cost Accounting 14E by Horngren  8 chapter

Test Bank Cost Accounting 14E by Horngren 8 chapter

manufacturing overhead, a spending variance for the fixed overhead component, an efficiency variance for the variable overhead, and a production-volume variance for the fixed overhead. When the firm uses a 3-variance approach, the fixed and variable spending variance is combined into a single variance, while the variable overhead efficiency is still shown separately and the fixed overhead production- volume variance is singled out. In the 2-variance method, the fixed and variable spending variances are combined into one amount along with the variable efficiency, and then the fixed production-volume is shown as a separate variance. The 1-variance method shows the difference between the actual costs incurred and the flexible-budget amount for the output level achieved.
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Cost Accounting, Chapter 2 11ch02

Cost Accounting, Chapter 2 11ch02

Relevant Range Example Relevant Range Example Assume that fixed leasing costs are $94,500 for a year and that they remain the same for a certain volume range 1,000 to 5,000 bicycles...[r]

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Test Bank Cost Accounting 6e by Raiborn and Kinney  9 chapter

Test Bank Cost Accounting 6e by Raiborn and Kinney 9 chapter

Again, using a unit of sales mix as the unit of analysis, one unit of sales mix sells for $56. Since the contribution margin is $20 on one unit of sales mix, the CM ratio on one unit of sales mix is $20/$56 = .3571. This implies that variable costs as a percentage of sales are equal to 1 - .3571 = .6429. Income before income taxes equal to 15 percent of sales can be found by solving a formula of the following type:

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Test Bank Cost Accounting 14E by Horngren  16 chapter

Test Bank Cost Accounting 14E by Horngren 16 chapter

58) Wharf Fisheries processes many of its seafood items to the demands of its largest customers, most of which are large retail distributors. To keep the accounting system simple, it has always assigned cost by the weight of the finished product. However, with increased competition, it has had to watch its prices closely and, in recent years, several items have incurred zero profit margins. After several weeks of investigation, your consulting firm has found that, while weight is important in processing of seafood, numerous items have very distinct processing steps and some items are processed through more steps than others.
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Test Bank Cost Accounting 6e by Raiborn and Kinney  6 chapter

Test Bank Cost Accounting 6e by Raiborn and Kinney 6 chapter

When standard costing is used in conjunction with process costing, the costing procedure is simplified. Standard costing eliminates the calculation in each new period of a new production cost because the standards are established as on going norms for (at least) a one-year period of time. Standard costing in a process costing system is essentially a FIFO system that permits variances to be recognized during the period.

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Test Bank Cost Accounting 14E by Horngren  11 chapter

Test Bank Cost Accounting 14E by Horngren 11 chapter

18) Pat, a Pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens Manufacturing announced the availability of a new convection oven that cooks more quickly with lower operating expenses. Pat is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one they recently purchased. Selected information about the two ovens is given below:

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Cost Accounting, Chapter 6 11ch06

Cost Accounting, Chapter 6 11ch06

Ending Inventory Budget Ending Inventory Budget Cost per finished unit: Materials $ 4 Labor 21 Variable manufacturing overhead 24 Fixed manufacturing overhead 5* Total $54... Ending[r]

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Cost Accounting, Chapter 13 11ch13

Cost Accounting, Chapter 13 11ch13

Price-Recovery Component Price-Recovery Component Cost effect of price-recovery component Input prices in 2004 – Input prices in 2003 Actual units of inputs or capacity that would hav[r]

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Cost Accounting, Chapter 12 11ch12

Cost Accounting, Chapter 12 11ch12

Time Horizon of Pricing Decisions Time Horizon of Pricing Decisions Short-run decisions have a time horizon of less than a year:  pricing a one-time-only special order  adjustin[r]

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Cost Accounting, Chapter 11 11ch11

Cost Accounting, Chapter 11 11ch11

Profitability, Activity-Based Costing, and Relevant Costs Profitability, Activity-Based Costing, and Relevant Costs Assume that if Mountain View Furniture drops Cohen’s business it ca[r]

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Cost Accounting, Chapter 10 11ch10

Cost Accounting, Chapter 10 11ch10

Nonlinearity and Cost Functions Nonlinearity and Cost Functions A step function is a cost function in which the cost is constant over various ranges of the level of activity, but the c[r]

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Cost Accounting, Chapter 9 11ch09

Cost Accounting, Chapter 9 11ch09

Comparing Income Statements Absorption Costing Comparing Income Statements Absorption Costing Total fixed production costs are $54,000 at a normal capacity of 12,000 units.. Fixed nonm[r]

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Cost Accounting, Chapter 8 11ch08

Cost Accounting, Chapter 8 11ch08

Integrated Analysis Integrated Analysis Actual manufacturing overhead incurred: Variable manufacturing overhead $244,775 Fixed manufacturing overhead 300,000 Total $544,775 Overhead [r]

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Cost Accounting, Chapter 3 11ch03

Cost Accounting, Chapter 3 11ch03

Cost-Volume-Profit Assumptions and Terminology Cost-Volume-Profit Assumptions and Terminology Operating income = Total revenues from operations – Cost of goods sold and operating cos[r]

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Cost Accounting, Chapter 4 11ch04

Cost Accounting, Chapter 4 11ch04

Variations of Normal Costing Variations of Normal Costing Home Health budget includes the following: Total direct labor costs: $400,000 Total indirect costs: $96,000... Variations of [r]

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