ac102_rev04-06 - Revised Spring 2011 EXAM REVIEW UNIT II -...

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Revised Spring 2011 Page 1 of 25 EXAM REVIEW UNIT II - CHAPTERS 4, 5, & 6 Study Suggestions Review your class notes, homework exercises and problems. Review Summary, Review Problem and Glossary at the end of each chapter. Use your Study Guide, especially Multiple Choice and True & False questions Review the resource materials and practice quizzes and exams available on the Textbook Website: http://highered.mcgraw-hill.com/sites/0073048836/information_center_view0/ Additional review materials are available online at sites such as: http://www.cliffsnotes.com/WileyCDA/Section/id-305261.html Key Terms and Concepts to Know Chapter 4 – Systems Design: Process Costing Differences and similarities between job order and process costing. Flow of product costs through the inventory accounts and intocost of goods sold. Each production department has a unique Production Report and separate work- in-process inventory account. Journal entries required in a Process Cost system. Concept of "Equivalent Units" and how to calculate equivalent units Prepare a Production Report consisting of: Quantity Schedule Equivalent Units Cost per Equivalent Unit Cost Reconciliation/Assignment Chapter 5 - Cost Behavior: Analysis And Use Variable costs o Effect of a change in volume of total and per unit variable costs o Relationship between variable cost and the activity base. o True variable costs versus step variable costs. o Effect of the relevant range on the behavior of variable costs. Fixed cots o Effect of a change in volume of total and per unit fixed costs o Effect of the relevant range on the behavior of fixed costs.
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Revised Spring 2011 Page 2 of 25 o Committed versus discretionary fixed costs. Mixed costs o Have properties of both variable and fixed costs. o Effect of a change in volume of total and per unit mixed costs o Analysis of mixed costs high-low method and scattergraph (quick-and-dirty) methods. Contribution approach income statement. Chapter 6 - Cost-Volume-Profit Relationships CVP analysis is based on the interactions among the following five elements: o Price or revenue of products o Volume or level of activity o Per units variable costs o Total fixed costs. o Mix of products sold (CVP analysis requires an assumption about sales mix) Contribution Margin o Difference between gross margin and contribution margin o Understand the relationship among: Revenue, variable cost and contribution margin per unit Why fixed costs and operating income per unit are never used. Total revenue, variable cost, contribution margin and fixed costs Level of activity versus number of units sold o Contribution Margin is the remaining amount of sales dollars available to cover fixed expenses and profit. o
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ac102_rev04-06 - Revised Spring 2011 EXAM REVIEW UNIT II -...

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