033110_Review_for_Exam_II_v2003

033110_Review_for_Exam_II_v2003 - Exam 2 overview Friday...

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Exam 2 overview Friday April 2, 2010 in your section, 50 minutes 20 multiple choice questions on CH 6-10 (approx. equally weighted) Approx. 1/3 word answers and 2/3 calculations CH 7 does not include Action Analysis reports CH 9 does not include Manufacturing Cycle Efficiency Simple calculators only; bring spare batteries, pencils, erasers Violations of the Broad Honor Code include sharing information with other students during the exam or passing information along to students in other sections have serious consequences. Report any violations. Student assistants cannot answer questions. Kattelus -Spring 2010 1
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Tips What is the question asking? What managerial tool (e.g., framework, strategy, formula, equation, model) is available to answer the question? What data are relevant in answering that question? Search through the data set for the relevant data. Set aside the data that is not relevant. Reason through why each of the other answers are not correct. Kattelus - Spring 2010 2
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CH 6 Variable Costing Compare variable and absorption costing methods for: Product costs (both unit cost and total cost of a product) Period expenses Net operating income Ending inventory What are the advantages and disadvantages of each method? Kattelus - Spring 2010 3
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The relation between F/G Inventory and COGS Balance Sheet Assets: Cash x Accounts receivable x Finished goods inventory x Capital assets x Total Assets x Total Liabilities x Total Equity x Income Statement Sales x Less: Beginning F/G Inventory + Cost of Goods Manufactured Cost of Goods Available for Sale - Ending F/G Inventory COGS x Gross Margin x Less: x Kattelus - Spring 2010 4
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Key Lessons in CH 6 Variable Costing Direct Materials Direct Labor Variable Manufacturing Overhead FIXED MANUFACTURING OVERHEAD  Variable Selling and Administrative Expenses Fixed Selling and Administrative Expenses Variable Costing Absorption Costing Product Costs Period Costs Product Costs Period Costs 5 Kattelus - Spring 2010
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How is Fixed Mfg O/H treated differently between Variable and Absorption Costing? Balance Sheet Income Statement Absorption Costing Inventory includes fixed manufacturing overhead; “inventoriable” product costs Cost of Goods Sold includes fixed manufacturing overhead Variable costing No fixed manufacturing overhead in inventory Expense all fixed manufacturing overhead Kattelus - Spring 2010 6
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Summary of Key Insights Kattelus - Spring 2010 7 Relation between Effect Relation between production on variable and and sales iniventory absorption income Inventory Absorption Production > Sales increases > Variable Inventory Absorption Production < Sales decreases < Variable Absorption Production = Sales No change = Variable
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On CH 6 Variable Costing The principal difference between variable costing and absorption costing centers on: whether fixed manufacturing costs should be included as product costs Kattelus - Spring 2010 8
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This note was uploaded on 10/17/2011 for the course ECON 101 taught by Professor Thompson during the Spring '11 term at Michigan State University.

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033110_Review_for_Exam_II_v2003 - Exam 2 overview Friday...

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