This test covers chapter 1 through 3. In particular, the following topics are emphasized. Chapter 1 • Distinguish between managerial accounting and financial accounting • Distinguish between cost and expense • Define and understand cost, direct cost, indirect cost, opportunity cost, variable cost and fixed cost • Define value chain and understand value-added activities and non-value-added activities included in a typical value chain Chapter 2 • Define and understand direct material costs, direct labor costs, and manufacturing overhead • Understand the basic cost flow equation • Distinguish between normal costing and actual costing • Understand a normalized overhead rate • Distinguish between job order costing and process costing • Understand features of operation costing • Understand features of Just-In-Time method (production and sales) • Calculate predetermined overhead rate and use it in job order costing to determine
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