201-Wk6-Review questions midterm-S'12 (STUD)

201-Wk6-Review questions midterm-S'12 (STUD) - Mgmt. 201...

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page 1 Mgmt. 201 – Managerial Accounting – Week 6 Review for Exam I Professor Thoman page 2 Topics for the exam 1. Cost accounting definitions 2. Flow of costs, Statement of Cost of Goods Manufactured, Statements of Cost of Goods Sold, Inventory Equation, and the Income Statement 3. Traditional versus ABC product and service costing 4. Actual versus Normal costing 5. Cost Estimation
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page 3 1. Cost Accounting Definitions – The basics Manufacturing costs Out-of-pocket costs that relate to a firm’s production operations; all costs incurred in the factory to manufacture the product. Non-manufacturing costs All out-of-pocket costs of the company that are not manufacturing costs. GAAP defines what is a Manufacturing or a Non-manufacturing cost. Direct Costs Cost of resources used to make a product or provide a service that: are physically traceable to the product (e.g., part of it), and the company chooses to trace the costs to each different product or service line. Indirect costs Costs of resources used to make a product or provide a service that are not direct costs. Companies have discretion as to what they treat as a direct cost (and trace the costs to their products) and which are indirect costs (and allocated to the product). Conversion costs (CC) Direct Labor + Manufacturing Overhead Costs to convert raw materials into the finished product. page 4 Product Costs Inventoriable Costs Costs that are assigned to products, which were either purchased for resale or manufactured for sale. The expense (Cost of Goods Sold or COGS) is recognized only when the goods are sold. Period Costs Costs which are not product costs; costs which are associated with the period in which they occur (and not a particular product manufactured or acquired for resale during that period) The expense is recognized immediately or in the same period as the cost. Variable Costs Given a relevant range of activity, costs that automatically change with the activity level; accountants usually assume that variable costs vary proportionately with the activity level. Fixed Costs Given a relevant range of activity, costs that do not vary with the level of activity
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page 5 1. Cost Accounting Definitions – Problem Classify each of the following cost items as: a. Most likely a Direct or an Indirect (D or I) cost with respect to each individual focus group. b. A Variable or Fixed (V of F) cost with respect to how the total costs of the focus group operation is affected: a lumpy cost added to the total costs (F) or a cost that varies with the number of focus groups. D or I V or F A. Payment to individuals in each focus group to provide comments on new products. B. Annual subscription of Consumer Focus to Consumer Reports magazine. C.
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This note was uploaded on 02/23/2012 for the course MGMT 201 taught by Professor Rowe during the Spring '08 term at Purdue.

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201-Wk6-Review questions midterm-S'12 (STUD) - Mgmt. 201...

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