Quick Study 16-7
The cost of beginning inventory plus the costs added during the period
should equal the cost of units transferred out plus the cost of ending
Quick Study 16-14
EUP for Lab
Year 1. $ 60,000
Cost of investment.
Paid back in years 1-3.
Paid back in year
A gain from the sale of equipment is subtracted from net income to determine cash
flows from operations using the indirect method.
Operating activities include those transactions and events that determine net
Cash equivalent must be held at a local
Managerial Accounting Acronyms
WIP = Work In Process
OH = Overhead
RM = Raw Material
FG = Finished Goods
COGS = Cost of Goods Sold
COGM= Cost of Goods Manufactured
Finished Goods Inventory
= Sales - Variable Expenses
Sales = Price * Quantity
Variable Expenses = Variable * Quantity
Becomes profit after the break-even point
Sale Price * Sale Quantity= Break-Even Zero Profit
Contribution Margin per unit = ^ / # of
2. What is a variable cost? Identify two variable costs.
A variable cost changes in proportion to changes in volume capacity.
Direct Materials; direct labor (if employees are paid per unit), sales commission, shipping costs, and
SOME overhead c
2. What is the difference between operating departments and service departments?
Operating Departments engage directly in manufacturing or making sales directly to customers.
Service Departments do not directly manufacture products but contribu
B-1: Bill Thompson expects to invest $10,000 at 12% and, at the end of a
certain period, receive $96,463. How many years will it be before Thompson
receives the payment?
B-2: Ed Summers expects to invest $10,000 for 25 years, after which
PAY ATTENTION TO EXERCISE 3 connect and 8 FROM BOOK
20-2A Pg. 868
3. What is the benefit of continuous budgeting?
Management is continuously planning ahead
4. Identify three usual time horizons for short-term planning and budgets.
Any 12 month accounting period is known as a fiscal year.
Credit to Accounts Payable is an Increase
Debit means Left
Prepaid expenses are classified as Assets
The difference between an assets account balance and its related accumulated
Quick Study 23-6
Incremental cost analysis
Costs of purchasing
Cost to purchase Product B.
Revenue loss from reduced price ($13.50 - $12.00). 1.50
Savings of purchasing
Costs eliminated if Product B purchased ($5 of $9). 5.00
Quick Study 20-3
Computation of Budgeted Cost of Purchases
For Month Ended July 31
Budgeted ending inventory.
Budgeted cost of goods to be sold [$600,000 x (1 40%)].
Required available merchandise.
Less budgeted beg
Weighted Avg Cost of Production Summary Worksheet, Department _
For the Month Ended _
Cost of goods sold.191
Accounts receivable. 01
Analysis: The trend in sales is positive. While this is better than no growth,
one cannot definitively say wh
Weighted Avg Cost of Production Summary Worksheet, Department _Dept 1_
For the Month Ended _April 30, 20XX_
BWIP (%N/A with W.A.)
Process Cost Summary (Weighted-Average Method)
For Month Ended September 30
Costs Charged to Production
Costs of beginning work in process
Exercise 15-3 (10 minutes)
1. The cost of direct materials requisitioned in the month equals the total
direct materials costs accumulated on the three jobs less t
Note: I do want you to read the Chapter 16 Appendix that explains the difference between Weighted
Average Process Costing and FIFO Process Costing. Under FIFO the BWIP units are the first ones in for
the current period so they are the first units worked o
Quick Study 17-7
1. Plantwide overhead rate: $2,480,000/125,000 DLH = $19.84/DLH
2. Assign overhead costs to Deluxe and Basic models
25,000 DLH x $19.84/DLH
production volume (units)
Average overhead cost per unit
Quick Study 19-10
The suggested selling price for the special order ($68 per unit) exceeds the
variable costs per unit ($30 + $18 = $48 per unit). As long as fixed costs do
not change, and the company has enough capacity to produce this order
Graph #1. Variable cost
Graph #2. Fixed cost
Graph #3. Mixed cost
Graph #4. Curvilinear cost
Graph #5. Step-wise cost
Quick Study 21-1
Flexible Budget Performance Report
For Month Ended May 31
Quick Study 14-7
Finished goods inventory, December 31, 2012. $ 345,000
Plus cost of goods manufactured.
Cost of goods available for sale. 1,263,700
Less finished goods inventory, December 31, 2013.
Cost of goods sold. $ 980,100