Cost-Volume-Profit Review Problems (For Exam 1)
Bridal Shoppe sells wedding dresses.
The cost of each dress is
comprised of the following: Selling price of $1,000 and variable (flexible)
costs of $400. Total fixed (capacity-related) costs for B
Fundamentals of Cost
1. Use cost-volume-profit (CVP) analysis
to analyze decisions.
2. Understand the effect of cost structure on
3. Use differential analysis to analyze
Cost Accounting Labour_
Method of Remuneration:
1) Time Rate system
a) Flat time Rate
b) High wage system
c) Graduated time rate
2) Payment by Results
a) Piece rate system
i) Straight piece rate
ii) Differential piece rate
Cost Accounting - Overheads_
Reapportionment of service department expenses over production department :1) Direct redistribution method:
Service department costs are divided over production department.
Ignore service rendered by one dept. t
Cost Accounting Job & Batch Costing (Theory) _
JOB AND BATCH COSTING
With job costing, we are dealing with one off situations. We are dealing with
organisations that carry out functions and services on a one at a time basis. Good examples
of job costing
Cost Accounting Transfer Pricing, Budgetary Control & Activity Based
A transfer price is the amount of money that one unit of an organisation charges for
goods and services to another unit of an organisation.
One of the key asp
Cost Accounting Standard Costing_
STANDARD COSTING - I
Method one of reading:Material:SP SQ
a) Material cost variance
b) Material price variance
c) Material usage variance
d) Material mix variance
e) Material yield variance
Labour:SR ST SR A
REV: MARCH 9, 2004
Susan, I have just seen the quarterly P&L. Its great that we exceeded our billed hours and revenue
targets. But why, with higher revenues, is our bottom line less than half of what we had budgeted. Can
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Cost Accounting - Material_
1) Reorder level = Maximum usage Maximum lead time
Minimum level + (Average usage Average Lead time)
2) Minimum level = Reorder level (Average usage Average lead time)
3) Maximum level
= Reorder level + Reorder qu
Cost Accounting - Manufacturing_
CLASSIFICATION OF COSTS: Manufacturing
We first classify costs according to the three elements of cost:
Product and Period Costs: We also classify costs as either
Product costs: the c
Cost Accounting Relevant Costing (Some Theory)_
Relevant Costing - (Some Theory)
Introduction: A management decision involves predictions of costs & revenues. Only the costs and
revenues that will differ among alternative actions are relevant to the dec
Information for Decision
1.Describe the way managers use accounting
information to create value in organizations.
2.Explain how cost accounting information is
used for decision making and performance
Cost Concepts and
1. Explain the basic concept of cost.
2. Explain how costs are presented in financial
3. Explain the process of cost allocation.
4. Understand how material, labor, and overhead
Fundamentals of Variance
1.Use budgets for performance evaluation.
2.Develop and use flexible budgets.
3.Compute and interpret the sales activity
4.Prepare and use a profit variance analysis.
1. Explain the concept and purpose of
2. Assign costs to products using a five-step
3.Assign costs to products using weightedaverage costing.
4. Prepare and analyze a production cost
1. Understand the potential effects of using reported
product costs for decision making.
2. Explain how a two-stage product costing system
3. Compare and contrast plantwide and department
Fundamentals of Product & Service
1. Explain the fundamental themes underlying
the design of cost systems.
2. Explain how cost allocation is used in a cost
3. Explain how a basic product costing
1. Understand the role of budgets in overall
2. Understand the importance of people in the
3. Estimate sales.
4. Develop production and cost budgets.
1.Explain the basic issues associated with
2.Explain the general transfer pricing rules and
understand the underlying basis for them.
3.Identify the behavioral issues and incentive
1. Explain what job and job shop mean.
2. Assign costs in a job cost system.
3.Account for overhead using
4.Apply job costing methods in
5.Describe the difference be
1. Explain why service costs are allocated.
2. Allocate service department costs using the direct method.
3. Allocate service department costs using the step method.