Activity Based Costing,
Lean Production, and
Costs of Quality
Plantwide Overhead vs.
Plantwide Overhead use one
overhead rate for entire factory.
May result in cost distortion for
companies producing multiple
Cost-Volume-Profit (CVP) Analysis
Is a powerful tool that helps managers make important
Is a relationship among costs, volume, and profit or loss
Determines how much the company must sell each
Standard Costs and Variances
Direct Materials Variances
Direct Labor Variances
Standards are benchmarks or norms for
For example - a person may have a
Exam 1 Sample Questions: Chapters 1, 2, 3, 4
1. Managerial accounting places less emphasis on precision and more emphasis on flexibility and
relevance than financial accounting.
2. Which of the following statements is false?
ACG 2071, Exam 2- Sample questions:
1. Within the relevant range, as the number of units produced increases:
variable costs increase in total.
the variable cost per unit remains the same.
fixed costs in total remain the same.
Relevant Costs for Short-Term
Different Types of Short-Term
- Accepting a Special Sales Order for a
- Pricing decisions
- Dropping a current product, service,
department, business segment, etc.
Change in cost (Y)
High Cost - (same)Low Cost
Change in volume (X)
High Volume - (same)Low Volume
Compute the intercept (i.e.TotalFixed Costs) by plugging in slope with costs for the highest orlowest activity
Highest:y2= x2m +FC
Variable, Fixed and Mixed
remain the same
per unit and change in total as
volume of activity changes
Fixed costs remain the same in
total and change per unit as
volume of activity changes (note
Cost-Volume-Profit(CVP) analysis relies on the interdependency of
Five components,or pieces of information
Sales price perunit
No volume discounts
Variablecosts per unit
Costs are linear throught relevant range