Exam (elaborations)
ACG Final Exam Graded A+ 2024
- Course
- Institution
ACG Final Exam Graded A+ 2024
[Show more]
Content preview
ACG Final Exam Graded A+ 2024ON TEST* Make vs. Buy Decision - ANS-We must decide whether to make something
ourselves or outsource it
Write Make vs. Buy
- Write down all the relevant costs and pick the one that is cheaper
- Avoidable fixed costs and and opportunity costs go in make
4 Common Methods used to Evaluate Capital Investment Options: - ANS-*1. Payback
Period $
2. Simple Rate of Return also called Accounting Rate of Return (ARR)*
For 1 & 2 ignore the time value of money (TVM)
3. Net Present Value (NPR) $
4. Internal Rate of Return (IRR) $
For 3 & 4 consider time value of money (TVM)
$ focus on cash flows
4 Cost Behavior Patterns: - ANS-1. Variable Costs
2. Fixed Costs
- Committed Fixed Costs: Fixed Costs that the company cannot change in short run
- Discretionary Fixed Costs: Fixed costs that management has the ability to change or
influence in the short run
3. Mixed Costs: Contains a variable and fixed element
4. Step Costs: Costs that remain constant for a small range of activity but then jump to a
different fixed level
4 Q's, 2 conceptual: Allocating Manufacturing OH - ANS-This estimate is called pre-
determined overhead application rate
Pre-determined OH Rate = Budgeted OH Cost / Budgeted Activity Used
4 Quality Costs - ANS-Prevention, Appraisal, Internal Failure, External Failure
Prevention: costs incurred to avoid producing poor-quality goods or providing poor-
quality services.
oSpend more time and money on R&D and design
o Train employees
o Evaluate potential suppliers
Appraisal: costs incurred to detect poor-quality goods or services.
o Inspecting materials
o Inspecting products throughout production
,o Testing products
Internal Failure: costs incurred on defective units before delivery to customers.
o Reworking defective products
o Scrapping defective products
External Failure: costs incurred because defective goods or services are not detected
until after delivery is made to customers.
o Recalls
o Warranties
o Lost profits from lost customers
A little difficult ...
Optimal Use of Limited Resources Decision - ANS-We must decide which products to
make based on contribution margin
If there are constraints, compute CM/constraint (constraint usually = time)
PHOTO
Step 1:
Get CM for each item
What they sell for - VC
PROD. A and prod B
now for prod. a do cm/constraint
prob b. com/constraint
A/P ... comes from?
*Budgeted A/P for as of June 1st* <- June 1st is really May 31st - ANS-Comes from
*Purchases*
Cash Disbursements are 70% and 30%
May (.30)(Purchases) + 0 for April
A/R Balance ... comes from?
*Budgeted A/R balance as of May 31st?* - ANS-Comes from *Credit Sales*
Cash Collections are
Current Month = 60%
1 Month Later = 25%
, 2 Months Later = 10%
May (25% + 10% = 35%)(Credit Sales) + April (10%)(Credit Sales) + 0
As CM and SP increase ... what happens to break-even? - ANS-Decrease
As VC or FC increase ... what happens to break-even? - ANS-BE increases
Break down the *master budget variance* into the revenue/spending variance (also
called flexible budget variance) and the activity variance (also called volume variance) -
ANS-Read right to left
Budgeting Formula: - ANS-What goes out + Ending Inventory - Beginning Inventory =
What you need
Capital Budgeting - ANS-Process of planning an organization's investment in long-term
assets, also referred to as *capital assets*
Capital Turnover (ROI) Formula: - ANS-Sales/Assets
Cash Disbursements ... comes from?
*What are budgeted cash disbursements for May?* - ANS-Comes from *Purchases*
- Consider any cash spent in current period
- Consider any credit owed from previous period
Cash Disbursements are 70% and 30%
May (.70)(Purchases # for May) + April (.30)(Purchases # for April)
COGS available for sale formula? - ANS-Beginning Inventory + Purchased
(Tariff/Freight-In)
COGS formula? - ANS-COGS available for sale - EI
COGS is what cost - ANS-Product Costs
Company has determined that their fixed expenses for this month are $250,000, their
CM per unit is $8, and their valuable cost per unit is $2. If their anticipated sales this
month are 50,000 units at their selling price, the firms *margin of safety* as a percent
is... - ANS-BE IN $$ = FC + Op. Inc. / CM ratio
STEP 1:
BE = $250,000 + 0 / .80 = $312,500
STEP 2:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller CLOUND. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now