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ACC 241 Exam 2|216 Questions with Verified Answers,100% CORRECT
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ACC 241 Exam 2|216 Questions with Verified Answers
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ACC 241 Exam 2|216 Questions with Verified AnswersCompanies w automation often condense costs into 2 categories: - CORRECT
ANSWER direct materials
conversion costs
equivalent units - CORRECT ANSWER express the amount of work done during a
period in terms of fully completed units of output
Number of physical units * percentage of completion
conversion costs - CORRECT ANSWER direct labor + MOH
weighted average method of process costing - CORRECT ANSWER process costing
method that combines any beginning inventory units (and costs) with the current
period's units (and costs) to get a weighted average cost
difference between weighted average method of costing and FIFO costing... -
CORRECT ANSWER only in the way they treat beginning inventory costs
waste audits - CORRECT ANSWER studying the steam of waste from company
operations to determine waste that can be avoided and alternative uses for the
remaining waste
transferred in costs - CORRECT ANSWER costs that are transferred in from
another process
production cost report - CORRECT ANSWER summarizes a processing
department's operations for a period
Summarizes 5-step process
cost behavior - CORRECT ANSWER describes how costs change as volume changes
variable costs - CORRECT ANSWER costs incurred for every unit of volume
,change in direct proportion to volume
cost equation - CORRECT ANSWER mathematical equation for a straight line that
expresses how a cost behaves
Total variable cost = cost per unit x volume
fixed costs - CORRECT ANSWER costs that don't change despite wide changes in
volume
committed fixed costs - CORRECT ANSWER fixed costs that are locked in because
of previous management decisions; management has little to no control over
these costs in the short run
ex: property taxes
discretionary fixed costs - CORRECT ANSWER fixed costs that are the result of
annual management decisions; fixed costs that are controllable in the short run.
ex: advertising
mixed costs - CORRECT ANSWER costs that change, but not in direct proportion to
volume. Mixed costs have both variable cost and fixed cost components.
ex: utilities
y=vx+f
v=volume, x=cost per unit, f=fixed cost (utilities in common areas), y=total costs
relevant range - CORRECT ANSWER band of volume where total fixed costs
remain constant at a certain level and where the variable cost per unit remains
constant at a certain level
step costs - CORRECT ANSWER cost behavior that is fixed over a small range of
activity and then jumps to a different fixed level with moderate changes in
volume
curvilinear costs - CORRECT ANSWER cost behavior that is not linear
account analysis - CORRECT ANSWER method for determining cost behavior that
is based on a manager's judgement in classifying each general ledger account as a
variable, fixed, or mixed cost
,scatter plot - CORRECT ANSWER graph that plots historical cost/volume data
outliers - CORRECT ANSWER abnormal data points; data points that do not fall in
the same general pattern as the other data points
regression analysis - CORRECT ANSWER statistical procedure for determining the
line that best fits the data by using all of the historical data points, not just the
high and the low data points
absorption costing - CORRECT ANSWER costing method where products "absorb"
both fixed and variable manufacturing costs
required by GAAP and IRS
variable costing - CORRECT ANSWER costing method in which only variable
manufacturing costs are assigned to products. All fixed MOH re expensed as
period costs
leads to better decisions from management
contribution margin income statement - CORRECT ANSWER income statement
that organizes costs by behavior (variable costs or fixed costs) rather than by
function
contribution margin - CORRECT ANSWER sales revenue - variable expenes
reconciling operating income between variable and absorption costing - CORRECT
ANSWER Difference in operating income = Change in inventory level (in units) *
fixed MOH per unit
cost volume profit analysis - CORRECT ANSWER expresses the relationships
among costs, volume, and profit or loss
sales mix - CORRECT ANSWER combination of products that make up total sales
contribution margin per unit - CORRECT ANSWER the excess of the unit sales price
over the variable cost per unit. Also called unit contribution margin.
, contribution margin ratio - CORRECT ANSWER ratio of contribution margin to
sales revenue
aka
percentage of each sales dollar that is available for covering fixed expenses and
generating profit
breakeven point - CORRECT ANSWER sales level at which operating income is zero
3 ways to find breakeven point: - CORRECT ANSWER 1) income statement
approach
2) shortcut approach using the unit contribution margin
3) shortcut approach using the contribution margin ratio
1) income statement approach - CORRECT ANSWER Sales revenue - variable
expenses - fixed expenses = operating income
2) shortcut approach using the unit contribution margin - CORRECT ANSWER sales
rev - variable = contribution margin
contribution margin - fixed expenses = operating income
Sales in units = (fixed expenses + operating income)/(contribution margin per
unit)
3) shortcut approach using the contribution margin ratio - CORRECT ANSWER
Sales in dollars = (fixed expenses + operating income)/(contribution margin ratio)
sales rev and total cost on graph - CORRECT ANSWER where SR line and TC lines
intersect
sensitivity analysis - CORRECT ANSWER a what-if technique that asks what a result
will be if a predicted amount is not achieved or if an underlying assumption
changes
sales in total units (w/ product mix) & in dollars - CORRECT ANSWER =
(FC+OH)/Weighted average contribution margin per unit
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