Cost Accounting
This type of accounting deals with accumulating and recovering costs for products or services.
What is cost accounting?
These costs can be directly traced to a specific product or service, such as materials or labor.
What are direct costs?
These costs remain constant regardless of the level of production or business activity.
What are fixed costs?
- method is used to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and their corresponding total costs. The difference between the two points helps to determine the variable cost per unit, which is then used to calculate the fixed cost.
Answer: What is the high-low method?
This type of cost includes direct materials, direct labor, and overhead costs that can be directly traced to the production of a specific product or service.
What is prime cost?
In a company like GreenTech Manufacturing, which produces sustainable home appliances, this type of cost can be directly traced to the production of dishwashers. The price of the stainless steel used for each appliance is what type of cost?
Answer:
What is a direct cost?
These costs vary in direct proportion to changes in production levels, like raw materials or direct labor.
What are variable costs?
This refers to the potential benefit lost when choosing one option over another, often considered in decision-making.
What is opportunity cost?
This accounting focuses on preparing reports for internal managers, helping them make decisions about future operations.
What is managerial accounting?
This cost refers to the expenses associated with converting raw materials into finished goods, including direct labor and manufacturing overhead.
What are conversion costs?
Talk-a-doodle-doo INC. runs a call centre business and wants to figure out the best way to allocate its overhead costs. It decides that it will allocate costs incurred by the number of minutes the employee spends on the phone with a customer. This is an example of?
What is a cost driver?
This refers to the revenue left after covering variable costs, useful for understanding profitability.
What is contribution margin?
This field of accounting focuses on external reporting, giving stakeholders an understanding of a company’s financial health.
What is financial accounting?
A company is manufacturing Taylor swift shirts.
The company sources fabric for $2.50 a shirt and they have people who are operating the machinery to make the shirts getting paid $20 per hour. They also have admin employees who oversee the sales of all the shirts, getting paid $25 per hour. What type of cost is the Admin employee salary ?
What are Indirect costs ?
A company has fixed costs of $120,000, a selling price per unit of $50, and a variable cost per unit of $30. What is the break-even point in units?
What is 6,000 units?
BE point = Fixed cost /CM per unit
CM per unit = Selling price -Variable cost
--> 50 - 30 = 20
BE point = 120,000/20
= 6000 units
This type of budget adjusts for changes in the volume of production levels, allowing companies to compare actual costs to expected costs at different levels of output.
What is a flexible budget ?
A company manufactures a product. The cost of raw materials purchased during the period is $60,000, and the beginning inventory of raw materials was $5,000. At the end of the period, the company had $8,000 in raw materials inventory. The company uses a first-in, first-out (FIFO) inventory method. The direct material cost is
What is $57,000 direct material cost?
In a company like FastMove Logistics, the depreciation on its fleet of delivery trucks is considered this type of cost, as it is not directly tied to a specific delivery but is essential for overall business operations.
What are overhead costs?
A company is considering purchasing new machinery to increase output. The current machinery produces 50,000 units and orginally cost $300,000. The company could spend $50,000 to enhance the existing machine to increase output or purchase a new machine for $200,000. When the manager is deciding whether to repair or purchase a new machine, the $300,000 would be considered a ______ cost and would therefore not be relevant to the managers decision making.
What is a sunken cost ?
A tool used to estimate how profits are effected by these 5 factors:
1. Selling prices
2. sales volume
3. unit variable cost
4. total fixed cost
5. mix of product sold
what is Cost Volume Profit Analysis ?