Cost Types
A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes.
What is a step-wise cost?
This is the sum of the manufacturing costs for all jobs in process but not yet completed.
What is Work in Process Inventory?
Cost of Goods Manufactured is included in a ___________ company's financial statements, but not a merchandiser's financial statements.
What is manufacturing?
This is the amount of sales that are expected to be above the break-even point.
What is margin of safety?
This is a statistical method of identifying cost behavior.
What is the least-squares regression method?
Direct Materials are most likely classified as ___________ costs, whereas Property Taxes are most likely classified as ___________ costs. (Fixed, variable, or step-wise)
What are variable costs and fixed costs?
Businesses that create _______ products best benefit from job order costing.
What are custom?
These three of the following costs are included in total manufacturing costs for the year:
Direct Materials Used
Factory Overhead
Transportation Out Expenses
Direct Labor
Office Equipment Used
What is Direct Materials Used, Direct Labor, and Factory Overhead?
Beauty Inc. just added a new mascara line. They will sell the new mascara for $10 per unit. Variable costs per unit are $4 and fixed costs total $4,000. These are the contribution margin per unit and the contribution margin ratio.
What are $6 and $0.60?
Contribution Margin per Unit= Selling Cost per Unit - Variable Cost per Unit
$10 - $4 = $6
Contribution Margin Ratio = Contribution Margin Per Unit/Selling Price Per Unit
$6/$10 = .60
Financial or Managerial Accounting?
External reporting that requires the use of GAAP.
What is financial accounting?
Labor costs can be classified as either ________ or ________ costs?
What are direct or indirect?
The company used $50,000 in direct materials and $15,000 in indirect costs. These are the journal entries
What are
debit Work in Process Inventory $50,000
credit Raw Materials Inventory $50,000
debit Factory Overhead $15,000
credit Raw Materials Inventory $15,000
?
Based on the following manufacturing company's information, this is the cost of goods manufactured.
Total Manufacturing Costs $455,000
Work In Process Inventory, Beginning $129,000
Work in Process Inventory, Ending $134,000
What is $450,000?
Total Manufacturing Costs + Work In Process Inventory, Beginning = Total Cost of Work in Process
$455,000 + $129,000 = $584,000
Total Cost of Work in Process - Work in Process Inventory, Ending = Cost of Goods Manufactured.
$584,000 - $134,000 = $450,000
Compute the total amount of factory overhead from the following costs for Speedy Carz manufacturer.
Factory Rent $5,000
Assembly Line Employee Wages $19,000
Direct Materials Used $25,000
Indirect Materials Used $10,000
Factory Insurance $3,000
Factory Mechanic Salaries $8,000
Accountant Salaries $7,000
Depreciation on Factory Machinery $6,000
Office Copier Rental $1,000
What is $32,000?
Factory Overhead = Factory Rent + Indirect Materials Used + Factory Insurance + Factory Mechanic Salaries + Depreciation on Factory Machinery
$5,000 + $10,000 + $3,000 + $8,000 + $6,000 = $32,000
Financial or Managerial Accounting?
Custom reports with information can be pulled at any time and do not have to be audited.
What is managerial accounting?
Costs that are capitalized as inventory during completion of products and expensed as cost of goods sold when the products are sold.
What are product costs?
The company used $38,000 in direct labor and $12,000 in indirect labor (payable). These are the journal entries.
What are
debit Work in Process Inventory $38,000
credit Factory Wages Payable $38,000
debit Factory Overhead $12,000
credit Factory Wages Payable $12,000
?
Given the numbers below, this is the Direct Materials Used.
Sales $500,000
Raw materials inventory, beginning $90,000
Work in process inventory, beginning $80,000
Finished goods inventory, beginning $110,000
Raw materials purchases $300,000
Direct labor $350,000
Indirect labor $60,000
Raw materials inventory, ending $80,000
Work in process inventory, ending $100,000
Finished goods inventory, ending $150,000
What is $310,000?
$90,000 Beginning Inv.
+ $300,000 Purchases
= $390,000 Raw Materials Available for Use
- $80,000 Ending Inv.
= $310,000 Direct Materials Used
A Home Furniture Manufacturer has expected sales of $145,000 and its break-even sales are $122,000. This is the margin of safety in dollars.
What is $23,000?
Margin of Safety in Dollars = Expected Sales - Break-Even Sales
$195,000 - $122,000 = $23,000
Fancy Jewels Store is a retailer in a local mall. Their Merchandise Inventory balance at the beginning of the year was $125,000 and at the end of the year was $48,000. They purchased $223,000 in inventory throughout the year. This is their cost of goods sold.
What is $300,000?
RETAILER Cost of Goods Sold = Beginning Merchandise Inventory + Cost of Merchandise Purchased − Ending Merchandise Inventory
$125,000 + $223,000 - $48,000 = $300,000
Predetermined overhead rates are established at this point.
What is the start of the period?
Shaw's Custom Guitar Shop applies overhead of $150 to custom job 125. This is the journal entry.
What is:
debit Work In Process Inventory $150
credit Factory Overhead $150
?
This classification of costs determines whether a cost is listed as an expense on the income statement or included in inventory on the balance sheet.
What is product vs. period costs?
Mumsy's Football Manufacturers sell their footballs for $15 each and their variable cost is $12 per football. This is their contribution margin ratio.
What is 20%?
Contribution margin ratio = Contribution margin per unit / Sales price per unit
$3/$15 = 20%
Contribution margin per unit = Sales price − Variable cost
$15-$12 = $3
Dallas Manufacturing Company has the following balances at year-end:
Ending Raw Materials $5,000
Raw Materials Used: $150,000
This is their days’ sales in raw materials inventory.
What is 12.17 days?
(Ending Raw Materials Inventory/Raw Materials Used) x 365 days
(5,000/150,000)x365=12.166667