More BE, Differential Analysis & Distribution Costs
100
Costs that are assigned to Work in Process (Inventory) as
production occurs and subsequently transferred to Finished Goods as products are completed.
What are product costs? (inventory costs)
100
The cost of a manufactured product under this method includes only the costs that vary directly with volume.
What is variable or direct costing?
100
An identifiable organizational unit that could be a company division, a product line, a sales territory, or some other type of unit.
What is a segment?
100
A technique that uses the degrees of cost variability to measure the effect of changes in volume on resulting profits.
What is cost-volume-profit (CVP) analysis?
100
Indicates the amount that sales can decrease before a company will reach break-even.
What is the margin of safety?
200
Costs that are not assigned to the product and therefore are recognized as expenses in the period incurred.
What are period costs?
200
Both fixed and variable manufacturing costs are assigned to the product under this method and no particular attention is given to classifying the costs as either fixed or variable.
What is absorbtion or full costing?
200
A cost that can be traced to the segment being analyzed.
What is a direct (traceable) cost?
200
The point at which sales revenue is adequate to cover all costs to manufacture and sell the product but not enough to generate any profit.
What is the Break Even Point? (BE can be expressed in dollars or units)
200
A calculation that factors in income taxes.
After-tax income divided by (1 - Tax rate)
What is pretax income?
300
The treatment of these costs is what differenciates variable(direct) costing from absorbtion(full) costing.
***DAILY DOUBLE***
What are fixed manufacturing costs?
300
Gross profit (gross margin) is not normally used under variable costing and is replaced by this term.
What is manufacturing margin?
300
The excess of segment revenue over variable direct costs (manufacturing as well as selling and administrative).
What is contribution margin?
300
The range within which CVP assumes that the fixed costs of a firm will remain the same in total under a wide range of production volume in which a firm expects to operate.
What is the relevant range?
300
A study that highlights the significan differences in revenues and costs between two alternatives.
***DAILY DOUBLE***
What is differential analysis?
400
The only costing method acceptable for external financial reporting (financial statements).
What is absorbtion(full) costing?
400
The only circumstance whereby manufacturing margin will be the same under variable (direct) costing and absorbtion (full) costing.
What is production equals sales? (Inventory does not change)
400
A cost cannot be directly identified to a segment.
What is an indirect (nontraceable or common) cost?
400
Total fixed costs divided by the contribution margin ratio.
What is the formula for break even expressed in sales dollars?
400
A differential analysis approach, applicable only when there is excess capacity, where a company will accept a selling price if it exceeds variable cost (and therefore generates a positive contribution margin).
What is contribution pricing?
500
If a fixed manufacturing cost is charged to Work in Process it indicates that this costing method is being used.
What is absorbtion (full) costing?
500
This situation results in the manufacturing margin under variable costing being greater than under absorbtion costing.
What is production is less than sales?
500
Contibution margin less direct fixed costs (both manufacturing and selling and administrative).
What is segment margin?
500
Total fixed costs divided by unit contibution margin.
What is break even expressed in sales units?
500
Costs incurred to sell and deliver a product (i/e sales salaries and freight costs)