Exam 1 Concepts
Exam 2 Concepts
Budgeting
100

What does the Retained earnings statement show? 

change in retained earnings

Beginning retained earnings +/- Net income or loss - dividends

100

True or False: Process costing is more accurate than job order costing.

False

100
  • Janelle Company has budgeted the following unit sales

  • January: 450

  • February: 330

  • March: 600

  • She expects to sell the units at $5 in January and March, but $6 in February, when demand usually increases for valentines day.

  • Prepare the montly sales budget for Janelle.

Jan: $2,250,    

Feb: $1,980,     

March: $3,000

200

Resources owned by companies that provide future benefits

Asset

200

What is the formula for the Predetermined Overhead Rate?

Estimated annual overhead / Estimated annual operating activity 

200

What are two benefits of budgeting?

Requires management to plan ahead, to set goals/objectives, creates an early warning system, activities more easily coordinated, increases management's awareness of the company's performance, motivates staff to meet objectives 

300

If I sell equipment to someone else on account. What is the dual entry accounting transaction I would record?

Increase accounts receivable

Decrease assets (equipment)

300

Any factor or activity that has a direct cause-effect relationship with the resources consumed is a ?

Cost Driver

300

Instead of a production budget, a merchandising company would use a __________ budget

Purchases budget

400

What makes up retained earnings?

Revenue - expenses - dividends

400

What is the formula for Cost of Goods Manufactured?

Beginning WIP + Total Manufacturing Costs - Ending WIP

400

What is it called when everyone in the company gives their input on the budget?

Participative budgeting

500

What are the 3 classes of manufacturing costs

DM, DL, MOH

500

What is an activity cost pool? Give an 2 examples

The overhead cost attributed to a distinct activity. 

Examples: machine setup, manufacturing, ordering materials, factory supervising

500

What makes the budget different from standard costs? 

A standard is a unit amount. A budget is a total amount.