Managerial PT2
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| Total MOH / Total DL$ | Plant-wide POHR based on DL$
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| Assembly Dept $ / MH in Assembly | Assembly dept. allocation rate for departmental overhead
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| Packaging Dept $ / DL$ in Packaging | Packaging Dept. allocation rate for departmental overhead
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| Plant wide MOH allocation | Good for firms that make only one product. also good for products that use dept. MOH resources similarly
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| Departmental MOH | Better for products that use dept. MOH resources differently
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| Activity based costing | Best for firms that make a wide variety of products that consume MOH in different ways
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| Target Price | Market sets the price
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| Cost-based pricing | firm sets the price
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| Just in Time (JIT) manufacturing | Demand pull, reduces costs to carry inventory, simplifies bookkeeping
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| JIT Management | Good are made when a customer orders, little or no inventory on hand, Raw materials ordered when needed, flexible workforce, Goods shipped when completed, DL & MOH treated as Conversion Cost
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| Traditional manufacturing | supply push
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| Conformance costs | cost to ensure quality
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| Non-Conformance Cost | cost of poor quality
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| Prevention cost | conformance cost Before Production (Quality training & Machine inspections)
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| Appraisal costs | conformance cost During Production (Materials inspections & Product testing)
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| Internal failure costs | non-conformance cost on defects before sale (Scrapped units & rework of defective units)
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| External failure costs | non-conformance cost on defects after sale (customer complaints, warranty repairs, lost sales)
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| Variable Cost per Unit & Total Fixed Cost | Stays the same as the activity level Grows
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| Total Variable Cost | Grows as the activity level grows
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| Fixed Cost per unit | Drops as activity level grows
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| Mixed Cost | Have both fixed and variable components
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| Relevant Range | Range of activities where total FC and VC/unit remain constant. Approximately a straight line
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| Slope | (High cost - low cost) / (High activity - low activity)
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| Total CM | Total Sales - Total VC=
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| CM/Unit | Sales/unit - VC/unit =
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| CM Ratio | CM/unit by Sales/unit=
CM / Sales=
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| Profit | Sales - VC - FC =
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| Sales in units (Contribution Margin Approach) | (FC + PRofit) / CM per Unit =
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| Sales in Dollars (Contribution Margin ratio approach) | (FC + Profit) / CM per unit
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| Break Even | (FC + 0) / CM per unit =
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| Break Even in Dollars | break even units X sales price per unit
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| Margin of safety in units | expected units - break even units =
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| Margin of safety in dollars | safety units X sale price per unit =
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| Margin of safety ratio | Margin of safety / Expected Units Sold =
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| Gross Profit | Sales Revenue - COGS
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| Operating Income | Gross Profit - Sales and Adminstraive
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| Variable Costing | Used for internal decision making
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| Contribution Margin | Sales - All VC
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| Operating Income | CM - all FC
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| Manufacturing cost for Absorbing Costing | Items sold X variable cost per unit + Fixed Overhead Cost =
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| Manufacturing cost for Variable Costing | variable cost per unit
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| Ending inventory for Absorption costing | Manufacturing cost per unit X leftover units
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| Ending inventory for Variable Costing | Variable Cost per unit X leftover units
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| Variable Costing | Operating income always remains the same under this costing method within the Income statement
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| Absorption and Variable Costing | Whenever the # we make and sell are same, operating income will be same under
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| Absorption Costing | Used for external reporting
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Created by:
normh80
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