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Questions and Answers
What is the total direct costs for all manufacturing orders combined?
What is the total direct costs for all manufacturing orders combined?
What is the total indirect manufacturing cost charged based on direct labor for all orders?
What is the total indirect manufacturing cost charged based on direct labor for all orders?
What is the total actual production indirect costs reported?
What is the total actual production indirect costs reported?
How much is the general indirect cost reported after the period?
How much is the general indirect cost reported after the period?
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What is the combined margin for all manufacturing orders after considering indirect costs?
What is the combined margin for all manufacturing orders after considering indirect costs?
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What action should be taken if the difference in ICP is deemed significant and caused by a permanent issue?
What action should be taken if the difference in ICP is deemed significant and caused by a permanent issue?
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What does it indicate if differences in ICP are categorized as non-significant?
What does it indicate if differences in ICP are categorized as non-significant?
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If a significant difference in ICP occurs due to a circumstantial, non-repetitive event, what corrective action is necessary?
If a significant difference in ICP occurs due to a circumstantial, non-repetitive event, what corrective action is necessary?
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Which of the following is NOT a factor that determines whether an ICP difference is significant?
Which of the following is NOT a factor that determines whether an ICP difference is significant?
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What must be done if a significant difference in ICP occurs and the order has already been sold?
What must be done if a significant difference in ICP occurs and the order has already been sold?
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What are the two main lines of thought regarding cost systems?
What are the two main lines of thought regarding cost systems?
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Which aspect do Anglo-Saxon cost models prioritize in their approach?
Which aspect do Anglo-Saxon cost models prioritize in their approach?
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How do Anglo-Saxon authors generally classify cost models?
How do Anglo-Saxon authors generally classify cost models?
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What primarily distinguishes the production processes analyzed in Anglo-Saxon models?
What primarily distinguishes the production processes analyzed in Anglo-Saxon models?
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What is a common feature of German or Central European cost models?
What is a common feature of German or Central European cost models?
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Which of the following best defines 'full-costing' in the context of cost allocation?
Which of the following best defines 'full-costing' in the context of cost allocation?
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What is the primary focus of the study mentioned in the content?
What is the primary focus of the study mentioned in the content?
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In the context of cost systems, what are 'organic' and 'inorganic' types related to?
In the context of cost systems, what are 'organic' and 'inorganic' types related to?
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What is the default rate per labor cost?
What is the default rate per labor cost?
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What is the deviation of the ICP?
What is the deviation of the ICP?
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What is the initial margin calculated for all orders combined?
What is the initial margin calculated for all orders combined?
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What is the total margin after accounting for the deviation ICP?
What is the total margin after accounting for the deviation ICP?
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What is the negative result calculated after accounting for general indirect costs?
What is the negative result calculated after accounting for general indirect costs?
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Which industry is NOT mentioned as an example of process cost model applications?
Which industry is NOT mentioned as an example of process cost model applications?
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In the context of cost calculations, what is the primary focus of process costing?
In the context of cost calculations, what is the primary focus of process costing?
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What is the primary method used to analyze the productive process in process costing?
What is the primary method used to analyze the productive process in process costing?
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What is the main feature of the cost model by operations?
What is the main feature of the cost model by operations?
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In the context of the cost model for operations, how are direct costs handled?
In the context of the cost model for operations, how are direct costs handled?
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Which of the following industries is most likely to use the cost model by operations?
Which of the following industries is most likely to use the cost model by operations?
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What does the cost model by operations primarily focus on when calculating the unit cost?
What does the cost model by operations primarily focus on when calculating the unit cost?
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In the mixed cost models, which aspect is primarily emphasized?
In the mixed cost models, which aspect is primarily emphasized?
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Which statement best describes the intermediate approach in the cost model by operations?
Which statement best describes the intermediate approach in the cost model by operations?
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What differentiates the cost model by operations from pure mass production?
What differentiates the cost model by operations from pure mass production?
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Which is NOT a characteristic of the production processes referred to in the cost model by operations?
Which is NOT a characteristic of the production processes referred to in the cost model by operations?
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What do direct materials (MD) represent in the cost calculation process?
What do direct materials (MD) represent in the cost calculation process?
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In the ABC model, what is primarily considered to allocate costs?
In the ABC model, what is primarily considered to allocate costs?
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Which of the following statements accurately describes the ABC model's perspective on cost generation?
Which of the following statements accurately describes the ABC model's perspective on cost generation?
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What is the relationship between activities and products in the ABC model?
What is the relationship between activities and products in the ABC model?
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How are conversion costs allocated to different operations in cost calculation?
How are conversion costs allocated to different operations in cost calculation?
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Why does the ABC model differ from traditional costing approaches?
Why does the ABC model differ from traditional costing approaches?
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What defines the costs in the context of activities within the ABC system?
What defines the costs in the context of activities within the ABC system?
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What is one of the key ideas of the ABC system?
What is one of the key ideas of the ABC system?
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Study Notes
Anglo-Saxon Cost Models
- Anglo-Saxon cost models (primarily North American and British) focus on adapting the model to the different organizational structures of companies.
- The criterion for classifying Anglo-Saxon cost models is the characteristics of the cost accumulation processes, which depend on the production process (continuous or discontinuous).
- Continuous production (mass production) involves a consistent flow of raw materials to finished products, with no differences in unit-level costs.
- Discontinuous production (job order or batch production) involves orders or batches of goods.
Cost Models for Work Orders
- This model is suitable for companies that manufacture specific products or services tailored to customer needs (e.g., shipbuilding, custom furniture, or repair shops).
- Each order receives its own cost calculation that ends when the specific order is completed.
- Direct costs (materials and labor specifically for the order) are directly assigned to the order, while indirect costs are allocated based on a predetermined rate.
Cost Model by Processes
- This model works for organizations with consistent production processes where goods are manufactured in continuous flows (e.g., cement production or food processing).
- Costs are accumulated over time intervals (periods).
- Allocation is done based on the department or step in the production process, and unit costs are derived from the aggregate costs for the period.
- Calculation involves determining the production costs for each period, and then dividing the overall production costs by the number of units produced during that period.
Mixed Cost Models
- These integrate characteristics of both work order and process models.
- Suitable for companies producing similar, but not identical, products.
- Direct costs are assigned to batches/jobs, while indirect costs are often allocated based on operations.
Activity-Based Costing (ABC)
- ABC identifies activities as cost drivers.
- Activities are the essential steps in the production process that consume resources.
- Costs are attached to the activities and then assigned to products based on the consumption rate of different activities by each product.
- More accurate cost allocation than traditional methods, especially for complex production processes.
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Description
Explore the key concepts of Anglo-Saxon cost models, focusing on their classification based on production processes, including continuous and discontinuous production. This quiz also examines cost models relevant to work orders, tailored to specific manufacturing needs. Test your understanding of how these cost accumulation processes impact different organizations.
