Podcast
Questions and Answers
A company is trying to determine the cost of a new marketing campaign. What would be the BEST classification of this campaign?
A company is trying to determine the cost of a new marketing campaign. What would be the BEST classification of this campaign?
- Cost variance
- Cost pool
- Cost driver
- Cost object (correct)
A manufacturing company has fixed costs of $50,000 per month and variable costs of $10 per unit. If the company produces 5,000 units in a month, what is the total cost?
A manufacturing company has fixed costs of $50,000 per month and variable costs of $10 per unit. If the company produces 5,000 units in a month, what is the total cost?
- $100,000 (correct)
- $200,000
- $150,000
- $50,000
What does the 'a' represent in the cost formula y = a + bx?
What does the 'a' represent in the cost formula y = a + bx?
- Dependent variable
- Total fixed cost (correct)
- Independent variable
- Variable cost per unit
Which of the following describes managerial accounting?
Which of the following describes managerial accounting?
A company's management is deciding whether to launch a new product line. Which management function is being exercised?
A company's management is deciding whether to launch a new product line. Which management function is being exercised?
What does the coefficient of correlation (r) indicate in regression analysis?
What does the coefficient of correlation (r) indicate in regression analysis?
What is the main concept behind the learning curve theory?
What is the main concept behind the learning curve theory?
A company uses absorption costing. How is the Cost of Goods Sold (COGS) calculated?
A company uses absorption costing. How is the Cost of Goods Sold (COGS) calculated?
In variable costing, which costs are included in the calculation of variable costs?
In variable costing, which costs are included in the calculation of variable costs?
What is the role of a budget committee?
What is the role of a budget committee?
What information does a budget report typically provide?
What information does a budget report typically provide?
What is the formula for contribution margin per unit?
What is the formula for contribution margin per unit?
A company's fixed costs are $200,000 and its contribution margin ratio (CMR) is 40%. What is the sales in pesos required to break even?
A company's fixed costs are $200,000 and its contribution margin ratio (CMR) is 40%. What is the sales in pesos required to break even?
A company desires a profit before tax (PBT) of $50,000, has fixed costs of $150,000, and a contribution margin ratio (CMR) of 25%. What is the required sales in pesos?
A company desires a profit before tax (PBT) of $50,000, has fixed costs of $150,000, and a contribution margin ratio (CMR) of 25%. What is the required sales in pesos?
If a company is given a desired profit after tax to contribution margin ratio (PRAT-CM), a tax yield (TY), and a profit before tax (PRBT), which formula is used to calculate sales in pesos?
If a company is given a desired profit after tax to contribution margin ratio (PRAT-CM), a tax yield (TY), and a profit before tax (PRBT), which formula is used to calculate sales in pesos?
Flashcards
Managerial Accounting
Managerial Accounting
Field of accounting providing economic and financial information for internal users, especially decision-makers.
Controlling (Management Function)
Controlling (Management Function)
Evaluating results against the plan and taking corrective action when necessary.
Cost
Cost
The monetary measure of resources used to achieve a benefit.
Cost Object
Cost Object
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Cost Driver
Cost Driver
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Cost Pool
Cost Pool
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Total Fixed Cost
Total Fixed Cost
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Total Variable Cost
Total Variable Cost
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Total Unit Cost
Total Unit Cost
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Learning Curve Theory
Learning Curve Theory
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Gross Profit
Gross Profit
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Contribution Margin
Contribution Margin
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Budget Committee
Budget Committee
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Budget Report
Budget Report
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Contribution Margin per Unit
Contribution Margin per Unit
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Study Notes
- Managerial accounting provides economic and financial information to internal users for decision-making.
Management Functions
- Planning involves setting goals and objectives.
- Directing and motivating entails leading and encouraging employees.
- Controlling involves monitoring and evaluating performance.
Costs
- Costs are the monetary value of resources sacrificed for present or future benefits.
- A cost object is any item for which cost is measured.
- A cost driver is a variable that significantly affects costs over time.
- A cost pool is an account used to accumulate similar costs.
Cost Formulas
- Total Cost = Total Fixed Cost + Total Variable Cost
- Total Unit Cost = Unit Variable Cost + Unit Fixed Cost
- Total Variable Cost = Units Produced x Unit Variable Cost
- Unit Fixed Costs = Total Fixed Cost / Number of Units Produced
Cost Formula/Regression Equation: y = a + bx
- 'a' (intercept) represents Total Fixed Cost.
- 'b' (slope) represents Variable Cost per Unit.
- 'y' is the dependent variable.
- 'x' is the independent variable.
- 'r' is the coefficient of correlation.
- 'r²' (percentage of variability) indicates reliability, with a minimum of 90%.
Learning Curve Theory
- Incremental unit costs decrease as managers and labor gain experience.
- Average Direct Labor Input Time PER UNIT decreases as cumulative output doubles.
Formulas:
- Unit Variable Manufacturing Cost (UVMC) = Direct Material + Direct Labor + Variable Factory Overhead
- Unit Variable Cost (UVC) = Unit Variable Manufacturing Cost + Unit Variable Expense
- Unit Manufacturing Cost (UMC) = Unit Variable Manufacturing Cost + Unit Fixed Factory Overhead
Absorption/Full Costing
- Sales in Pesos = Sales in Units x Unit Selling Price
- Cost of Goods Sold (COGS) = Sales in Units x (Unit Variable Cost + Fixed Factory Overhead)
- Gross Profit = Sales in Pesos - Cost of Goods Sold
- Variable Expense = Sales in Units x Unit Variable Expense
- Fixed Expenses = Normal Capacity x Unit Fixed Expense
- Net Income (Net Loss) = Gross Profit - Variable Expense - Fixed Expense
Variable/Direct Costing
- Sales = Sales in Units x Unit Selling Price
- Variable Costs = Sales in Units x (Unit Variable Cost + Unit Variable Expense)
- Contribution Margin = Sales in Pesos - Variable Costs
- Fixed Factory Overhead = Normal Capacity x Unit Fixed Factory Overhead
- Fixed Expenses = Normal Capacity x Unit Fixed Expense
- Net Income / (Net Loss) = Contribution Margin - Fixed Expense - Fixed Factory Overhead
Budgeting
- A budget committee consists of key management personnel responsible for budget policies and coordination.
- A master budget encompasses the organization's operating and financial plans for a specific period.
- A budget manual includes a budget planning calendar and distribution instructions.
- The budget planning calendar schedules activities for budget development.
- Distribution instructions inform segments involved in the budget process.
- A budget report compares actual and budgeted performance, highlighting variances.
Special Order Decisions
- Total cost = Cost per Unit x Special Order per Unit
- Total Revenue = Selling Price per Unit * Special Order per Unit
- Profit = Total Revenue - Total Cost
- Contribution Margin = Unit Selling Price - Unit Variable Cost
- Contribution Margin per Unit = Contribution Margin / GH
- CMU = Unit Selling Price - Unit Variable Cost
- Total Revenue from the special order = SP * (new) special order in units
- Total cost of SO = (Direct Material + Direct Labor + VO + VE+ CPU)* (SOU + AC) - STC
- LOSS = total cost of the special order - total revenue
Sales in Pesos
- SALES IN PESOS = FIXED COST/CMR
Sales in Units
- SALES IN UNITS = FIXED COST / CMU
Given Profit Before Tax
- SALES IN PESOS = (FIXED COST + PBT) / CMR
- SALES IN UNITS = (FIXED COST + PBT) /CMU
Given Profit Before Tax
- SALES IN PESOS = (FIXED COST / CMR) - PRBT
- SALES IN UNITS = SALES IN PESOS / USP
Given PRBT-CM & 1- (PRBT-CM)
SALES IN PESOS = FIXED COST / CMR (1- PRBT) SALES IN UNITS: SIP/USP
Given PRAT-CM, TY, PRBT, 1-PRBT
- SALES IN PESOS = FIXED COST / CMR - PRBT
- SALES IN UNITS = Sales in Peso/ Unit Selling Price
Given PU (Per Unit)
- SALES IN PESOS = Sales in Unit * Unit Selling Price
- SALES IN UNITS = FIXED COST / (CMU-PU)
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