accounting exam one (cheat sheets)

planning

process of setting goals and making plans to achieve them

control

process of monitoring and evaluating an org's activities and employees

Managerial Accounting

focused on the needs of internal managerial and executive employees

financial accounting

focused on the needs of external users including investors and creditors

direct costs

costs that can be cost-effectively traced to a cost object; examples: wages of bike maker, tires, seats, handlebars, cable, frames, pedals, and brakes

indirect costs

costs that cannot be cost-effectively traced to a cost object; examples: factory accounting, factory rent, factory supervisor salary, factory insurance

direct materials

materials that are crucial parts of a finished product and that can be cost-effectively traced to finished goods. examples: tires, seats, handlebars, cables, frams, pedals and brakes

direct labor

employees who directly convert materials to finished product and whose costs can be cost-effectively traced to finished goods. examples: workers who convert raw materials into finished products, assembly workers who attach materials like tires, seats, etc.

factory overhead

all manufacturing costs that are not direct materials or direct labor; includes indirect materials, indirect labor, and other indirect costs like staples, glue, supervisor salaries, and factory insurance

prime costs

direct materials costs + direct labor costs

conversion costs

overhead costs + direct labor costs

product costs

consist of direct materials, direct labor and factory overhead; added to inventory during production; after the products are sold, they become cost of goods sold

period costs

nonproduction costs linked to a time period rather than to completed products; examples: sales staff salaries, office worker wages, ad expenses, and depreciation on office furniture; expensed in the period when incurred and reported on the income statement as either selling expenses or general and admin expenses

manufacturer balance sheet (current assets section)

ROCKY MOUNTAIN BIKES
Current Assets section of Balance Sheet
December 31

Assets
Current assets
Cash
Accounts receivable, net
RM inventory
WIP inventory
FG inventory
Supplies
Prepaid insurance
Total current assets

Merchandiser Cost of Goods Sold

beginning inventory + cost of goods purchased - ending inventory

manufacturer cost of goods sold

beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory

manufacturer income statement

ROCKY MOUNTAIN BIKES
Income Statement
For Year Ended Dec 31
Sales
Cost of goods sold
FG inventory, beg.
COGM
Goods avail for sale
Less FG inventory, end.
COGS
Gross profit
Selling expenses
General and admin expenses
Net income

Cost of Goods Manufactured

total of direct materials used, direct labor, and factory overhead costs for finished goods manufactured

Total Manufacturing Costs =

direct materials + direct labor + factory overhead

cost of good manufactured =

total manufacturing costs + beg. WIP inventory - ending WIP inventory

schedule of cost of goods manufactured

ROCKY MOUNTAIN BIKES
schedule of cost of goods manufactured
for year ended december 31

direct materials
RM inventory, beg.
RM purchases
RM avail. for use
Less RM inventory, end.
Direct materials used
Direct labor
Factory overhead
Indirect labor
Factory utilities
Repairs - factory equip.
Property taxes - factory
Depre. expense- factory
Total factory overhead
Total manufacturing costs
Add WIP inventory, beginning
Total cost of work in process
Less WIP inventory, ending
Cost of goods manufactured

total job cost =

direct materials + direct labor + overhead applied

acquire raw materials (job costing)

raw materials inventory
accounts payable

record direct materials used (job costing)

WIP inventory
RM inventory

record direct labor used (job costing)

WIP inventory
factory wages payable

Predetermined overhead rate =

est. overhead costs / est. activity base

applied overhead =

predetermined overhead rate x actual activity base used

record indirect materials used (job costing)

factory overhead
raw materials inventory

record indirect labor used (job costing)

factory overhead
factory wages payable

apply overhead using predetermined rate (job costing)

WIP inventory
factory overhead

record actual overhead costs (job costing)

factory overhead
acc. deprec.- factory euip.
rent payable
utilities payable
prepaid insurance

record completion of jobs (job costing)

finished goods inventory
WIP inventory

record cost of goods sold for sold jobs (job costing)

cost of goods sold
FG inventory

record sales for sold jobs (job costing)

accounts receivable
sales

close overhead and COGS at period-end underapplied (job costing)

cost of goods sold
factory overhead

close overhead and COGS at period-end overapplied (job costing)

factory overhead
cost of goods sold

weighted average computations

equiv. units of production = equiv. units completed and transferred out + equiv. units in ending work in process

cost per equiv. unit of production (weighted average) =

costs of beg. WIP + costs added this period/ equiv. units of production

acquire raw materials (process costing)

raw materials inventory
accounts payable

record direct materials used (process costing)

WIP inventory - process 1
WIP inventory - process 2
raw materials inventory

record indirect materials used (process costing)

factory overhead
raw materials inventory

record direct labor used (process costing)

wip inventory- process 1
wip inventory- process 2
factory wages payable

record indirect labor used (process costing)

factory overhead
factory wages payable

record actual other overhead costs such as insurance, rent, utilities, and depreciation (process costing)

factory overhead
prepaid insurance
utilities payable
cash
accumulated depreciation- factory equipment

Apply overhead using predetermined rate (process costing)

WIP inventory- process 1
WIP inventory- process 2
factory overhead

record transfer of costs to next department (process costing)

WIP inventory- process 2
WIP inventory- process 1

record transfer of costs to finished goods (COGM) (process costing)

finished goods inventory
WIP inventory- process 2

record sales (process costing)

accounts receivable
sales

record cost of goods sold (process costing)

cost of goods sold
finished goods inventory

FIFO computations

EUP = equiv. units to complete beginning WIP + units started adn completed + equiv. units in ending WIP

cost per EUP (FIFO) =

costs added this period/EUP

plantwide rate method

uses one overhead rate

plantwide overhead rate =

budgeted overhead cost/budgeted allocation base

allocating overhead using plantwide rate

allocated cost per unit = plantwide overhead rate x DLH used

departmental rate method

uses a diff. overhead rate for each department

departmental overhead rate=

budgeted departmental overhead cost/budgeted departmental allocation base

three steps to activity based costing

1. identify activities and their budgeted overhead cost
2. compute an overhead activity rate for each activity (budgeted activity cost/budgeted activity usage)
3. allocate overhead cost to cost objects (allocated cost= actual activity usage x activity rate)