Accounting 261 exam 1

Cost object

Anything for which cost data are desired, products, customers, jobs

Cost object example

Starbucks cup of coffee

Direct cost

easily traced to a specifed cost object

indireect cost

cannot be easily traced to specifed cost obnjects

selling cost

Ads, shipping, sales, commisions

admin costs

executive compensation, admin builiding

prime cost

direct material+direct labor

connversion costs

direct labor+moh

fixed cost: committed

long term, cannot be significantly reduced in short term

fixed cost: discretionary

may be altered in short term by current managerial decisions

relevant range

a range where we can assume total fixed cost and per unit variable cost will not change

total fixed cost

does not change

variable cost per unit

does not change

diferential cost and revenue

cost an drevenues that differ among alternatives

opportunity cost

potential benefit that’s given up when one alternative is selected over another

sunk costs

have already been incurred and cannot be changed now or in the future. these should be ignored when making decisions.

mixed cost equation

total mixed cost=total fixed cost+variable cost per unit*activty level, y=a+bx

traditional format

has gross margin, for external use

COGS equation

beginning inv+purchases-ending inventory

contribution format

has variable and fixed, for internal use

job order costing

used when there are many different products, manufactured to order, or there is a unique nature

why use job cost sheet

only way to know how much our individual jobs cost

what is the job cost sheet

a document that details all the costs associated with a specific job, including direct materials, direct labor, and overhead

POHR equation

estimated total moh cost/estimated total allocation base(hours)

why use POHR

Actual MOH for period wont be known until the end of period, but want to sell jobs before that

MOH applied

POHR*actual hours

total job cost

DM+DL+MOH

Cost of goods manufactured

include the maufacturing csot associated with goods that were finished during the period(transferred form WIP to FG)

Direct materials used in production

beg rm+purcahses-ending rm-indirect materials

total manufacturing costs added to production

dm used+DL+MOH applied

Cost of goods manufactured equation

Beg WIP+total Manu cost-end WIP

adjusted cost of goods sold

Beg FG+COGM-ending FG+unederapplied or -overapplied

underapplied OH

OH applied<OH actual

overapplied

OH applied>OH actual

what to do if overapplied

subtract, credit COG

what to do if underapplied

add, debit COG

MOH account at the end

must be zero balance

Product costs

Direct cost, indirect costs, MOH

Period cost

Selling and admin costs

Factory supervisor

Indirect labor and fixed overhead