Managerial Accounting test 2 flashcards

CM=

sales - variable expenses

CM Ratio

CM/Sales

Margin of Safety =

Actual Sales - Break Even Sales

BE Sales =

Fixed Cost / CM Ratio

Unit Sales required

(FC+NIBT) / CM per unit

FC examples

Property insurance, real estate taxes, times based depreciation

VC examples

Units of output or production based depreciation, direct material, direct labor

Mixed costs

partially fixed and partially variable such as utility costs

Product costs

Material, labor, and manufacturing overhead

Period costs

General and administrative expenses, selling expenses (sales salaries and commissions, delivery costs)

Opportunity cost

benefit given up when choose one alternative over another

How does underapplied MOH affect CoGS?

Increases cost of goods sold

How does overapplied MOH affect CoGS?

Decreases cost of goods sold

(DB) Raw Materials (Cr) Accounts Payable

RM purchase

(DB) Work in progress (DB) MOH (CR) Raw materials

RM charges to prod as DM or IM

(DB) Work in progress (DB) MOH (CR) Salaries and wages payable

Labor charged as DL or IL

(DB) MOH (CR) Accumulated depreciation

Rec ac dep Actual Fact MOH

(DB) MOH (CR) Accounts payable

Record other Actual Fact MOH

(DB) Work in progress (CR) MOH

Apply MOH to WIP

(DB) Finished Goods (CR) Work in Progress

To record C of GM

(DB) Accounts Receivable (Cr) Sales

To record sales and C of GS

Predetermined overhead rate

Est. MOH / Est. Machine hours

SP - VC =

CM per unit

unit sale required =

(FC + NIBT) / CM per unit

Unit Sale @ Break-even =

Fixed Cost + NIBT / Weighted avg ($CM p/unit)