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Costs are assigned to each specific job in a process cost system.
In a process cost system, total costs are determined at the end of a period of time, such as a month.
In a process cost system, the unit cost is total manufacturing costs divided by the equivalent units produced during the period.
The accumulation of the costs of materials, labor, and manufacturing overhead is the same in a process cost system as in a job order cost system.
More materials requisitions are generally required in a process cost system than in a job order cost system.
Equivalent units of production equals units completed and transferred out + units in beginning work in process.
Two equivalent unit computations are necessary—one for materials and the other for conversion costs.
The first step in preparing a production cost report is to compute the equivalent units of production.
The cost reconciliation schedule shows that the total costs accounted for equal the total costs to be accounted for.
Units in work in process at the beginning of the period are included in units “started and completed” under the FIFO method.
Which of the following is not a step in preparing a production cost report?
A department has no beginning work in process, has started 80,000 units and completed 50,000 units. Its ending work in process is 30,000 units, 60% complete as to conversion costs and fully complete as to materials. Its equivalent units for conversion costs are
In process costing, the computation of unit production costs requires
Which of the following is not included in a production cost report?
Unit costs for materials and conversion costs amount to $4 and $5 respectively. The ending work in process costs for 8,000 units (100% complete as to material and 70% complete as to conversion costs) amount to
The CVP income statement classifies costs as variable or fixed and computes a contribution margin.
The margin of safety indicates how much sales must increase before a company will be operating at a profit.
Sales mix is the relative percentage in which each product is sold when a company sells more than one product.
When multiple products exist, the break-even point in dollars is computed by dividing fixed costs by the weighted-average contribution margin.
When a company has limited resources, management must decide which product to make and sell in order to maximize contribution margin ratio.
The last step in activity-based costing is to
Machine hours would be an accurate cost driver for
Contribution margin per unit of limited resource is obtained by dividing the contribution margin per unit of each product by the number of units of the limited resource required for each product.
All of the following are benefits of ABC except it leads to
Operating leverage refers to the extent to which a company’s net income reacts to a given change in production.
Companies that have higher fixed costs relative to variable costs have higher operating leverage.
Under variable costing, all variable costs are considered product costs.
Fixed manufacturing costs are a product cost under absorption costing but are a period cost under variable costing.
For a company selling multiple products, the break-even point in dollars is computed by dividing fixed costs by the
The level of ABC activities performed in support of an entire product line are classified as
In order to maximize net income a company should produce and sell the product with the highest.
Operating leverage refers to the extent to which a company’s net income reacts to a given change in
Just-in-time processing strives to eliminate inventories by using a
Under variable costing, all of the following are considered product costs except
All of the following are potential advantages of variable costing except that
The range over which a company is expected to operate is called the relevant range of the activity index.
A mixed cost contains both selling and administrative cost elements
Variable costs are costs that remain the same per unit at every level of activity.
If a salesperson incurs $2,000 of expenses in servicing two customers and $4,000 of expenses in servicing four customers, the fixed costs are $1,000.
If revenue = $80 and variable cost = 40% of revenue, then contribution margin = $48.
