find it advantageous to use the periodic inventory system in its general ledger (instead of the perpetual inventory system) especially when it uses the LIFO cost flow assumption for valuing its inventory and cost of...
find it advantageous to use the periodic inventory system in its general ledger (instead of the perpetual inventory system) especially when it uses the LIFO cost flow assumption for valuing its inventory and cost of...
could be less than the cost of not filing a customer’s order on time or having to stop its production line. Example of Safety Stock Assume that a company uses the economic order quantity (EOQ) model to determine the...
What is the meaning of base year? In accounting, base year may refer to the year in which a U.S. business had adopted the LIFO cost flow assumption for valuing its inventory and its cost of goods sold. Under the...
How much of the contribution margin is profit on units sold in excess of the break-even point? After the break-even point is reached, the entire contribution margin on the next units sold will be profit…provided the...
and Sub2. Sub1 manufactures electronic components that it sells to companies throughout the world. Sub2 manufactures a unique consumer gadget that uses a component that Sub1 manufactures. Sub1 sells the component for...
ownership of the unit to the lessee (tenant) at the end of the one-year lease. Another lease might involve a business leasing a forklift from a forklift dealer. This lease states that it is noncancelable and requires 60...
the amounts established at the time that the static budget was prepared and approved.) For costs that vary with volume or activity, the flexible budget will flex because the budget will include a variable rate per unit...
the contribution margin per unit. UNITS TNSUI Unscramble UNITS STINU Unscramble 6. When calculating a product's break-even point in dollars, the denominator is the contribution margin __________. RATIO TRAOI...
What is job order costing? Definition of Job Order Costing Job order costing or job costing is a system for assigning and accumulating manufacturing costs of an individual unit of output. The job order costing system is...
EFFICIENCY NEECICFFIY Unscramble 6. When the standard cost is less than the actual cost, the variance is _______________. UNFAVORABLE FROBLVAAUEN Unscramble UNFAVORABLE VUOELFNBRAA Unscramble 7. The standard unit cost...
What is a variable cost? Definition of Variable Cost A variable cost is a constant amount per unit produced or used. Therefore, the total amount of the variable cost will change proportionately with the change in volume...
In standard costing, how is the purchase price variance reclassified to arrive at actual cost? Definition of Purchase Price Variance In standard costing, the purchase price variance is the difference between the actual...
of the organization Preparing special analyses that assists in making the best decisions Examples of Cost Accounting A significant part of cost accounting involves the unit cost of a manufacturer’s products in order...
is calculated by dividing the company’s total fixed expenses for the accounting period by the contribution margin per unit. The break-even calculation assumes that the selling prices, contribution margins, and fixed...
Unscramble 7. Full __________ costing involves assigning both fixed and variable manufacturing overhead. ABSORPTION TPBAIOORNS Unscramble ABSORPTION SBTOPNAORI Unscramble 8. ____________ costs are predetermined unit...
that was prepared by the organization The receiving report that was prepared by the organization The “match” part of the three-way match refers to comparing the quantities, price per unit, terms, and other...
overhead, which is an indirect product cost that must be assigned to units of product manufactured on a logical basis. As a result, part of the rent is included in the units’ costs which are in inventory or have been...
in inventory). Cost Flow Assumption Is Needed When costs change during the accounting period, a cost flow will have to be assumed. Some common cost flow assumptions include FIFO, LIFO, and average. Join PRO to Track...
Our Explanation of Break-even Point illustrates how to determine the number of units or sales dollars that will result in zero net income. The techniques rely on a product's contribution margin or contribution margin...
items are purchased at different unit costs during the year, a company must elect a cost flow assumption. In the U.S. the options are 1) first costs in are the first costs out (first-in, first-out or FIFO), 2) last...
is helpful in determining the two components of a mixed cost (also known as semivariable cost): The amount that is fixed or constant The variable rate (the rate by which the total cost changes when there is one...
. Perhaps a U.S. manufacturer using LIFO will deliberately reduce its inventory quantities in low profit years in order to liquidate the old LIFO layers containing low unit costs. Another manufacturer might increase its...
? A variable cost is a constant amount per unit produced or used. Therefore, the total amount of the variable cost will change proportionately with the change in volume or activity. Learn more about variable costs What...
as an annual amount per unit or as a percentage of an item’s cost. The calculation of the cost to store inventory should be the incremental annual costs or the company’s opportunity costs. In other words, if a...
If the cost object is a product being manufactured, it is likely that direct materials are a variable cost. (If one pound of material is used for each unit, then this direct cost is variable.) However, the product’s...
the cost per unit. If there are 80 units in inventory at the end of the accounting period, the cost of the ending inventory and the cost of goods sold (using the periodic inventory system) are as follows: Amount from...
with a selling price of $12 a unit. SalesMax sends GoodCorp an invoice listing the items, the date shipped of June 15, and payment terms of 2/10, net 30. When GoodCorp receives the 100 units of product, it...
of Accounting for Goods Purchased Assume that a retailer begins the year with inventory having a cost of $800. It ends the year with inventory having a cost of $900. During the year the retailer purchased goods at a...
Vs. the actual hours it took and multiplies the difference in hours by the standard cost per direct labor hour. Here’s an example with amounts. Let’s assume the standard for direct labor is 3 hours per unit of...
amount per unit produced or used. Therefore, the total amount of the variable cost will change proportionately with the change in volume or activity. Learn more about variable costs Join PRO to Track Progress Mark the...
to the change in the volume of activity A mixed cost is also referred to as a semivariable cost. A mixed cost is expressed by the algebraic formula y = a + bx, where: y is the total cost a is the fixed cost per period b...
foregone by carrying out another alternative is the__________ cost. 5. A division’s profit minus a charge for its assets or capital employed is its __________ income. 6. The per unit selling price and purchase price...
. common-size income statement This type of income statement is related to vertical analysis since all amounts are shown as a percentage of net sales. Mark as wrong Mark as right LIFO (or) last in, first out This cost...
statements (or) footnotes These are required with external financial statements in order to comply with the full disclosure principle. The company’s significant accounting policies are one of the disclosures. Mark as...
Our Explanation of Manufacturing Overhead gives you examples of what is included in manufacturing overhead. You will learn that these are indirect product costs and therefore are allocated to the products in order to...
) the amount allowed by the flexible budget. Static Budget vs. Flexible Budget To help in understanding the flexible budget variance, let’s assume that you are the manager of a company’s shipping department. You...
Our Explanation of Debits and Credits describes the reasons why various accounts are debited and/or credited. For the examples we provide the logic, use T-accounts for a clearer understanding, and the appropriate general...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
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