C253 Advanced Managerial Accounting Exam Guide

Material Overhead Rate (Labor Hours) - Estimated Overhead/Estimated Labor Hours Cost Per Part - (Direct Materials + Direct Labor + (overhead rate * amount of overhead))/units COGS - (Beg. Materials+Purchased Materials+End Materials)+Direct Labor+(Overhead for Labor)+(Beg work in process-End work in process) Predetermined Overhead Rate - Estimated total manufacturing overhead/Estimated total amount of allocation base Manufacturing Overhead Applied - Predetermined Overhead Rate x Actual amount of allocation base Total Manufacturing Cost - Direct Materials + Direct Labor + Overhead COGS Manufactured - Direct Materials+Direct Labor+Manufacturing Overhead Applied+Beg Work in Process-End Work in Process What industry uses job order costing - Legal Services Adjusted COGS - Unadjusted COGS-under/overapplied overhead What type of business is process costing? - Flour Manufacturer What are absorption costing product costs? - Materials, Labor, Variable Manufacturing Overhead and Fixed Manufacturing Overhead (No selling and general admin) What are variable costing product costs? - Materials, Labor and Variable Manufacturing Overhead (no fixed costs) Absorption Cost - (((Material+Labor+Variable Manufacturing Overhead)*Units Produced)+Fixed Costs)/Units Produced Net Income - Sales Revenue - Expense (Revenue - (Absorption Cost*Units Sold) - (Variable SG&A*Units Sold)-Fixed SG&A Fixed Manufacturing Overhead Per Unit - (COGS-Variable Manufacturing)/Units Sold How do variable and absorption costing compare? - Net income under absorption costing is higher than variable costing when units produced are greater than units sold Gross Profit Margin - ((# Units Sold*Price per Unit)-((# Units Sold*(Materials+Labor+Overhead)))/(# Units Sold*Price Per Unit) Activity Rate - Estimated Overhead/Total Product Hours Allocated Overhead - (Total Overhead for Activity/Total Used) & compute for each activity Forecasted Gross Margin - (Units*Sales)-(Units*Materials)-(Units*Labor)-(Units*Overhead) Relevant Costs Are - The costs that are different between two choices Segment Margin - Sales-Variable Expenses-Relevant Costs What is the most reliable determinant for taking on a project - Net Present Value (NPV) What is the Present Value Factor - Investment/Return Simple Rate of Return - (Revenue-Costs)/initial investment (Costs include depreciation) What do you need to calculate to determine Payback Period - Net Cash Flow (Net Income+Depreciation) Do you accept a project with a higher or lower IRR? - Higher Net Present Value - (((Sales-Annual Costs)*PVF)+((Working Capital+Salvage Value)*PVF))-((Equipment Costs+Work in Capital)+(Overhaul Equipment)*PVF)) How do you use Present Value Table? - Match up time in years with the discount rate to get factor Profitability Index - (Present Value-Upfront Investment)/Upfront Investment Revised NPV - NPV+(cash inflows*PVF at cash inflow) Break Even Point - Fixed Costs/Contribution Margin Break Even Point Change - ((Fixed Costs/(Product A*%Sales)+(Product B*%Sales))*%Sales Calculate the Breakeven Point at both Sales % and subtract them Contribution Margin - Sales-Variable Costs