ACC 241 ACTUAL EXAM SCRIPT QUESTIONS AND
ANSWERS SURE A+
✔✔What is the formula to calculate cost plus price? - ✔✔COST + MARKUP ON THE
COST
✔✔What is the formula to calculate total MOH allocated? - ✔✔POHR X TOTAL
ACTUAL AMOUNT ALLOCATION BASE
✔✔How do we determine when the company under or overallocated and what should
be done to fix it? - ✔✔- If the MOH incurred is less than the actual MOH then that
means the company underallocated and should increase cogs by debiting it
- If the MOH incurred is greater than the actual MOH then that means the company
overallocated and should decrease cogs by crediting it
✔✔How can the plantwide overhead rate distorts costs? - ✔✔- If different departments
incur different kind of MOH
- If jobs uses the department to different extents
✔✔Activity-based costing - ✔✔Reduces cost distortion to a minimum and focuses on
activities as fundamental cost objects.
✔✔Unit-level activities. Give an example. - ✔✔Activities and costs incurred for every
unit. For example, the inspection and packaging of every unit the company produces.
✔✔Batch-level activities. Give an example. - ✔✔Activities and costs incurred for every
batch regardless of number of units. For example, machine setup.
✔✔Product-level activities. Give an example. - ✔✔Activities and costs incurred for a
particular product regardless of number of units and batches. For example, cost
research.
✔✔Facility-level activities. Give an example. - ✔✔Activities and costs incurred
regardless of number of units, batches, and particular product. For example, facility
upkeeping.
✔✔ABC tends to do what? - ✔✔It tends to increase the unit cost of low-volume products
and decrease the unit cost of high-volume products.
✔✔ABC can be used for what? - ✔✔- Determining which products/services to
emphasize
- Set prices
- Cut costs
- Make other routine planning
, - Control decisions
✔✔What are the benefits to adopting ABC? - ✔✔- It provides a more accurate product
cost information to set competitive prices
- Can pinpoint cost saving
✔✔Backflush costing - ✔✔A product is not assigned a cost until it is finished or sold.
✔✔Prevention costs - ✔✔Costs incurred from avoiding producing poor quality
goods/services.
✔✔Appraisal costs. Give an example. - ✔✔Costs incurred from detecting poor quality
goods/services. For example, the testing of a product.
✔✔Internal failure costs - ✔✔Costs incurred on defective units before delivery.
✔✔External failure costs - ✔✔Costs incurred on defective units after delivery.
✔✔Prevention and appraisal costs are sometimes known as what? - ✔✔Conformance
costs.
✔✔What are some signs that the system may be distorting costs? - ✔✔- Managers
doesn't understand your costs and profits
- Losing a bid when you expected to win and winning a bid when you expected to lose
- Diversified product line
✔✔Cost behavior - ✔✔Explains how cost changes when volume changes.
✔✔Variable costs - ✔✔Costs incurred for every unit of volume. Total variable costs
changes in direct proportion to changes in volume.
✔✔What is the cost equation formula? - ✔✔VARIABLE COST PER UNIT OF ACTIVITY
(Y) X VOLUME (X)
OR
Y=VX
✔✔Committed fixed costs - ✔✔Costs that has been locked in due to previous
management decisions. They have little control over these costs in the short run but
they're fixed in the long run.
✔✔A lower cost unit gives businesses what? - ✔✔The flexibility to decrease the sale
price.
ANSWERS SURE A+
✔✔What is the formula to calculate cost plus price? - ✔✔COST + MARKUP ON THE
COST
✔✔What is the formula to calculate total MOH allocated? - ✔✔POHR X TOTAL
ACTUAL AMOUNT ALLOCATION BASE
✔✔How do we determine when the company under or overallocated and what should
be done to fix it? - ✔✔- If the MOH incurred is less than the actual MOH then that
means the company underallocated and should increase cogs by debiting it
- If the MOH incurred is greater than the actual MOH then that means the company
overallocated and should decrease cogs by crediting it
✔✔How can the plantwide overhead rate distorts costs? - ✔✔- If different departments
incur different kind of MOH
- If jobs uses the department to different extents
✔✔Activity-based costing - ✔✔Reduces cost distortion to a minimum and focuses on
activities as fundamental cost objects.
✔✔Unit-level activities. Give an example. - ✔✔Activities and costs incurred for every
unit. For example, the inspection and packaging of every unit the company produces.
✔✔Batch-level activities. Give an example. - ✔✔Activities and costs incurred for every
batch regardless of number of units. For example, machine setup.
✔✔Product-level activities. Give an example. - ✔✔Activities and costs incurred for a
particular product regardless of number of units and batches. For example, cost
research.
✔✔Facility-level activities. Give an example. - ✔✔Activities and costs incurred
regardless of number of units, batches, and particular product. For example, facility
upkeeping.
✔✔ABC tends to do what? - ✔✔It tends to increase the unit cost of low-volume products
and decrease the unit cost of high-volume products.
✔✔ABC can be used for what? - ✔✔- Determining which products/services to
emphasize
- Set prices
- Cut costs
- Make other routine planning
, - Control decisions
✔✔What are the benefits to adopting ABC? - ✔✔- It provides a more accurate product
cost information to set competitive prices
- Can pinpoint cost saving
✔✔Backflush costing - ✔✔A product is not assigned a cost until it is finished or sold.
✔✔Prevention costs - ✔✔Costs incurred from avoiding producing poor quality
goods/services.
✔✔Appraisal costs. Give an example. - ✔✔Costs incurred from detecting poor quality
goods/services. For example, the testing of a product.
✔✔Internal failure costs - ✔✔Costs incurred on defective units before delivery.
✔✔External failure costs - ✔✔Costs incurred on defective units after delivery.
✔✔Prevention and appraisal costs are sometimes known as what? - ✔✔Conformance
costs.
✔✔What are some signs that the system may be distorting costs? - ✔✔- Managers
doesn't understand your costs and profits
- Losing a bid when you expected to win and winning a bid when you expected to lose
- Diversified product line
✔✔Cost behavior - ✔✔Explains how cost changes when volume changes.
✔✔Variable costs - ✔✔Costs incurred for every unit of volume. Total variable costs
changes in direct proportion to changes in volume.
✔✔What is the cost equation formula? - ✔✔VARIABLE COST PER UNIT OF ACTIVITY
(Y) X VOLUME (X)
OR
Y=VX
✔✔Committed fixed costs - ✔✔Costs that has been locked in due to previous
management decisions. They have little control over these costs in the short run but
they're fixed in the long run.
✔✔A lower cost unit gives businesses what? - ✔✔The flexibility to decrease the sale
price.
