ACCT 201 EXAMINATION SET QUESTIONS AND ANSWERS
GRADED A+
✔✔Total Manufacturing Costs - ✔✔The total amount of product costs (DM + DL + MOH)
that is added to Work In Process account during the period
✔✔Actual Overhead - ✔✔costs are tracked throughout the year in the overhead
account - IM + IL + Other Factory MOH
✔✔Applied Overhead - ✔✔overhead assigned to production using predetermined rates
- PDMOH x actual activity level
✔✔types of inventory accounts - ✔✔raw materials, work in process, finished goods
✔✔Value Chain - ✔✔all of the activities a company incurs that adds value to its
products or services; total cost
✔✔Direct Costs - ✔✔traced directly to the product / cost object
✔✔Cost of Goods Sold (COGS) - ✔✔The total amount of product costs (DM + DL +
MOH) associated with inventory that was sold during the period to customers. COGS is
used to show the transfer of inventory product costs from the balance sheet to the
income statement.
✔✔Merchandising Companies - ✔✔- add value to the finished product purchased from
suppliers - sells finished goods direct to consumers (retail) and to other merchandisers
(wholesaler) - merchandise inventory - ex: Target
✔✔Work In Process - ✔✔Products that are partially through the manufacturing process
✔✔Direct Labor - ✔✔cost of compensating employees who physically convert raw
materials into the finished product -ex: employees on the assembly line - NOT CEO
salaries (goes straight to I/S as pd. cost)
✔✔Period Costs - ✔✔costs that are taken directly to the income statement as expenses
in the period in which they are incurred or accrued - expenses after product has been
made - research and development, marketing, distribution, and customer service
✔✔Product Costs - ✔✔All costs that are directly involved in acquiring or making a
product. In the case of manufactured goods, these costs consist of direct materials,
direct labor, and manufacturing overhead. - Product Cost = DM + DL + Applied MOH
✔✔Manufacturing Overhead (MOH) - ✔✔- all manufacturing costs other than DM and
DL - Indirect materials, indirect labor, and other factory overhead
, ✔✔Raw Materials - ✔✔all the materials required to produce the finished good
✔✔Cost of Goods Manufactured (COGM) - ✔✔The total amount of product costs (DM +
DL + MOH) associated with inventory that finished production during the period and
transferred to finished goods inventory
✔✔Conversion Costs - ✔✔the costs incurred to transform raw materials into finished
goods. These costs are a combination of direct labor and manufacturing overhead,
representing the expenses directly involved in the production process aside from raw
materials - CC = DL + MOH
✔✔Where do we close MOH? - ✔✔Cost of Goods Sold (COGS)
✔✔Standard Cost - ✔✔budget for a single unit of product-made up of SP&SQ-SPxSQ
✔✔Standard Quantity - ✔✔The amount of input required to produce one unit + amount
of unavoidable waste/scrap or downtime
✔✔Standard Price - ✔✔Base purchase price - discounts + freight-in OR Base wage +
payroll tax + benefits
✔✔Favorable - ✔✔Financially better off, expenses are less than what was budgeted
✔✔Unfavorable - ✔✔Financially worse off than what we budgeted
✔✔Static/Master Budget - ✔✔prepared for one level of sales volume
✔✔Flexible Budget - ✔✔Prepared for any level of sales volume within relevant range
For fixed costs, the Flexible Budget = Master Budget
✔✔Price/Rate Variance - ✔✔Did we pay too much or too little compared to the standard
price? -compares actual and hybrid budgets -want actual < hybrid
✔✔Quantity/Efficiency Variance - ✔✔Did we use too much or too little compared to the
standard quantity? -compares hybrid and flexible budgets -want hybrid < flexible
✔✔Sales Volume Variance - ✔✔Did we sell more or less than originally projected? -
compares the flexible and master budgets -want flexible < master
✔✔Flexible Budget Variance - ✔✔Did we properly control costs or manage revenue? -
helps us identify the piece of the variance that is attributable to factors other than
volume -compares flexible and actual budgets
want actual < flexible
GRADED A+
✔✔Total Manufacturing Costs - ✔✔The total amount of product costs (DM + DL + MOH)
that is added to Work In Process account during the period
✔✔Actual Overhead - ✔✔costs are tracked throughout the year in the overhead
account - IM + IL + Other Factory MOH
✔✔Applied Overhead - ✔✔overhead assigned to production using predetermined rates
- PDMOH x actual activity level
✔✔types of inventory accounts - ✔✔raw materials, work in process, finished goods
✔✔Value Chain - ✔✔all of the activities a company incurs that adds value to its
products or services; total cost
✔✔Direct Costs - ✔✔traced directly to the product / cost object
✔✔Cost of Goods Sold (COGS) - ✔✔The total amount of product costs (DM + DL +
MOH) associated with inventory that was sold during the period to customers. COGS is
used to show the transfer of inventory product costs from the balance sheet to the
income statement.
✔✔Merchandising Companies - ✔✔- add value to the finished product purchased from
suppliers - sells finished goods direct to consumers (retail) and to other merchandisers
(wholesaler) - merchandise inventory - ex: Target
✔✔Work In Process - ✔✔Products that are partially through the manufacturing process
✔✔Direct Labor - ✔✔cost of compensating employees who physically convert raw
materials into the finished product -ex: employees on the assembly line - NOT CEO
salaries (goes straight to I/S as pd. cost)
✔✔Period Costs - ✔✔costs that are taken directly to the income statement as expenses
in the period in which they are incurred or accrued - expenses after product has been
made - research and development, marketing, distribution, and customer service
✔✔Product Costs - ✔✔All costs that are directly involved in acquiring or making a
product. In the case of manufactured goods, these costs consist of direct materials,
direct labor, and manufacturing overhead. - Product Cost = DM + DL + Applied MOH
✔✔Manufacturing Overhead (MOH) - ✔✔- all manufacturing costs other than DM and
DL - Indirect materials, indirect labor, and other factory overhead
, ✔✔Raw Materials - ✔✔all the materials required to produce the finished good
✔✔Cost of Goods Manufactured (COGM) - ✔✔The total amount of product costs (DM +
DL + MOH) associated with inventory that finished production during the period and
transferred to finished goods inventory
✔✔Conversion Costs - ✔✔the costs incurred to transform raw materials into finished
goods. These costs are a combination of direct labor and manufacturing overhead,
representing the expenses directly involved in the production process aside from raw
materials - CC = DL + MOH
✔✔Where do we close MOH? - ✔✔Cost of Goods Sold (COGS)
✔✔Standard Cost - ✔✔budget for a single unit of product-made up of SP&SQ-SPxSQ
✔✔Standard Quantity - ✔✔The amount of input required to produce one unit + amount
of unavoidable waste/scrap or downtime
✔✔Standard Price - ✔✔Base purchase price - discounts + freight-in OR Base wage +
payroll tax + benefits
✔✔Favorable - ✔✔Financially better off, expenses are less than what was budgeted
✔✔Unfavorable - ✔✔Financially worse off than what we budgeted
✔✔Static/Master Budget - ✔✔prepared for one level of sales volume
✔✔Flexible Budget - ✔✔Prepared for any level of sales volume within relevant range
For fixed costs, the Flexible Budget = Master Budget
✔✔Price/Rate Variance - ✔✔Did we pay too much or too little compared to the standard
price? -compares actual and hybrid budgets -want actual < hybrid
✔✔Quantity/Efficiency Variance - ✔✔Did we use too much or too little compared to the
standard quantity? -compares hybrid and flexible budgets -want hybrid < flexible
✔✔Sales Volume Variance - ✔✔Did we sell more or less than originally projected? -
compares the flexible and master budgets -want flexible < master
✔✔Flexible Budget Variance - ✔✔Did we properly control costs or manage revenue? -
helps us identify the piece of the variance that is attributable to factors other than
volume -compares flexible and actual budgets
want actual < flexible
