1
CMA (Certified Management Accountant)
Standard Costs - -Correct Answer-Standard costs are predetermined,
attainable unit costs. Standard cost systems isolate deviations (variances) of
actual from expected costs. One advantage of standard costs is that they
facilitate flexible budgeting. Accordingly, standard and budgeted costs should
not differ when standards are currently attainable. However, in practice,
budgeted (estimated actual) costs may differ from standard costs when
operating conditions are not expected to reflect those anticipated when the
standards were developed.
Cost of Goods Manufactured - -Correct Answer-Beginning work-in-process
inventory $xx
add: total manufacturing costs xx
less: ending work-in-process inventory (xx)
Cost of goods manufactured $xx
Cost of Goods Manufactured calculation - -Correct Answer-Sales
Less: gross profit
=Cost of goods sold
Add: ending finished goods
=Goods available for sale
Less: beginning finished goods
=Cost of goods manufactured
1
, 2
Cost of goods sold calculation (manufacturing) - -Correct Answer-Cost of
goods manufactured + Beginning finished goods inventory - ending inventory
of finished goods = COGS
Carrying Costs - -Correct Answer-Costs of holding or story inventory. Ex:
capital, insurance, warehousing, breakage, absolescence
Process Costing - -Correct Answer-Like products that are mass produced
should be accounted for using process costing techniques to assign costs to
products. Costs are accumulated by departments or cost centers rather than
by jobs, work-in-process is stated in terms of equivalent units, and unit costs
are established on a departmental basis. Process costing is an averaging
process that calculates the average cost of all units.
Target Costing - -Correct Answer-Target costing begins with a target price,
which is the expected market price given the company's knowledge of its
customers and competitors. Subtracting the unit target profit margin
determines the long-term target cost. If this cost is lower than the full cost, the
company may need to adopt comprehensive cost-cutting measures.
Opportunity costs - -Correct Answer-Opportunity cost, also called implicit
cost, is the maximum benefit forgone by using a scarce resource for a given
purpose and not for the next-best alternative.
Total manufacturing costs - -Correct Answer-Beginning direct materials
inventory
Add: purchases
2
CMA (Certified Management Accountant)
Standard Costs - -Correct Answer-Standard costs are predetermined,
attainable unit costs. Standard cost systems isolate deviations (variances) of
actual from expected costs. One advantage of standard costs is that they
facilitate flexible budgeting. Accordingly, standard and budgeted costs should
not differ when standards are currently attainable. However, in practice,
budgeted (estimated actual) costs may differ from standard costs when
operating conditions are not expected to reflect those anticipated when the
standards were developed.
Cost of Goods Manufactured - -Correct Answer-Beginning work-in-process
inventory $xx
add: total manufacturing costs xx
less: ending work-in-process inventory (xx)
Cost of goods manufactured $xx
Cost of Goods Manufactured calculation - -Correct Answer-Sales
Less: gross profit
=Cost of goods sold
Add: ending finished goods
=Goods available for sale
Less: beginning finished goods
=Cost of goods manufactured
1
, 2
Cost of goods sold calculation (manufacturing) - -Correct Answer-Cost of
goods manufactured + Beginning finished goods inventory - ending inventory
of finished goods = COGS
Carrying Costs - -Correct Answer-Costs of holding or story inventory. Ex:
capital, insurance, warehousing, breakage, absolescence
Process Costing - -Correct Answer-Like products that are mass produced
should be accounted for using process costing techniques to assign costs to
products. Costs are accumulated by departments or cost centers rather than
by jobs, work-in-process is stated in terms of equivalent units, and unit costs
are established on a departmental basis. Process costing is an averaging
process that calculates the average cost of all units.
Target Costing - -Correct Answer-Target costing begins with a target price,
which is the expected market price given the company's knowledge of its
customers and competitors. Subtracting the unit target profit margin
determines the long-term target cost. If this cost is lower than the full cost, the
company may need to adopt comprehensive cost-cutting measures.
Opportunity costs - -Correct Answer-Opportunity cost, also called implicit
cost, is the maximum benefit forgone by using a scarce resource for a given
purpose and not for the next-best alternative.
Total manufacturing costs - -Correct Answer-Beginning direct materials
inventory
Add: purchases
2
