ACC 406 Lecture 2: ACC 406 Lecture 2

80 views2 pages

lemonminnow843

6 Feb 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

The amount of cash or cash equivalent sacrificed for goods/services. Costs can be used differently, at the same time to help make decisions. Revenue - expenses = profit on income statement. Assigning costs is the way that a cost is linke to some cost object. Classified according to the decision making needs of management. Can vary according to the objective being served. Can be classified into groups using a variety of criteria. Since non traceable, costs are to be allocated/assigned. Fixed = total cost remains fixed (rent) More activity = lesser cost per unit. Variable = total cost varies with activity level. Fixed = access fee, variable = depending how much you use. Period expenses = non-inventoriable (prime costs, conversion costs) Easily and accurately trace to a cost object. Relationship between cost and object = physically observed. Cannot be easily traced to a cost object. Relationship between cost and object = not easily observed.

Related Questions

1. A cost pool is :

A. a collection of homogeneous cost to be assigned.

B. almost always the combined result of decision made bydifferent responsibility center manager.

C. The primary function of a responsibility accountingsystem.

D. the amount of cost that has been allocated say, 10% to a userdepartment.

E. The tool used to allocate cost dollars to userdepartments.

2.Variable costs are those costs that:

A. vary (in total ) inversely with changes in activity.

B. vary (in totals) directly with in activity.

C. remain constant (in total) as activity changes.

D. Decrease on a per unit basis as activity increase.

E. Increase on a per unit basis as activity increases.

3. When comparing EOQ and JIT inventory system, which of thefollowing statement is false?

A. The EOQ approach takes the viewpoint that some inventory isnecessary.

B. The EOQ system assumes a constant order quantity.

C. JIT argues that inventory investments should beminimized.

D. The EOQ system focuse on acquistion and holding costs.

E. JIT argues that safety stocks are necessary to reduce theprobability of a stock shortage.

4. Procust costing in manufacturing firm is the process of:

A. Accumulating the company 's period costs

B. Allocating costs among the firm departments.

C. Placing a value on the company's fixed assets.

D. Assigning cost to the firm's inventory.

E. Assinging costs to the comapny's managers.

5.Decentralized firms can delegate authority by structuring anorganization into responsibility centers. Which of the followingorganizational segments is most like a totally independent,standalone business where managers are expected to "make it on theown?

A. Cost center

B. Revenue Center

C. Profit Center

D. Investment center

E. Contribution center

6. Costs that are expensed when incurred are called:

A. Product costs

B. Direct Costs

C. Inventoriable Cost

D. Period Cost

E. Indirect costs

7. A budget serves as a benchmark against which:

A. Actual result can be compared

B. Allocated results can be compared

C. actual result be inconsequential

D. Alloated results become inconsequential.

E. Cash balances can be compared to expense totals.

8. Activity based costing system.

A. use a single volume based cost driver.

B. Assign overhead to product based on the products' relativeusage of direct labor.

C. often reveal products that were under or over costed bytraditional costing.

D. Typically use fewer cost driver than more traditional costingsystem.

E . Have a tendency to distort product costs/

9.The point in a joint production process where each individualproduct becomes separately identifiable is commonly called the:

A. Decision point

B. Separation point

C. Individual product point

D. Split-off point

E. Joint product point.

10.The RIO calculation will indicate:

A. the percentage of each sale dollar that is invested inassets.

B. The sale dollars generated from each dollar of income.

C.How effectively a company used its invested capital

D. the invested capital generated from each dollar of income

E. the overall quality of the company's earnings.

burgundyrhinoceros92

I'll rate posting for sec times just do last parts likecost and balance sheet ( account balance and cost incurred ) that'sit ready question carefully then answer all last partthanks

Charles Maxwell is starting a cheesecake bakery, Able BakerCharlie Company, to produce and sell different flavored cheesecakesto restaurants and the general public. He has just begun his studyof accounting, and is a bit confused about the many types ofreports he has read about and how they will help him run hisbusiness. He asks you to help him clarify what the differencesbetween managerial accounting and financial accounting are. Heâsalso wondering how to set up his inventory, how to classify thecosts of his business, and how to fill in some missinginformation.

	Required:
1.	Choose whether thecharacteristics on the Managerial vs. Financial panel are mostoften associated with managerial accounting or financialaccounting.
2.	Charles has provided some ofthe costs he expects to incur on the Cost Classification panel.Decide on the classifications that could be applied to each ofthese costs using the table provided. The cost object in each caseis the cheesecake.
3.	Charles found some sampleincome statements and balance sheets on the Internet, and askedwhich of them might be most appropriate for a manufacturingbusiness like his. Review income statements A and B on the IncomeStatements panel, and balance sheets C and D on the Balance Sheetspanel. Determine which income statement and balance sheet would bemost appropriate for a manufacturing business like Able BakerCharlie. Then, on the Financial Statements panel, denote whichincome statement and balance sheet would be most appropriate for amanufacturing business.
4.	At the end of February, afterthe second month of operations of Able Baker Charlie Company,Charles shows you the data heâs collected, but he was unable tofigure out some of the amounts. On the Costs and Balances panel,determine the missing amounts. Note: It may behelpful to use T accounts to map the flow of the amounts throughthe manufacturing accounts and solve for the missing dollarvalues.

Managerial vs. Financial

Choose whether the following characteristics are most oftenassociated with managerial accounting or financial accounting.

	Managerial Accounting	Financial Accounting
Primarily used for internal decision making
Generally Accepted Accounting Principles (GAAP) must beused
Prepared statements usually pertain to the company as a wholerather than individual departments or products
Information provided will often be subjective, such asestimated future results
Often prepared on an as-needed basis rather than at fixedintervals
Use principles of the Sustainability Accounting Standards Board(SASB) to provide sustainability information to external financialstatement users
Consideration of sustainability practices to contribute to thecompanyâs long-term success
Using eco-efficiency measures to reduce expenses

Cost Classification

Charles has provided some of the costs he expects to incur asfollows. Decide on the classifications that could be applied toeach of these costs using the table provided. The cost object ineach case is the cheesecake.

Cost	Product	Period	Direct	Direct	Factory	Selling	Administrative	Direct	Indirect	Prime	Conversion
Cost	Cost	Cost	Materials	Labor	Overhead	Expense	Expense	Cost	Cost	Cost	Cost
Eggs used to make cheesecakes
Bakerâs wages
Delivery driver wages
Depreciation of office computers
Power to run the cheesecake ovens
Presidentâs salary
Sales commissions
Factory supervisor salary

Financial Statements

Charles found some sample income statements and balance sheetson the Internet, and asked which of them might be most appropriatefor a manufacturing business like his. Review income statements Aand B on the Income Statements panel, and balance sheets C and D onthe Balance Sheets panel. Determine which income statement andbalance sheet would be most appropriate for a manufacturingbusiness like Able Baker Charlie Company.

Which income statement is most appropriate for a manufacturingbusiness?

Income statement A

Income statement B

Which balance sheet is most appropriate for a manufacturingbusiness?

Balance sheet C

Balance sheet D

Income Statements

Income Statement A (scroll down for Income StatementB):

Sample Company A

Income Statement

For the Year Ended December 31, 20Y8

1	Sales		$42,000.00
2	Beginning finished goods inventory	$5,250.00
3	Plus cost of goods manufactured	6,400.00
4	Cost of finished goods available for sale	$11,650.00
5	Less ending finished goods inventory	400.00
6	Cost of goods sold		11,250.00
7	Gross profit		$30,750.00
8	Operating expenses:
9	Selling expenses	$6,400.00
10	Administrative expenses	5,250.00
11	Total operating expenses		11,650.00
12	Net income		$19,100.00

Income Statement B:

Sample Company B

Income Statement

For the Year Ended December 31, 20Y8

1	Sales		$42,000.00
2	Beginning merchandise inventory	$5,250.00
3	Plus net purchases	6,400.00
4	Merchandise available for sale	$11,650.00
5	Less ending merchandise inventory	400.00
6	Cost of merchandise sold		11,250.00
7	Gross profit		$30,750.00
8	Operating expenses:
9	Selling expenses	$6,400.00
10	Administrative expenses	5,250.00
11	Total operating expenses		11,650.00
12	Net income		$19,100.00

Balance Sheets

Balance Sheet C (scroll down for Balance SheetD):

Sample Company C

Balance Sheet

December 31, 20Y8

1	Assets
2	Cash		$20,800.00
3	Accounts receivable (net)		10,000.00
4	Merchandise inventory		6,000.00
5	Supplies		2,100.00
6	Land		17,000.00
7	Total assets		$55,900.00
8	Liabilities
9	Accounts payable		$17,800.00
10	Stockholdersâ Equity
11	Common stock	$19,000.00
12	Retained earnings	19,100.00
13	Total stockholdersâ equity		38,100.00
14	Total liabilities and stockholdersâ equity		$55,900.00

Balance Sheet D:

Sample Company D

Balance Sheet

December 31, 20Y8

1	Assets
2	Cash		$20,800.00
3	Accounts receivable (net)		10,000.00
4	Inventories:
5	Finished goods	$2,000.00
6	Work in process	1,500.00
7	Materials	2,500.00	6,000.00
8	Supplies		2,100.00
9	Land		17,000.00
10	Total assets		$55,900.00
11	Liabilities
12	Accounts payable		$17,800.00
13	Stockholdersâ Equity
14	Common stock	$19,000.00
15	Retained earnings	19,100.00
16	Total stockholdersâ equity		38,100.00
17	Total liabilities and stockholdersâ equity		$55,900.00

Costs and Balances

At the end of February, after the second month of operationsof Able Baker Charlie Company, Charles shows you the data heâscollected, but he was unable to figure out some of the amounts.Review the following data and fill in the missing amounts on thechart for Able Baker Charlie Company. Note: It maybe helpful to use T accounts to map the flow of the amounts throughthe manufacturing accounts and solve for the missing dollar values.It may also be helpful to review the steps for determining the costof materials used, total manufacturing cost incurred, and cost ofgoods manufactured.

Data forFebruary
Decrease in materialsinventory	$3,300
Materials inventory on Feb. 28	50% of materials inventory on Jan.31
Direct materials purchased	$12,600
Direct materials used	3 times the direct laborincurred
Total manufacturing costs incurredin period	$29,400
Total manufacturing costs incurredin period	70% of Cost of GoodsManufactured
Total manufacturing costs incurredin period	$7,000 less than Cost of GoodsSold

Account	Account Balances		Costs Incurred
Account	Jan.31	Feb.28	Costs Incurred
Materials Inventory			DirectMaterials Used
Work inProcess Inventory	$27,000		DirectLabor Incurred
FinishedGoods Inventory		$16,000	FactoryOverhead Incurred
			Cost ofGoods Sold

grayprairie-dog947

Course Project Week 4

For this next part of the project you will build the Income Statement and Balance Sheet for the Bike Repair & Maintenance Shop (BRMS) for 2018. Use the information below and add another sheet to your Excel Workbook.

BRMS Information for 2018

In 2017, the repair shop was opened in October and ended the year with a ($10,500) operating loss.

Supply Inventory of parts & supplies maintained	$3,000
Replacement parts are ordered as they are used.
Shop hours of operation: 52 weeks a year.
Monday - Friday 11am - 7pm	8 hrs
Saturday 9am - 7pm	10 hrs
Staff	FTEs	Salary
Manager	1	$ 40,000
bookkeeper/purchaser	0.8	$ 20/hr
Repairers	2.5	$ 18.50/hr

Employee benefits: 20% of salary for the manager; 17% of salary for all others.

Supply costs	$ 65,000
utility costs	$ 7,200
marketing costs	$ 10,000
other costs	$ 22,000

Services Provided:

Budgeted: Repair Services: $100 each for 2,600 repairs

New Packages being considered

Package A: Preventative maintenance service package $ 80

Package B: Basic inspection, lube, adjust & clean shifting braking system $ 90

Package C: Annual peak performance package $100

Package D: Basic inspection, + replace shifting cables & preventative maintenance package $250

Estimated Services Provided under the new options:

Package A: 25 per week

Package B: 15 per week

Package C: 10 per week

Package D: 5 per week

Bike Repair & Maintenance Shop
Budgeted Income Statement
For the Year Ended December 31, 2018
Revenue
Repair Fees	?
Other Income	?
Gross Revenues	?

Expenses
Salaries & Benefits	?
Wages & benefits	?
Utilities	7,200
Marketing costs	10,000
Supply costs	65,000
Other costs	22,000
Total Expenses	104,200
Operating Income	?
Income tax	?
Net Income	$(43,692)
Profit Margin	?

a) For the first full year of operations, BRMS was budgeted to lose over $40,000 performing repair services. These repairs have high fixed costs for the replacement parts in the repairs. If BRMS decided to expand their services to provide bicycle inspections and preventative maintenance, which use more employee time than supplies, what would the projected change in profit be?

b) If a decision is made to add more service oriented repairs is there a change in fixed and variable costs for repair services?

c) Complete a new ACTUAL Income Statement based on your decisions in a & b. Then complete the Balance sheet below.

Bike Repair & Maintenance Shop
Balance Sheet
December 31, 2018
Assets
Cash	$ 8,500
Investments	-
Accounts Receivable (net)	6,000
Prepaid Expenses	3,000
Inventory	?
Plant, Property & Equipment	5,000
Less: Accumulated Depreciation	(167)
Total Assets	$ 25,333

Liabilities
Accounts Payable	$ 4,500
Accrued Liabilities	700
Salaries Payable	4,000
Long-term liabilities	-
Total Liabilities	$ 9,200

Common Stock	?
Retained Earnings	?
Total Stockholders' Equity	?
Total Liabilities & Stockholders' Equity	?

Next Steps: Financial Analysis for both BRBS & BRMS.

Using the information below for BRBS complete the financial metric analyses as indicated in Chapter 9 of the textbook for both BRMS (above) & BRBS.

The Income Statement for the Buy-Right Bike Shop is provided below for 2017 and 2018.

BUY-RIGHT BIKE STORE
Income Statement
	2018	2017
Sales - Online	$ 11,080,000	$ 6,240,000
Sales - In store	580,400	312,000
Sales returns	221,600
Gross Revenues	11,438,800	6,552,000
Cost of Goods sold	5,540,000	3,276,000
Contribution Margin	$ 5,898,800	$ 3,276,000
Expenses
Salaries & Benefits	$ 144,000	$ 139,206
Wages & benefits	391,880	274,997
Utilities	13,200	13,000
Marketing costs	200,000	200,000
Contributions & Community Involvement	58,040	31,200
Other costs	1,375,000	1,200,000
Operating Income	3,716,680	1,417,597
Income tax	1,077,837	411,103
Net Income	$ 2,638,843	$ 1,006,494
Profit Margin	23%	15%
Sales volume
Bike C - online	95,000	60,000
Bike A - online	4,800	-
Bike C - in store	5,100	3,000
Bike A - in store	200	-
total Sales volume	100,000	63,000

The Balance Sheet for Buy-Right Bike Store is provided below:

Buy-Right Bike Store
Balance Sheet
December 31, 2018
Assets
Cash		$ 1,500,000
Investments		225,000
Accounts Receivable (net)		1,250,000
Prepaid Expenses		30,000
Inventory		58,280
Plant, Property & Equipment		1,800,000
Less: Accumulated Depreciation		60,000
Total Assets		$ 4,923,280

Liabilities
Accounts Payable		83,250
Accrued Liabilities		4,414
Salaries Payable		7,913
Long-term liabilities		30,000
Total Liabilities		$ 125,577

Common Stock		1,152,366
Retained Earnings		3,645,337
Total Stockholders' Equity		$ 4,797,703
Total Liabilities & Stockholders' Equity		$ 4,923,280

ACC 406 Lecture 2: ACC 406 Lecture 2

Document Summary

Get access

Related Documents

ACC 406 Lecture Notes - Lecture 2: Denim

ACC 406 Lecture Notes - Lecture 2: Direct Labor Cost, Management Accounting, Income Statement

ACC 406 Lecture Notes - Lecture 2: Komala Party Of Iranian Kurdistan, Gross Margin, Management Accounting

Related Questions