ACCT 203 Chapter Notes - Chapter 7: Mass Production, Sunk Costs, Marginal Cost
25 May 2018
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ACCT 203 GMU Chapter 7 review
What is the periodic inventory system?
Calculated at the end of the period
Companies using perpetual system must still use the periodic system in order to
reflect:
Breakage
Theft
Input errors
Obsolescence
How do you calculate the cost of goods sold for a manufacturing company?
1. calculate the cost of dm used
2. calculate the cost of goods manufactured
3. calculate the cost of goods sold (BI + cost of goods manufactured= goods
available -EI = cost of goods sold)
What is a controllable cost?
management is able to influence or change
What is an uncontrollable cost?
costs companies are locked in to in the short run
What are relevant costs?
differential costs, differ between alternatives
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Document Summary
Companies using perpetual system must still use the periodic system in order to reflect: What is a controllable cost? management is able to influence or change. What is an uncontrollable cost? costs companies are locked in to in the short run. What are relevant costs? differential costs, differ between alternatives. What are irrelevant costs? do not differ among alternatives. Define sunk costs costs that have already been incurred and cannot be changed. Stay constant in total over a wide range of activity levels define variable costs. Change in total in direct proportion to changes in volume. What is marginal cost? the cost of making one more unit. What happens to the cost per unit with variable costs and fixed costs? variable costs: stay constant fixed costs: decline. Each unique product or batch is separate job What is a production schedule ? indicates quantity and types of inventory scheduled to be manufactured during the period.
