CPA BEC Ch 53 Part 2

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CPA BEC Ch 53 Part 2
2010-04-04 20:22:34
CPA BEC Ch 53 Part 2 Cost Attg

CPA BEC CH 53 part 2
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  1. In the cvp chart, explain BE pt, cont marg, NI & NL.
    BE = Total cost & sales intersectCont Marg = Sales line over variable costs lineNI = Past BE ptNL = Below BE pt
  2. Example of percentage markup on cost.
    Want to sell a product at a gross margin of 20%. The cost of the product is $4.00.% markup = 20% / 100% - 20% so = 25%Selling price = Cost of product + GM so 4.00 + 25%(4.00) = 5.00
  3. Does COGM replace purchases of a merchandising firm?
    Yes! Finished Goods = EI
  4. Experience curve?
    The experience curve is the graphic representation of time (& costs) for a broad category of tasks decreasing as a group gains experience with a set of tasks.
  5. What are the 2 common approaches to product pricing?
    Cont Margin Approach & Cost Plus Pricing
  6. What are step variable costs?
    ex. supervision may be fixed over a given production volume, but additional shifts or work crews may be needed to increase production therefore additional supervisors are needed & thus the added cost will go up in a lump sum or "stair step" manner!
  7. Explain the cost-plus pricing approach in product pricing.
    Takes the products costs & adds a predetermined markup to compute the targeted selling price.
  8. What's in the FG inventory acct?
    Beg Bal + Goods Finished (from WIP) = Avail for Sale - COGS = Ending Bal
  9. What's in raw mat'ls inventory acct?
    Beg Bal + Purchases = Available for use - RM used (transferred to WIP) = Ending Balance
  10. Contribution marg method of BE pt in $ & units.
    FC + NI / Cont Marg RatioFC + NI / UCMCont Marg is always in den!
  11. Explain how the diff (variance) btw actual OH & applied OH is reported?
    Usually reported as an adj to COGS in the I/S!
  12. In mixed sales, how would you get the BE point for each product?
    Composite Units x sales mix ratio = BE UnitsBE Units x selling price = BE $