BEC REVIEW 12

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BEC REVIEW 12
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BEC REVIEW 12
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  1. Rodder, Inc., manufactures a component in a router assembly. The selling price and unit cost data for the component are as follows:   

    Selling price                          $15   

    Direct materials cost                3   

    Direct labor cost                      3   

    Variable overhead cost            3   

    Fixed manufacturing overhead cost        2   

    Fixed selling and administration cost    1


    The company received a special one-time order for 1,000 components. Rodder has an alternative use for production capacity for the 1,000 components that would produce a contribution margin of $5,000.


    What amount is the lowest unit price Rodder should accept for the component?
    $14.00

    Rodder needs to sell the components in order to earn as much money as he would have had he used them for his alternate production use.

    In other words, he needs to determine the sales price that would allow him to keep the $5,000 contribution margin.

    The contribution margin is the difference between the revenue for the components and the variable cost of the components.

    The variable cost to produce these components is $9 per unit ($3 direct material + $3 direct labor + $3 variable overhead),

    or $9,000 total ($9 per unit × 1,000 units).$5,000 (Contribution margin) =

    Revenue - $9,000Revenue = $5,000 + $9,000 = $14,000

    $14,000 revenue for $1,000 units = $14 per unit$14 per unit is the lowest price Rodder should accept in order to keep his contribution margin of $5,000.
  2. The --------------------------- is the difference between the revenue for the components and the variable cost of the components.
    The contribution margin is the difference between the revenue for the components and the variable cost of the components.
  3. what is the contribution margin?
    The contribution margin is the difference between the revenue for the components and the variable cost of the components.
  4. ------------------- are inflows or other enhancements of the assets of an entity or settlements of its liabilities, or both, during the period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.
    Revenues are inflows or other enhancements of the assets of an entity or settlements of its liabilities, or both, during the period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.
  5. --------------------- must be earned and realized/realizable before they can be recognized.
    Revenues must be earned and realized/realizable before they can be recognized.
  6. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    -----------------------------
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  7. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    ------------------------------

    Monitoring Activities
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  8. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    -----------------------------

    Information and Communication

    Monitoring Activities
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  9. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    ----------------------------

    Control Activities

    Information and Communication

    Monitoring Activities
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  10. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    -------------------------------------

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  11. Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    -------------------

    -------------------

    -----------------------

    --------------------------------

    --------------------------------
    Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated into the management process. The components are:

    Control Environment

    Risk Assessment

    Control Activities

    Information and Communication

    Monitoring Activities
  12. Internal control consists of -------- interrelated components.
    Internal control consists of five interrelated components.
  13. ---------------------- are the policies and procedures established by management to provide reasonable assurance that its objectives will be achieved.
    Internal controls are the policies and procedures established by management to provide reasonable assurance that its objectives will be achieved.
  14. The ----------------------------- is the amount of time it takes between investing cash in inventory and eventual recovery of cash due to the sale of the inventory.
    The cash conversion cycle is the amount of time it takes between investing cash in inventory and eventual recovery of cash due to the sale of the inventory.
  15. -------------------------------------- systems integrate all aspects of a company’s operations with its information system.
    Enterprise resource planning (ERP) systems integrate all aspects of a company’s operations with its information system.
  16. What does a enterprise resource planning system do?
    An enterprise resource planning (ERP) system integrates all aspects of an organization's activities into one accounting information system.
  17. Canseco Enterprises uses 84,000 units of Part No. 256 in manufacturing activities over a 300-day work year. The usual lead time for the part is six days; occasionally, the lead time has gone as high as eight days. The company now wants to implement a safety stock policy (it presently has none). The safety stock size, the likely effect on stockout costs, and the likely effect on carrying costs, respectively, would be:
    560 units, decrease, increase.

    Daily usage = 84000 / 300 days     = 280 units

    Safety stock = maximum lead time - usual lead time * daily usage


    =(8days - 6 days) * 280 units  = 560 units

    As a result of the two days' safety stock the likelihood of a stockout and incurrence of stockout costs will decrease.However, because of the additional 560 units carried in inventory, inventory carrying costs will increase.

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