The Costing System Process
Under what conditions would it be appropriate to use a process costing system?
What is meant by the term equivalent units of production when the weight average method is used?
How many Work in Process (WIP) accounts are maintained in a company that uses process costing?
Watkins Trophies, Inc produces thousands of medallions made of bronze, silver and gold. The medallions are identical except for the materials used in their manufacture,. What costing system would you advise the company to use?
What is meant by a product’s contribution margin? How is this ratio useful in planning business operations?
What is meant by the term operating leverage
What is meant by the term break-even point?
What is meant by the term sales mix? What assumption is usually made concerning sales mix in CVP analysis?
Explain how a shift in the sales mix could result in both a higher break-even point and a lower net income?
What is the basic difference between absorption costing and variable costing?
What are the arguments in favor of treating fixed manufacturing overhead costs as product costs?
The Costing System Process-Under absorption costing, how is it possible to increase net operating income without increasing sales?
Why is direct labor a poor base for allocating overhead in many companies?
Why are there two stages of allocation in activity based costing?
How can the activity rates (ie cost per activity) for the various activities be used to target process improvements?
What is a quantity standard? What is a price standard?
What is meant by the term management by exception?
The materials price variance can be computed at what two different points in time? Which point is better? Why?
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