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ACCT 212 Chapter 6
Terms in this set (18)
direct materials, direct labor, VARIABLE overhead all included in product costs......INTERNAL
direct materials, direct labor, and VARIABLE AND FIXED overhead costs are included in product costs
Product Costs when sold vs Period Costs when sold
Product Costs: inventory until sold then COGS
Period Costs: reported as expenses as soon as incurred
Under Variable costing, costs are expensed when...
Does income differ between costing methods when inventory levels change?
Contribution Margin Income Statement
separates variable and fixed costs; highlights the contribution margin, (sales - variable expenses).
is reported income the same under the costing method when the number of units produced equals the number of units sold?
Finished Goods Inventory>>Income Effect
absorption > variable
variable > absorption
When the quantity produced and the quantity sold differ, the costing methods produce similar results
Converting variable costing to absorption costing
absorption costing=variable costing + fixed overhead in ending inventory - fixed overhead in beginning inventory
Fixed overhead cost deferred in (ending) inventory
what goes into inventory under absorption costing when production exceeds sales
Fixed overhead cost recognized from (beginning) inventory
prior period cost that becomes and expense of the current period when sales exceed production (absorption method)
if a manager has the power to control it
who controls variable production costs like direct materials and indirect labor?
fixed costs related to production capacity (depreciation) are controlled by
higher level managers who make decisions to change factory size or add new machines
Which costing method do special orders use?
When should you accept a special order?
when price is greater than variable and fixed costs
Should company accept 1,000 pairs of skates at $22 per pair?
Variable production cost formula? answer is $15 so they should accept it
(DM + DL + VOH)
Recommended textbook explanations
Horngren's Cost Accounting
Madhav Rajan, Srikant M. Datar
Glencoe Accounting: First Year Course
Don Herrmann, J. David Spiceland, Wayne Thomas
James F. Sepe, J. David Spiceland, Mark W. Nelson, Wayne Thomas
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