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107 Cards in this Set
- Front
- Back
Which form of accounting reports to those inside an organization?
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Managerial
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Which form of accounting emphasizes decisions affecting the future?
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Managerial
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Which form of accounting emphasizes relevance?
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Managerial
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Which form of accounting emphasizes timeliness?
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Managerial
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Which form of accounting emphasizes detailed segment reports about departments, products, and customers?
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Managerial
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Which form of accounting need not follow GAAP?
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Managerial
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Which form of accounting is not mandatory?
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Managerial
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Which form of accounting reports to those outside an organization?
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Financial
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Which form of accounting emphasizes financial consequences of past activities?
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Financial
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Which form of accounting emphasizes objectivity and verifiability?
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Financial
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Which form of accounting emphasizes precision?
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Financial
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Which form of accounting emphasizes summary data concerning the entire organization?
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Financial
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Which form of accounting must follow GAAP?
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Financial
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Which form of accounting is mandatory for external reports?
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Financial
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Direct Materials
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Raw Product that become an integral part of a finished product and can be conveniently traced into it
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Raw Product that become an integral part of a finished product and can be conveniently traced into it
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Direct Materials
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Direct Labor
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Factory labor costs that can be easily traced to individual units of product
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Factory labor costs that can be easily traced to individual units of product
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Direct Labor
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Manufacturing Overhead
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All costs associated with manufacturing except DM & DL.
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All costs associated with manufacturing except DM & DL.
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Manufacturing Overhead
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Raw Materials
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Any materials that go into the final product
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Any materials that go into the final product
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Raw Materials
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Work In Process
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Materials that have not been finished into the final product
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Materials that have not been finished into the final product
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Work In Process
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Finished Goods
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Materials that have been converted into the final product
No more processes are necessary to sell to the final customer. |
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Materials that have been converted into the final product
No more processes are necessary to sell to the final customer. |
Finished Goods
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Variable Costs
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A cost that varies in total, in direct proportion to changes in the level of activity
constant per unit. |
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A cost that varies in total, in direct proportion to changes in the level of activity
constant per unit. |
Variable Costs
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Fixed costs
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A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.
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A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If expressed on a per unit basis, it varies inversely with the level of activity.
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Fixed costs
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Product Costs
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All costs that are involved in the purchase or manufacture of goods
In the case of manufactured goods, these costs consist of DM, DL, and OH, (or inventoriable costs) |
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All costs that are involved in the purchase or manufacture of goods
In the case of manufactured goods, these costs consist of DM, DL, and OH, (or inventoriable costs) |
Product Costs
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Period Costs
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Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued; such costs consists of selling (marketing) and administrative expenses
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Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued; such costs consists of selling (marketing) and administrative expenses
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Period Costs
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Differential Cost/Revenue
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A difference in cost/revenue between any two alternatives (or incremental costs/revenues)
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A difference in cost/revenue between any two alternatives (or incremental costs/revenues)
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Differential Cost/Revenue
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Opportunity Cost
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The potential benefit that is given up when on alternative is selected over another
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The potential benefit that is given up when on alternative is selected over another
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Opportunity Cost
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Sunk Cost
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Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.
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Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.
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Sunk Cost
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Idle Time (Where are they charged?)
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costs for idle time are charged to OH
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Overtime Premium (Where are they charged?)
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costs for the premium of Overtime is charged to OH
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Labor Fringe Benefits (Where are they charged?)
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the superior method is to charge to Direct Labor Costs, but many companies charge to OH.
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Full Absorption Cost
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A costing method that includes all manufacturing costs – DM, DL, and both Variable and fixed OH, as part of the cost of a finished unit of product…this term is synonymous with FULL COST.
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A costing method that includes all manufacturing costs – DM, DL, and both Variable and fixed OH, as part of the cost of a finished unit of product.
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Full Absorption Cost
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Variable Costing
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Product cost only “absorbs” variable part of the manufacturing costs.
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Product cost only “absorbs” variable part of the manufacturing costs.
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Variable Costing
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Job Order Costing
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A costing system used in situations where many different products, jobs, or services are produced each period.
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A costing system used in situations where many different products, jobs, or services are produced each period.
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Job Order Costing
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Process Costing
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A costing system used in those manufacturing situations where a single, homogeneous product (such as flour, cement) is produced for long periods of time.
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A costing system used in those manufacturing situations where a single, homogeneous product (such as flour, cement) is produced for long periods of time.
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Process Costing
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Allocation base
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A measure of activity such as direct labor-hours or machine hours that is used to assign costs to cost objects (cost driver). In other words, a measure that is used to assign overhead costs to products and services
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A measure of activity such as direct labor-hours or machine hours that is used to assign costs to cost objects (cost driver). In other words, a measure that is used to assign overhead costs to products and services
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Allocation base
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Predetermined overhead rate
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A rate used to charge overhead cost to jobs in production; the rate is established in advance for each period by use of estimates of total manufacturing overhead cost and of the total allocation base for the period.
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A rate used to charge overhead cost to jobs in production; the rate is established in advance for each period by use of estimates of total manufacturing overhead cost and of the total allocation base for the period.
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Predetermined overhead rate
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Why have a pretermined OH rate, why not use actual OH used?
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-Timeliness
-So many expenditures, not easily trackable, simplicity -Seasonal expenditures can easily warp smaller time periods of expenditures…such as winter heating bill, and summer cooling bill, etc. |
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Just-in-time
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A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand
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A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand
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Just-in-time
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Six Sigma
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Relies on...
-customer feedback -fact-based data gathering and analysis techniques ...to drive process improvement |
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Relies on...
-customer feedback -fact-based data gathering and analysis techniques ...to drive process improvement |
Six Sigma
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business process
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-a series of steps that are followed
-to carry out some task in a business |
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-a series of steps that are followed
-to carry out some task in a business |
business process
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-five-step management approach
-organizes resources around the flow of business processes -pulls units in response to customer orders |
lean thinking model
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What are the five steps of the lean thinking model?
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1. Identify value in specific products/services.
2. Identify the business process that delivers value. 3. Organize work arrangements around the flow of the business process. 4. Create a pull system that responds to customer orders. 5. Continuously pursue perfection in the business process. |
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supply chain management
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-the coordination of business processes across companies
-to better serve end consumers |
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-the coordination of business processes across companies
-to better serve end consumers |
supply chain management
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Enterprise risk management
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-a process used by a company to identify the risks that it faces
-develop responses to those risks -enable the company to be reasonably assured of meeting its goals |
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-a process used by a company to identify the risks that it faces
-develop responses to those risks -enable the company to be reasonably assured of meeting its goals |
Enterprise risk management
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What do the debit and credit sides of a Management overhead T-account represent?
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Debit - Actual
Credit - Applied |
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What do the debit and credit balances of a Management overhead T-account represent?
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Debit - Underapplied
Credit - Overapplied |
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What is the journal entry when raw materials are purchased?
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Debit - Raw Materials
Credit - Cash (A/P etc...) |
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What is the journal entry when raw materials are issued into production?
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Debit - WIP (Direct Materials)
Debit - MOH (Indirect Materials) Credit - Raw Materials |
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What is the journal entry for labor applied to production?
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Debit - WIP (Direct Labor)
Debit - MOH (Indirect Labor) Credit - Salaries and Wages Payable |
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What is the journal entry for manufacturing overhead as it is incurred?
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Debit - MOH
Credit - Accounts Payable |
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What is the journal entry for accrued property taxes and prepaid insurance expiring?
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Debit - MOH
Credit - Property Taxes Payable Credit - Prepaid Insurance |
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What is the journal entry for depreciation on factory equipment?
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Debit - Manufacturing Overhead
Credit - Accumulated Depreciation |
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What is the journal entry when MOH is applied?
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Debit - WIP
Credit - MOH |
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What is the journal entry for S&A salaries?
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Debit - Salaries Expense
Credit - Salaries and Wages Payable |
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What is the journal entry for Depreciation on office equipment?
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Debit - Depreciation Expense
Credit - Accumulated Depreciation |
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What is the journal entry for Advertising and other S&A Expenses?
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Debit - Advertising Expense
Debit - Other S&A Expense Credit - Accounts Payable |
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What is the journal entry when a job is completed?
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Debit - Finished Goods
Credit - WIP |
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What is the journal entry when Finished goods are sold?
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Debit - A/R (Cash)
Credit - Sales Debit - COGS Credit - Finished Goods |
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What is the BASIC Form of a Schedule of Cost of Goods Manufactured?
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Direct Materials
Add: Direct Labor Add: Manufacturing Overhead = Total Manufacturing Cost Add: Beginning WIP Deduct: Ending WIP = COGM |
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What is the LONG Form of a Schedule of Cost of Goods Manufactured?
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Direct Materials:
-Raw Materials Inventory, Beginning -Add: Purchases of Raw Materials =Total Raw Materials Available -Deduct: Raw Materials inventory, ending = Raw Materials Used in Production -Deduct: Indirect Materials Included in Manufacturing Overhead =Total Direct Materials Direct Labor Manufacturing Overhead applied to WIP =Total Manufacturing Costs -Add: Beginning WIP = -Deduct: Ending WIP =COGM |
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What is the Form of a Schedule of Cost of Goods Sold?
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Finished Goods inventory, beginning
Add: COGM =GAS Deduct: Finished goods inventory, ending =Unadjusted COGS Add: Underapplied overhead (Deduct: Overapplied overhead) =Adjusted COGS |
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What is the form of an Income Statement?
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Sales ($ Far)
COGS ($ Far) =Gross Margin ($ Far) Selling and administrative expense: >Salaries Expense ($ Near) >Depreciation Expense ($ Near) >Advertising expense ($ Near) >Other Expense ($ Near) (Total) ($ Far) Gross Margin - S&A Exp = Net Operating Income ($ Far) |
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Quality cost
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Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units
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Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units
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Quality cost
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four broad groups of quality costs
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Prevention Costs, Appraisal Costs, Internal failure costs, and External failure costs
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Quality costs incurred in an effort to keep defective products from falling into the hands of customers
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-Prevention costs
-Appraisal Costs |
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Quality costs incurred despite efforts to prevent them
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-Internal Failure Costs
-External Failure Costs |
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Prevention Costs
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support activities whose purpose is to reduce the number of defects
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support activities whose purpose is to reduce the number of defects
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Prevention Costs
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Quality circles
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consist of small groups of employees that meet on a regular basis to discuss ways to improve quality
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consist of small groups of employees that meet on a regular basis to discuss ways to improve quality
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Quality circles
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Statistical process control
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a technique that is used to detect whether a process is in or out of control
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a technique that is used to detect whether a process is in or out of control
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Statistical process control
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Appraisal costs
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incurred to identify defective products before the products are shipped to customers
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incurred to identify defective products before the products are shipped to customers
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Appraisal costs
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Internal failure costs
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result from identifying defects before they are shipped to customers
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result from identifying defects before they are shipped to customers
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Internal failure costs
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result when a defective product is delivered to a customer
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External failure costs
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External failure costs
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result when a defective product is delivered to a customer
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What is the difference between prevention and appraisal costs?
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Appraisal costs can only find defects while prevention costs can eliminate them.
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What are the uses of quality cost reports? (3)
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helps managers...
-see the financial significance of defects. -identify the relative importance of the quality problems faced by their companies. -see whether their quality costs are poorly distributed |
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What are the three limitations of quality cost information that should be recognized?
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-Simply measuring and reporting quality costs does not solve quality problems. Problems can be solved only by taking action.
-results usually lag behind quality improvement programs. -The most important quality cost, lost sales arising from customer ill will, is usually omitted from the quality cost report because it is difficult to estimate |
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What are the quality control guidelines of the ISO 9000 Standards? (3)
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1. A quality control system is in use, and the system clearly defines an expected level of quality.
2. The system is fully operational and is backed up with detailed documentation of quality control procedures. 3. The intended level of quality is being achieved on a sustained, consistent basis. |