Costing systems, variance analysis, budgeting methods and internal control frameworks.
40 cards · basic cards · AI-written, checked twice. Edit anything.
- What is job order costing used for?
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Assigning costs to individual, unique jobs or projects- When is process costing most appropriate?
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When products are homogeneous and produced continuously or repetitively- What is activity-based costing (ABC)?
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Method that traces overhead costs to activities and allocates them to products based on activity consumption- In ABC, what is a cost driver?
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An activity or transaction that causes overhead costs to be incurred- What is the key difference between direct and indirect costs?
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Direct costs can be traced to a specific cost object; indirect costs cannot- Define variable costs.
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Costs that change in total proportionally with production or activity level- Define fixed costs.
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Costs that remain constant in total regardless of production volume within a relevant range- What is standard costing?
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System using predetermined standard costs to measure actual performance and calculate variances- How is material price variance calculated?
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Actual price minus standard price, multiplied by actual quantity purchased- How is material quantity variance calculated?
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Actual quantity minus standard quantity, multiplied by standard price- What does a favorable material price variance indicate?
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Materials were purchased at a lower price than the standard price- How is labor rate variance calculated?
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Actual wage rate minus standard wage rate, multiplied by actual labor hours- How is labor efficiency variance calculated?
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Actual hours minus standard hours, multiplied by standard wage rate- What does an unfavorable labor efficiency variance mean?
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More actual labor hours were required than the standard hours allowed- What is a flexible budget?
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Budget adjusted to actual activity or volume level, used for meaningful performance evaluation
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