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Managerial Accounting questions reviewed and answered in correct manner.
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Managerial Accounting questions reviewed and answered in correct manner.
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Managerial Accounting questionsreviewed and answered in correct
manner.
What are the causes of the "death spiral"? ANS - Normal Absorption costing
What is included in variable costing ANS - Direct Material, Direct Labor and Variable M.O.H
Remaining Problems of using Practical capacity ANS - It still doesn't tell us: Why we have excess
capacity, how to determine the right level of excess capacity and how to get to that level
Difference between absorption and Variable costing ANS - Absorption costing includes fixed M.O.H
Consequences of Death Spiral ANS - Causes managers to increase prices or cut away good business at
the wrong time.
What is over cost/undercosting ANS - Over costing = estimated(or reported) cost >real cost
Under costing = estimated (or reported) cost < real cost
Explain the advantage(s) of using estimated overhead rates. ANS - With this approach, we get unit costs
before the year is over; we can thus make decisions
during the year using our estimated unit costs;
This approach removes the cyclical of costs within the year.
A key difference between activity-based costing (ABC) and traditional costing is ANS - ABC allocates
costs along business processes
, List at least five actions we should consider when planning to improve our overall profitability using the
customer profitability study ANS - 1. Learn from both "good news" and "bad news";
2. Cross sell;
3. Protect and expand business with best customers;
4. Discount if necessary to win additional business from best (or lowest cost-to-serve) customers;
5. Negotiate win-win actions with customers;
6. Try to price expensive services;
7. Analyze the benefits of "worst" customers (prestige, reputation, ability to sell to other
customers because we can serve the "bad" ones, learning);
8. Go after competitors' customers that we can now predict are high-profit ones;
9. Stop doing business with ("fire") customers only after careful analysis;
10. Attempt to lower cost-to-serve to high-cost customers;
11. Attempt to sell more to low-cost customers.
Wages of a supervisor that supervises the operations is what expense? ANS - Manufacturing overhead
When asked for the cost of a particular product under absorption you will use ANS - Actual DM, Actual
DL and Estimated amounts because the actual amounts of these products are not yet determined.
Determining Excess Capacity ANS - Estimated cost of excess capacity = Total OH cost - Estimated MHs
Used × $ per MH (practical)
2 Formulas for OH Rate ANS - 1. Estimated OH/ Estimated DLH
2. (U/O applied) OH cost/Actual DLH
Product cost ANS - The cost used to create a product (DL,DM, consumable production supplies and
factory overhead)
Period Cost ANS - Not part of the manufacturing process, usually associated with selling and
administrative
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