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ACC 306 Test 1 Study Guide

by: LacyShirey

ACC 306 Test 1 Study Guide ACC 306

Marketplace > Ball State University > Accounting > ACC 306 > ACC 306 Test 1 Study Guide
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About this Document

This study guide covers chapters 1-5 of our textbook. This is a combination of my reading notes and in-class notes. This study guide is designed to work in tandem with the chapters 1-5 flashcards I...
Intermediate Business Accounting
Douglas Ray Ayres
Study Guide
ACC 306, Intermediate Business Accounting, Accounting, business, Study Guide, Chapters 1-5
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This 4 page Study Guide was uploaded by LacyShirey on Sunday January 31, 2016. The Study Guide belongs to ACC 306 at Ball State University taught by Douglas Ray Ayres in Spring 2016. Since its upload, it has received 66 views. For similar materials see Intermediate Business Accounting in Accounting at Ball State University.


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Date Created: 01/31/16
ACC 306 DOUGLAS AYERS TEST 1 STUDY GUIDE Chapter 1  Review Chapter 1 Flashcards  Answer Questions 1-14 on page 26 ADDITIONAL POINTS  “A firm must clearly define success in their mission statement. Then they use that statement to create a strategy.”  Value Chain Stages—Performed by Managerial Accountants  “The main function of cost management information must be its usefulness and timeliness. The focus of financial reports must be their accuracy and compliance.”  4 Functions of Management  FOCUS: “Strategic thinking involves anticipating changes; products, services and operating processes are designed to accommodate expected changes in customer demands. Flexibility is Important! {“Use the WINDSHEILD, not the rear-view mirror!”}  “The role of cost management is to support the firm’s strategy by providing the information managers need to succeed in their product development and marketing efforts.”  3 Types of Organizations  6 Primary Changes in the Business Environment  Robert Kaplan’s 4 Stages of Development of Cost Management Systems (pg. 10)  13 Methods of Focus  The Balanced Scorecard (Benefits)  4 Perspectives on Using Strategic Information(1 financial, 3 non-financial)  TOC: helps identify and eliminate bottlenecks (focuses on speed)  Cost Leadership vs Differentiation  5 Steps of Strategic Decision Making  Stage of Cost Managerial Control (Exhibit 1.2 pg. 5) EQUATIONS t 1.PV=FV/(1+r) 2.V=CF/(R-g) 3.Beginning Inventory + Purchases - Expense=Ending Inventory Chapter 2  Review Chapter 2 Flashcards  Answer Questions 1-17 on pg. 52 ADDITIONAL POINTS  SWOT Analysis  Strengths and Weaknesses  Opportunities and Threats  Critical Success Factors (Exhibit 2.1)  Effects of Competitive Strategy on Required Resources and Execution (Exhibit 2.2)  Value-Chain Analysis (Example: Exhibit 2.3)  5 Steps of Strategic Decision Making for CIC Manufacturing  Benefits of BSC  Implementing BSC  Sustainability Chapter 3  Review Chapter 3 Flashcards  Answer Questions 1-20 on pgs. 84-85 ADDITIONAL POINTS  Cost is a consumption of a resource.  Direct vs Indirect Costs  Random Variation has an overall average but may bounce around from period to period.  Variable Costs: y=m(x)  Fixed Costs: y=b  Mixed Costs: y=m(x)+b  Relevant Range  In the long-run, fixed cost are actually step costs.  3 Attribute of Cost Information  Accuracy  Timeliness  Cost and Value of Cost Information  Perpetual vs Periodic Inventory Systems Chapter 4  Review Chapter 4 Flashcards  Answer Questions 1-16 on pg. 115 ADDITIONAL POINTS  Costing Choices: 1. The Cost Accumulation Method  Job Costing  Process Costing  Joint Costing 2. The Cost Measurement Method  Actual  Normal  Standard 3. The Overhead Application Method  Volume-based (faster)  Activity-based (more accurate)  Job costing is especially useful for unique-product or service companies.  Cost Measurement Systems (Exhibit 4.1)  “Effective management of manufacturing costs requires timely and accurate cost information.”  “To be competitive, the firm needs accurate cost information—for product pricing, profitability analysis of individual products, profitability analysis of individual customers, evaluation of management performance and refinement of strategic goals.”  “Actual factory overhead costs are incurred each month for indirect materials, indirect labor, and other indirect factory costs.”  “Using a predetermined annual factory overhead rate normalizes overhead cost fluctuations.”  4 Steps to Obtain the Predetermined Overhead Rate 1. Estimate total factory overhead costs for the upcoming operating period. 2. Select the most appropriate cost driver for applying the factory overhead costs. 3. Estimate the total amount for the chosen cost driver for the upcoming operating period. 4. Divide estimated factory overhead costs by the estimate amount of the chosen cost driver to obtain the predetermined overhead rate.  Plant-wide Method of Normal Costing: Using the total overhead for all departments to determine the overhead rate.  2 Ways to Dispose of Overapplied/Underapplied Overhead: 1. Adjust the COGS account. 2. Adjust the production costs of the periods; allocate (pro-rate) the under/overapplied overhead among the ending balance of WIP Inventory, Finished Goods Inventory and COGS.  Overapplied vs Underapplied  Estimated OH > Actual OH = Overapplied  Estimated OH < Actual OH = Underapplied Chapter 5  Review Chapter 5 Flashcards  Answer Questions 1-15 (pgs. 158-159) ADDITIONAL POINTS  ABC recognizes the causal or direct relationships between resource costs, cost drivers, activities and cost objects in assigning costs to activities and then to cost objects.  Under ABC, overhead resources are shared.  Benefits of ABC  Better Profitability Measures  Better Decision Making  Process Improvement  Improved Planning  Cost of Unused Capacity {“The customer is the most important part of the assembly line.”} -W. Edward Deming  The Customer Profitability Analysis allows managers to:  Identify most profitable customers  Manage each customer’s cost-to-serve  Introduce profitable new products and services  Discontinue unprofitable products, services or customers  Shift a customer’s purchase mix toward higher-margin product and service lines  Offer discounts to gain more volume with low-cost-to-serve customers  Choose types of after-sale services to provide  5 Categories of Customer Cost Analysis 1. Customer Unit-Level cost 2. Customer Batch-Level Cost 3. Customer-Sustaining Cost 4. Distribution-Channel Cost 5. Sales-Sustaining Cost


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