Accounting Final Review
Accounting Final Review ACC 204
Popular in Managerial Accounting (20014)
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This 3 page Study Guide was uploaded by Melanie Guerrero on Saturday May 7, 2016. The Study Guide belongs to ACC 204 at Pace University taught by James Hannon in Spring 2016. Since its upload, it has received 54 views. For similar materials see Managerial Accounting (20014) in Accounting at Pace University.
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Date Created: 05/07/16
Accounting Final Review Variable Costing vs. Traditional Absorption Fixed Manufacturing Overhead Absorption Costing - The cost of the product(s) that were produced and sold go to the Income statement as COGS - The cost of products(s) that were produced and NOT sold go to the balance sheet as part of Finished Goods Inventories Variable Costing - All the cost of products(s) that were produced go to Income Statement as Period Expense Ending Inventory When units sales < units produced = Inventories Increase = Absorption Costing Net Income is higher When units sales > units produced = Inventories Decrease = Absorption Costing Net Income is lower When unit sales = units produced = No change in Inventories = Net Incomes are equal Traceable Fixed Cost - Of a segment is a fixed cost that is incurred because of the existence of the segment (i.e. no segment, no fixed cost) - Ex: Salary of a manager; maintenance cost for a building; Liability Insurance - Costs that would appear over time if the segment itself disappeared Common Fixed Cost - fixed cost that supports the operations of more than one segment, but is not traceable in whole or in part to any one segment (i.e. no segment, no change in fixed cost) - Ex: Salary of CEO of various divisions; cost of heating in a store with various departments; salary of receptionist shared by number a of doctors Segmented Margin - Is Obtained by deducting traceable fixed costs from a segment from the segment’s contribution margin - If a segment can’t cover its own costs, then that segment probably should be dropped *Traceable Costs can become Common Costs - Fixed costs that are traceable to one segment maybe a common cost of another segment - Ex: Airline wants a segmented income statement that shows segment margin for a particular flight further broken down into first-class, business-class, and economy class. Airline must pay landing fee regardless at the arriving airport. o Fixed Landing fee is a traceable cost of the flight, but common cost for each seating class o BUT since paying fee is needed to have any seating class, landing fee can be considered to be a common cost of all three classes
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