Managerial Accounting 285 Study Guide
Managerial Accounting 285 Study Guide 285
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This 2 page Study Guide was uploaded by Jake Luksan on Tuesday March 29, 2016. The Study Guide belongs to 285 at Iowa State University taught by Dr. Jim Cannon in Winter 2016. Since its upload, it has received 19 views. For similar materials see Accounting in Business at Iowa State University.
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Date Created: 03/29/16
Exam 1 Study Guide IMPORTANT Exam 1 Info: Date: Tuesday Feb 16th, 2015 Time: 8:15-10:15 PM Location: Kildee 0125 What to bring: 1) Student ID card 2) #2 pencils and erasers 3) Calculators (no phones, ipads, ipods, etc. will be allowed – ABSOLUTELY NO EXCEPTIONS!!!) 4) A 3x5 notecard (nothing larger) with your HANDWRITTEN notes on both sides –anything you want to write is fair game Format: - 30 multiple choice questions (3.33 pts per question for a total of 100 points – 1 or 2 bonus questions) - Questions are a mix of conceptual and computational GOOD LUCK! Study hard and you will do great! ____________________________________________________________________________________________________________ Chapter 1 What is managerial accounting? o How does it compare with financial accounting? Chapter 2 Know how to classify costs!!! o As PRODUCT (specifically direct materials, direct labor, or manufacturing overhead) or PERIOD (specifically selling or administrative) Manufacturing overhead is our “junk drawer” product cost account – what is included in the overhead account? Why do we keep track of which costs are product cost & which costs are period costs? When can we expense each type of cost? o As DIRECT or INDIRECT o As VARIABLE or FIXED You MUST be able to identify the behaviors of variable and fixed costs and apply them to identify whether a cost is variable, fixed, or mixed when given a set of volumes and associated costs You must be able to apply these cost behavior to predict future costs at different activity levels Be comfortable with the cost equation Y = a + bX. What do each of those letters represent? o Be able to use the cost equation to estimate costs at a new activity level. Understand the concept of the 3 methods of analyzing cost behavior in order to predict future costs (good, better, best) o Scatterplot method Understand the idea of the scatterplot method and that when activity is zero and the only costs being incurred are fixed costs o High-low method Be able to find the equation of the cost function given two points Use this equation to estimate costs at other activity levels o Least-Squares Regression Make sure you know the line items of an income statement using both of the following formats! o Traditional (gross margin) o Contribution (contribution margin) Understand what is meant by: o Sunk cost o Opportunity cost o Differential cost Chapter 3 How do you calculate Contribution Margin? (Remember you can do this using total dollar amounts or per unit dollar amounts) and the Contribution Margin Ratio? o What is the contribution margin ratio? What does it tell us? Be able to figure out how changes in units sold, unit selling price, variable expense, fixed expense, etc. would affect net operating income. (forces you to use knowledge of how variable/fixed costs work and the concept of applying per unit costs to different levels of activity) o Review the in-class problems covering this concept which are posted on Blackboard Know how to calculate the break-even point & the target profit for both total sales dollars and unit sales (remember there are 2 ways to figure both – 4 different formulas, but they are all connected and very similar!) o Review what these 2 concepts actually mean Be able to calculate margin of safety. What does margin of safety tell us? o Remember you can calculate margin of safety as a dollar amount, in units, and as a percentage. Be familiar with the calculation for all three. How do you use the degree of operation leverage? What does it tell us? Chapter 4 Remember the 3 different types of inventory (Raw Materials, Work in Process, & Finished Goods) and know how to calculate ending inventory Know how to calculate all items in the “4 step process” to finding Cost of Goods Sold and how the 4 steps fit together 1) Raw Materials Used in Production 2) Total Manufacturing Costs 3) Cost of Goods Manufactured 4) Cost of Goods Sold What is job-order costing? What types of companies use job-order costing vs. process costing? How are direct material, direct labor, and overhead costs assigned to jobs using job order costing? Why do we use a pre-determined overhead rate? What complications does using a pre-determined overhead rate cause in the long run? Know how to calculate the pre-determined overhead rate Be able to calculate the amount of APPLIED overhead using the pre-determined overhead rate Be able to calculate the total cost of a job Determine if overhead has been underapplied or overapplied, by how much, and how/when this should be corrected o Remember that COGS must be adjusted for over/underapplied overhead before used to find net operating income! Be able to calculate adjusted costs of goods sold that would appear on the income statement *You need to have a complete understanding of the flow of inventory and what all of the items in the 4 equations really represent! Based on information given in problems, you need to be able to identify which step to include in your calculations. Chapter 5 What are the product costs and period costs under absorption costing and under variable costing? When are period costs expensed? When are product costs expensed? Know how to calculate the 4 step process: 1) Review how to calculate (i.e., value) inventory using both methods 2) Know how to set up the income statement using the traditional format (using gross margin) and calculate net income using absorption costing 3) Know how to set up the income statement using the contribution format (using contribution margin) and calculate net income using variable costing 4) Know how to calculate the reconciliation *which means UNDERSTAND what causes the differences between variable costing net income to absorption costing net income When is absorption costing net income larger? When is variable costing net income larger? When are they equal? o This has to do with production vs. sales volume & FOH! o Use your chart in your slides When is variable costing used vs. when absorption costing is used? What are the benefits/drawbacks of using each method? What is a traceable fixed cost vs. a common fixed cost? Understand how to create a segmented income statement o This includes understanding the difference between traceable fixed costs and common fixed costs & how/where we subtract these My Advice 1) Review the slides/handouts from class while focusing on the topics listed above (make your note card while you are studying!) 2) PRACTICE, PRACTICE, PRACTICE! o Practice exam provided o In-class problems o Team quizzes and exercises o Examples given in the slides o Homework
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