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Standard Costs & Formulas for Accounting Flashcards

Standard Costs & Formulas for Accounting Flashcards
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Variance Analysis: Efficiency
You can perform this type of variance analysis to monitor differences in the estimated amount of materials needed for production and the actual amount used.
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Variance Analysis: Spending
The kind of variance analysis used to assess differences between a company's budgeted expenses and what they actually spend.
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Target Net Income: Formula
Fixed cost + net income / contribution margin for each unit
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Target Net Income
The profit goal that a company wants to reach by the end of the year. It is the desired amount of money (net income) that is remaining after all expenses have been paid.
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Break-Even Point in Units: Formula
Fixed costs / (Sales price per unit - variable cost per unit)
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Break-Even Point
The exact amount of money a business needs to make to cover the costs of production. You can find this based on units or a dollar amount.
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Revenue / Sales
The money a company makes off of its services or products. You can find this by adding a company's credit and cash sales together.
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Contribution Margin: Negative
We see this type of contribution margin in departments that aren't profitable and that can't pay all expenses.
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Contribution Margin
This tells a business if their profits have paid for the variable costs of production. It also notes the amount of money that remains to be spent on fixed costs.
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Beginning Inventory: Formula
Ending inventory + sales - new inventory = beginning inventory
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Beginning Inventory
Companies look at this to see how much the inventory that they have available at the start of an accounting period is worth.
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Ending Inventory: Formula
Beginning inventory + net purchases - cost of goods sold (COGS) = ending inventory.
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Ending Inventory
This represents the total value of the products a company has remaining and can sell when an accounting period ends.
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26 cards in set

Flashcard Content Overview

Accessing this set of flashcards can give you the chance to review standard costing and job order costing. You'll be able to consider different types of variance analysis and variance reports. Balanced scorecard perspectives are also addressed by these cards. Additionally, you can go over the formulas used to calculate:

  • Beginning inventory
  • Ending inventory
  • Revenue
  • The break-even point
  • Target net income
Front
Back
Ending Inventory
This represents the total value of the products a company has remaining and can sell when an accounting period ends.
Ending Inventory: Formula
Beginning inventory + net purchases - cost of goods sold (COGS) = ending inventory.
Beginning Inventory
Companies look at this to see how much the inventory that they have available at the start of an accounting period is worth.
Beginning Inventory: Formula
Ending inventory + sales - new inventory = beginning inventory
Contribution Margin
This tells a business if their profits have paid for the variable costs of production. It also notes the amount of money that remains to be spent on fixed costs.
Contribution Margin: Negative
We see this type of contribution margin in departments that aren't profitable and that can't pay all expenses.
Revenue / Sales
The money a company makes off of its services or products. You can find this by adding a company's credit and cash sales together.
Break-Even Point
The exact amount of money a business needs to make to cover the costs of production. You can find this based on units or a dollar amount.
Break-Even Point in Units: Formula
Fixed costs / (Sales price per unit - variable cost per unit)
Target Net Income
The profit goal that a company wants to reach by the end of the year. It is the desired amount of money (net income) that is remaining after all expenses have been paid.
Target Net Income: Formula
Fixed cost + net income / contribution margin for each unit
Variance Analysis: Spending
The kind of variance analysis used to assess differences between a company's budgeted expenses and what they actually spend.
Variance Analysis: Efficiency
You can perform this type of variance analysis to monitor differences in the estimated amount of materials needed for production and the actual amount used.
Variance Analysis: Price
This type of variable analysis looks at differences between how much it actually cost to produce a good and the price that was budgeted for production.
Variance Analysis: Variable Overhead
This type of variance analysis determines the variable overhead spending and variable overhead efficiency and adds them together.
Balanced Scorecard Perspectives: Learning and Growth
This perspective on the balanced scorecard looks at ways to improve employee performance through various forms of training.
Balanced Scorecard Perspectives: Internal Business Process
Focusing on this balanced scorecard perspective allows businesses to judge how well they are performing the activities associated with business.
Balanced Scorecard Perspectives: Financial
The balanced scorecard perspective that looks at how well a company is doing monetarily.
Balanced Scorecard Perspectives: Customer
You can look at this balanced scorecard perspective to assess how well your company is meeting the needs of consumers.
Labor Quantity Variance: Formula
Standard rate of pay x (standard hours budgeted - actual hours worked)
Standard Costs: Types

Standard direct labor costs

Standard materials costs

Overhead standard costs

Variance Report
This document allows a business to compare the differences between what they budgeted and what they actually used. This information is broken down by line item.
Standard Cost Income Statement
A type of income statement that records variances in addition to other information. This sets it apart from financial income statements.
Job Order Costing
You can use this costing system if you are creating custom products, since all costs relate directly to the products and variance doesn't need to be considered.
Standard Costing
This method of costing allows you to form an estimate for the cost of a project, which can be useful in constructing a budget or bidding for a job.
Standard Cost
The amount of money you can expect to pay for the resources you need to produce a good. Because these costs generally stay the same, they can be budgeted for.

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