Midterm Review: Managerial Accounting

University of Washington – ACCT 225 – Intro Managerial Accounting

Midterm 2 Study Guide Below is a list of some of the things you should definitely be familiar with for Midterm 2. It is not intended to be a complete list. Rather, this should be used a supplement to the studying you were otherwise doing. Chapter 7 Under variable costing, only those manufacturing costs that vary with production quantity (output) are included as product costs. This would typically include direct materials, direct labor, and the variable portion of manufacturing overhead (V-MOH). Unlike in absorption costing (i.e., everything we did in Midterm 1), fixed manufacturing overhead (F-MOH) is treated as a period expense that goes straight to the income statement rather
Like in the Production Budget, you’ll also need to make sure you have sufficient raw materials on hand to use in the beginning of the following month. The formula is essentially the same as the Production Budget formula. Once you’ve calculated your raw materials purchases, you also need to figure out how much cash you’ll be paying for these purchases. Similar to cash receipts from sales, cash payments may also be spread out over several months. The question should specify what portion you pay this month, in the next month, etc. You can also use this information to figure out your end “Accounts Payable – Inventory” for the period, which you’ll need later to complete your budgeted Balance Sheet. After raw materials, you may also be asked to estimate your Direct Labor & MOH costs. Lastly, you can calculate your expected COGS. This is just your total estimated unit cost times unit sales (from the Sales Budget). 4) S&A Expense Budget – this is just your estimated S&A Expenses based on your budgeted sales and production. The calculations will probably involved fixed and variable components. Like your raw materials purchases, these expenses will also likely be paid over several months. However, there are two
Also be on the lookout for prepaid expense accounts or any other balance sheet account that is slipped into the question somewhere. Chapter 10: Terms to know: - management by exception - ideal vs practical standards - standard price per unit (for direct materials) - standard rate per hour (for direct labor) - standard hours (of direct labor) per unit - standard MOH cost per unit - standard quantity (of direct materials) or hours (direct labor or MOH) allowed - materials quantity variance - materials price variance - labor rate variance - labor efficiency (quantity) variance - variable overhead spending (price) variance - variable overhead efficiency (quantity) variance - balanced score card – generally know what this is, but there shouldn’t be any detailed questions about it on the exam. You should know it for the “real world,” though. The general variance composition is price/rate variance {(AQ x AP) – (AQ x SP)} plus quantity/efficiency variance {(AQ x SP) – (SQ x SP)}. You should be able to compute each of these, determine whether it is favorable or unfavorable, and explain what each means. A very likely question format will be to provide you a few, disparate pieces of information and ask you to fill in all the rest of the balances and calculations (like the example we did in section). The trick is to draw your