Prevention costs
What do you call the costs incurred to avoid production of poor quality goods or services?
Warranty costs
Which of the following is not an internal failure cost?
Just-in time
A raw and in-process inventory account is part of which of the following?
Allocate costs to the cost object
What is the last step in developing an activity-based costing system?
An increase in the sales price per unit
Which of the following will decrease the breakeven point assuming no other changes in the cost-volume-profit relationship?
The decline in the fixed manufacturing cost per unit as a result of producing additional units
Which of the following considerations is irrelevant with respect to consideration of a special sales order?
Revenue it would lose
the costs it could save
how dropping the electronics product line would affect sales of its other products like CD
In deciding whether to drop its electronics product line, a company's manager would consider which of the following?
Fixed costs that are determined to be unavoidable
Which of the following costs is irrelevant with respect to a special sales order decision?
Cost Allocation Rate
Estimated total indirect cost/estimated total quantity of the allocation base
Allocated Activity Cost
cost allocation rate X actual quantity of the allocation base
Set Target Cost
Target sales price (based on market research)-Desired profit.
Prevention Cost
Cost spent to AVOID poor quality of goods or service
Appraisal Cost
Cost spent to DETECT poor quality of good or service
Internal Failure Cost
Cost spent to avoid poor quality of goods or service BEFORE delivery to customer
External Failure Cost
Cost spent after the company delivers poor quality good and service.
Margin of safety
Expected sales-Breakeven sales
Variable cost per unit
Change in total cost/ change in volume of activity
Total Fixed Cost
Total fixed cost - total variable cost
Total Mixed Cost
(Variable cost per unit X number of units)+ total fixed cost
Operating Income
Sales Revenue- (variable costs-fixed costs)
Units sold
Fixed cost + operating income/ contribution marging per unit
Contributon Marging Ratio
Contribution Margin/Sales revenue
Breakeven Sales in $$
Fixed costs/ contribution margin ratio
Target sales in $$
Fixed costs+operating income/contribution margin ratio