Spreadsheet: 55118d1255247419-fill-in-cells-with-1-same-filled-colour-instead-of-cells-filled-separately-cpa-notes
Sheet: Sheet1

Hi/Low  Technique | In accounting It is a required rule to use "activity" as the criterion for judging the highest and lowest figures. If there are two highest point of activity and 2 different cost(ie different month), use the average of the two. | Study guide 2.21
Total fixed cost | total fixed = total cost - total variable
Limitation of Hi Low and Regression techniques | 1. Thee techniques equally weigh older and recent data points | Study guide 2.27
Limitation of Hi Low and Regression techniques | 2. The technique assumes all the points included are useful to predict cost for the future. This is not always the case. For example, a company with new machinery should be estimated differently from cost data generated from using old machines.
Limitation of Hi Low and Regression techniques | 3. Inflation
Limitation of Hi Low and Regression techniques | 4. If the cost data are already known to be a mistake error, then the predicted data will be wrong.
Limitation of Hi Low and Regression techniques
Inventory | Cost of any resources acquired by an organization in order to be sold to customers. Raw material - preproduction. Work in progress - during production Finished goods - post production.
Work In Progress | Direct Material Used, Direct Labour Incurred and Necessary Factory Overheads accumulate at WIP stage. When product finishes the cost transfer to finished goods and reduce WIP. | Study guide p2.29
Cost of Goods Sold | Its an expense account not inventory account. Cost moves from inventory and become expense in the statement of comprehensive income. Revenue from selling the product less COGS equals company's gross profit. Thenselling and admin period expense incurred are subtracted from it to get a net profit | Study guide P2.29
Cost of Goods Manufacturered Statement | Gaph and formula attached | 2.31
Cost of Goods Sold Statement | Graph anf formula attached | 2.31
Statement of comprehensive income | Sales Revenue - Cost of Goods Sold = Gross profit - period(selling and administration) expense = Net Profit before tax (Same as our capex??) | 2.31
Physical Unit | A unit that is being produced in factory regardless of its stage of completion | 2.4
Equivalent Units | % Percentage complete X Number of Units + % Percentage complete X Number of units etc.. | 2.4
Process costing formula | Beginning WIP units + New units started = Units transferred out + Ending WIP units
Conversion Cost | Refer to Direct Labour and Manufacturing Overhead
Adjustment | Made for unders and overs for both process and job costings | Self assessment 2.6
Process costing | Generally more suited when products are homogeneous
Process costing | Preferrable than job costing when there is high volume homogeneous products
Weighted Average Method | Considers the volume of products produced in each product type. Therefore weighted average technique provides a better indication of average selling prices and variable costs per unit, for inclusion in the CVP model, when making multi product decisions.
Step method | One department can allocate overhead cost to all departments(including another support department). Flow of cost is one way. | 3.16
Reciprocal method | There is a 2 way depedence between support departments(ie one support department can use another's service and vice versa). The cost can flow from anywhere to anywhere 2 ways | 3.17
Single Plant Wide OH rating | Total OH = $10000, 20000 machine hours, each machine hour = $0.5. 2 Problems. First not all overhead cost in the company are related to machine hour. Second it is unlikely that all cost of overhead are explained by machine hours.
Product Profitability | Fixed Cost per unit are not relevant in deciding the profitability of the product lines. Therefore the gross profit margin is not the correct measure of profitability. Rather, the focus is on the variable costs and thus the contribution margin.
Contribution Margin | Sell price minus variable cost.