Acct 2 Spring Semester 2016

Exam #2 Reminder and Topics to Review

Wednesday, Feb 24th and Thursday, Feb 25th, 2016
1) Exam #2 will be given on Wednesday, February 24th from 9:20 am to 10:35 am and
on Thursday, February 25th from 9:20 am to 10:35 am.
2) If you need to switch sections, please email me so that the exam sections are balanced.

3) The exam is closed book, closed notes, closed cell phone usage,
and closed neighbor, no talking, no whispering and no
cheating.
4) Please bring your own calculator and a #2 pencil.
5) I will provide the exam scantrons, and about 10 calculators and about 20 pencils.
6) The exam will cover topics from chapters 3, 4, and 5. The exam is printed in the
multiple choice format.
7) There are no journal entries on the exam, but you will need to know debits, credits, and Taccounts. The exam will consist of concept/term recognition, and computational
problems.
Please review the following topics:
Chapter 3 Know elements of Process Costing:
1) Know how to reconcile Total Physical Units, or BI + IN = OUT + EI
BI (units) + (new) units started (IN) = (100% complete) units transferred out (OUT) + EI (units)
2) Know how to reconcile Total Dollar Costs ($$) both for DM (Direct Materials) and for CONV
(Conversion Costs).
Note that $$ 2a) plus $$ 2b) equals Total Costs which is your check figure $$ 2)
2a) DM: $$ BI + $$ IN = $$ 2a
2b) CONV: $$ BI + $$ IN = $$ 2b
And $$ 2a + $$ 2b = $$ 2 (your check figure to equal $$ 5a + $$ 5b)
3) Know how to compute Equivalent Units of Production (EUs)
3a) DM: 100% units transferred OUT + 100% units in EI (since materials are always 100% or
added at the beginning of the process by definition)
3b) CONV: 100% units transferred OUT + (given) % completion rate times units in EI
4) Know how to compute $$ Cost per Equivalent Unit or $$ Cost/EU
4a) DM: $$ 2a / 3a (as computed in the above steps)
4b) CONV: $$ 2b / 3b (as computed in the above steps)
5a) Costs Allocated to Units Transferred Out = Units OUT times Cost/EU for 4a and 4b
Total $$ Costs to OUT = Units OUT times 4a for DM + Units OUT times 4b for Conversion

5b) Costs Allocated to EI = (Cost / EU x Equivalent Units (EUs) in EI)

Total $$ Costs to EI = Units EI times 100% times 4a for DM + Units EI times (the given) % rate of
completion times 4b for Conversion
Note Check Figures: $$ 5a + $$ 5b = $$ 2a + $$ 2b = $$ 2
Costs Allocated to Units Transferred Out (or to Cost of Goods Manufactured, CGM)
= (Cost / EU x Equivalent Units (EUs) or 100% of Physical Units transferred out)
Chapter 4 Know how to compute Activity Based Overhead Rate (ABOR).
1) Compute ABOR = $OH / Identified Activity or Cost Driver. Do this for several activities.
Know how to assign or allocate it out among different Activities using various Cost Drivers
2) Multiply each ABOR times estimated usage or activity allocated among products or divisions.
Use an Allocation Formula or by % Allocation among 2 or more products
Chapter 5
From a list, identify examples of a fixed cost and a variable cost
Know the elements of the cost function Y = a + bX
Know what is represented by, a, b, X and Y (Fixed costs, variable cost/unit, # units, Total costs)
Know how to compute the total costs (Y), given the numbers for a, b and X
Know how to recompute Y if given a different number for X
Know how to compute for either a, b, X or Y, if given all the other figures
Know how to compute b, a, and Y given a new X
Know how to compute variable cost/unit or b, if given two points (High & Low)
Know how to compute fixed costs or a using the High-Low Method. Solve using, a = Y - bX
Know how to identify the cost function, Y = a + bX, using the High-Low Method
Know the Contribution Format of the Income Statement
Know overall formula, [Sales V/C F/C = Net Income (NI)]. At the BEP, NI = $ 0
Know how to compute Contribution Margin (CM), or [Sales V/C (Variable Costs) = CM]
Know how to compute CM Ratio = ($$ CM / $$ Sales), and Unit CM = Unit SP Unit VC
Know how to compute Unit Sales Price if given Unit CM and CM Ratio
Know how to compute Total Variable Costs if given $$ CM and CM Ratio
Know how to compute Break-Even Point (BEP) in $$ Sales. BEP ($$) = ($$ FC / CM Ratio)
Know how to compute Break-Even Point (BEP) in Units Sold. BEP (Units) =($$ FC / Unit CM)
Know how to compute New BEP, if given a Target Profit (TP).
New BEP ($$ Sales) = ($$ FC + $$ TP) / CM Ratio
New BEP (Units Sold) = ($$ FC + $$ TP) / Unit CM
Know that TP can be set and worked backwards to compute Required Sales,
Or, TP = Sales V/C - F/C, or TP = CM F/C
Know how to compute Margin of Safety (MS) = Actual (or Expected Sales) BEP ($$ Sales)
Know how to compute Margin of Safety (MS) Ratio = [$$ MS / $$ Actual (Expected Sales)]