ACCT 2203 – FALL 2015

STUDY GUIDE FOR EXAM 2 – ACCT 2203 – FALL 2015

Know definitions and characteristics for: Parallel processing, sequential processing, process costing,weighted-average-costing.

Parallel processing – is a form of processing that requires two, or more, sequential processes to occur with the respective output of each, a “component” coming together in a final process that produces a finished good from the assembled components.

 

Sequential processing – requires that the ‘units’ pass through a series of stages where one stage leads to the next stage ‘in sequence’.

 

Process costing – can be used for any product or service that is homogenous

 

Weighted-average-costing – combines the beginning inventory costs and work done with current period costs and work done to calculate the current period’s ‘unit cost’.

 

Know what revenue and cost elements appear on each of the following (and some elements appear

on both): Variable Costing Income Statement, Absorption Costing Income Statement

 

Know the different parts of, and what shows up on: The Operating Budget and/or The Financial Budget

 

Know how to use the formula for, i.e. how to calculate, each of the variances.

 

Know the definition for, and how to compute, equivalent units of production, total plant costs, DM

costs, DL costs, and conversion costs.

 

Know how to compute the cost per unit, and the cost per equivalent unit, and how to use those

figures to calculate the ending inventory and cost of goods produced.

 

Be familiar with the mathematical function that defines the ‘flow of costs’ as production passes

through the process, and how to use that function to solve for CG transferred, EWIP, BWIP, Inputs

added in the process.

 

Know the difference between a product cost and a period cost.

 

Know the differences between FIFO, LIFE, and Weighted Average methods of inventory valuation.

ACCT 2203

Know the procedure for reconciling the ‘units to be accounted for’ with the ‘units accounted for’ AND

‘costs to be accounted for’ with the ‘costs accounted for’.  ACCT 2203

Know the difference between ‘unit-level costs’ and ‘non-unit-level costs’ and how to distribute ‘nonunit-level

costs’ in order to determine the cost per unit based on ‘consumption ratios’.

 

Know which costing method GAAP requires to be used. ACCT 2203

 

Know in general the different characteristics and requirements of financial statements prepared for

internal use versus external use.

Be familiar with the general concepts involved in developing budgets for sales, production costs (both

prime and conversion), ending inventory, raw materials purchases, direct labor, and overhead

applied.

Know how to calculate the several variances and how to determine if the variance is Favorable or

Unfavorable.

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