BUS A202
EXAM 1 REVIEW SHEET

PROLOGUE: Managerial Accounting: An Overview
Steps in the planning and control cycle and what role accounting plays in each step (shown in class).
Comparison of financial accounting versus managerial accounting.

CHAPTER 1: Managerial Accounting and Cost Concepts
Basic terminology related to product costing: manufacturing (product) versus nonmanufacturing (period) costs, direct materials, direct labor, manufacturing overhead, direct versus indirect costs, prime versus conversion costs, sunk versus opportunity costs, relevant versus irrelevant costs, differential costs, fixed versus variable costs.
Distinguish between the following types of cost behaviors: variable, fixed, mixed, step variable, step fixed, curvilinear, etc. and be able to match the description of a cost behavior to its graphical respresentation like the problem distributed and cover in class.
Understand the concept of relevant range and how the following variable, fixed, and mixed costs behave at both the total and per unit levels.
Know the mathematical representation of the cost equation: Y = a + bX.
Be able to calculate a and b in the above cost equation using the high-low method.
Identify the advantages and disadvantages of the following cost estimation techniques: high-low, scattergraph, and least-squares methods (comparison table distributed in class).
Know the format of the contribution margin income statement and its usefulness.

CHAPTER 2: Job-Order Costing
Type of manufacturing firms that would use a job order costing system versus process costing system.
Inventory classification in a manufacturing setting: raw materials inventory, work in process inventory, and finished goods inventory.
Calculation of cost of goods manufactured and cost of goods sold.
Documentation used in a job order costing system: materials requisition form, time ticket, and, in particular, job cost sheet.
Calculation of and need for a predetermined overhead rate.
Recording all relevant entries in debit/credit format in a job order costing including the disposition of overapplied or underapplied manufacturing overhead to cost of goods sold.

CHAPTER 3:
Activity-Based Costing
Benefits and costs of maintaining an activity-based costing system.
Identification of activity level: unit, batch, product, facility.