Section 1 - Postsecondary Education Quality Assessment Board

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• Advantages of using variable costing in a
manufacturing company
Chapter 17 4. Product Costing
• Cost Drivers
• Traditional Cost Allocation approach
• Activity-Based Costing approach
Chapter 16 5. Job Order and Process Costing
• Job Order Costing
• Compute budgeted factory overhead rate
• Normalized overhead rate
• Process Costing
• Compute output in terms of equivalent units
• Effects of beginning inventories
Chapter 19 6. Short Term Decision Making
• Concept of relevance
• Relevant costs:
• Relevant costs for specific decisions
• Equipment Replacement decisions
• Make-or-buy decisions
• Sale mix and sales price decisions
Product line decisions
Chapter 20 7. Long Term Decision Making
• Capital Budgeting Decisions
• Evaluation methods:
o NPV
o IRR
o Payback
o ARR
• Tax impact on investment cash flows
• Inflation impact on investment cash flows
• Risk factors in long term decisions
Chapter 21 8. Budget Preparation
• Master Budget
• Responsibility Accounting
• Operating Budgets
• Financial Budgets
• Role of participation in budget setting
Chapter 22 9. Budgetary Control
• Difference between static budgets and
flexible budgets
• Identify budget variances
o Sale Volume variance
o Price variance
o Usage variance
o Variable overhead variance
o Fixed overhead variance
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