PRICING AND COSTING LONG QUIZ

Cost measuring represent methods used to

measure and record the cost of direct materials,

direct labor, and factory overhead.

Normal Costing - is the actual expenditure made to acquire an asset, which includes

the supplier-invoiced expense, plus the costs to deliver, set up, and

test the asset. This is the cost of an asset when it is initially recorded in

the financial statements as a fixed asset.

Actual Costing - is a costing system that assigns actual direct materials, labor

cost

to production, but using a predetermined rate to assign

overhead cost.

Cost control is an important factor in maintaining and

lower profitability.

Cost Volume Profit (CVP) Analysis, also known as break-even

analysis, is a financial planning tool that leaders use when

determining short-term strategies for their business.

Cost direct- Cost leadership In a narrow or focused market.

TRANSFER PRICING - The amount charged when one division

sells goods or services to another

division.

Management's goal in setting a transfer price is to encourage goal congruence among

the division and the whole company coincide.

Goal Congruence - The sell should be set so that the divisional management desire to maximize divisional

earnings is consistent with the objectives of the company as a whole.

The three basic or general method for determining transfer prices are:

1. Cost-based transfer price.

2. Market-based transfer price.

3. Negotiates transfer price.