The company sells widgets for $3 each. Variable costs are .50 cents per unit. Fixed costs are
$100,000. The number of units the company needs to sell to break even is
SG&A in a medium to large sized company would typically include the costs of all of the
following departments except:
Name and define two methods of valuing inventory. Name several pros and cons of each.
Weighted Average Cost has several pros and cons. Some pros are that it evens out
fluctuations in inventory costs over time, is straightforward to calculate, and easy record
keeping. Drawbacks include inaccurate costs during fluctuations, obscured profit margins,
inflated obsolete inventory value, unsuitability for unique items, limited cost visibility, tax
compliance challenges, and suboptimal decisions based on averaged costs.
Standard Cost provides
cost predictability by setting predetermined standard costs,
making budgeting, and forecasting easier. Standard fee simplifies record-keeping as each
item has a fixed standard cost. Inventory valuation remains stable, avoiding significant
cost fluctuations during price changes.
The standard cost method does have drawbacks.
Complexity in setting accurate costs, issues in fluctuating markets, costly variance
investigation, potential incentives distortion, need for regular revisions, limited suitability
for custom-made products, and lack of cost transparency.
What is receivables float? What is payables float?
Receivable float is the time between a company receiving payment and the funds being
available for use.
Payables float refers to the delay between a payment sent to a supplier and the funds
being deducted from the company's account.
ACC 340 Midterm