ACCTG 221 Cheatsheet · Cost and Management Accounting

1 · Exam map course data + final announcement

“Summary sheets. These must be A4 size or smaller and may be either typed or handwritten. A maximum of five double-sided sheets is permitted.” ACCTG 221 course home announcement on the final exam, Semester 2 2026 (MD_ACCTG_221_Cost_and_Management_Accounting_Home_3.md)

2 · CVP sequence Ch 1 · W1

core formulasCM/u = selling price − variable cost/u
CM ratio = CM ÷ sales revenue
Profit = Q × CM/u − fixed cost
BE units = fixed cost ÷ CM/u
BE sales $ = fixed cost ÷ CM ratio
Target Q = (fixed cost + target profit) ÷ CM/u
Margin of safety = expected sales − BE sales

When it bites: identify whether the answer is units, sales dollars, bundles or %. Round a whole-unit target upward, then prove: rounded Q × CM − fixed cost ≥ target. Model assumes price, unit variable cost, fixed-cost pool and mix hold within the relevant range.

Sales mix

Build one composite bundle from the stated proportions. Bundle CM = Σ(product quantity × product CM). Find break-even bundles, then unpack each product quantity. A changed mix requires a new bundle; do not reuse the old weighted contribution.

Reverse questions: when volume is given, rearrange the same profit equation to solve for selling price, allowable variable cost or fixed cost. Change one assumption at a time, state the feasible capacity, and compare scenarios in both numerical and managerial language.

Interpretation check: a larger safety margin puts expected sales further above break-even, but does not prove demand or capacity. State its denominator and forecast assumption.

3 · Cost behaviour Ch 2 · W2

high–lowVariable rate b = (Cost at high activity − Cost at low activity) ÷ (High activity − Low activity)
Fixed cost a = Total cost − b × activity
Cost function: Y = a + bX

Select highest and lowest activity, not highest and lowest cost. Substitute into both selected observations; fixed-cost estimates should agree apart from rounding. High–low uses only two points, so flag outliers and range limits.

Evidence boundary: sketch the expected cost line before calculating. A variable-cost line begins at the origin; a fixed-total line is horizontal; a mixed line has a positive intercept. Compare a high–low result with the other observations. Regression uses all observations and can report statistical evidence about a proposed driver, but a neat line still needs causal sense and the relevant range.

4 · Support allocation Ch 2 · decision table

5 · Choose the costing system Ch 3 · W3

6 · Job costing Ch 3

rate and applicationPredetermined OH rate = budgeted OH ÷ budgeted allocation-base quantity
Applied OH = rate × actual base used by job
Total job cost = direct material + direct labour + applied OH
Unit cost = total job cost ÷ job units

A predetermined rate gives timely job costs before actual period totals are known. Label the base (machine-hour, labour-hour, etc.). At period end compare actual OH with applied OH; under/overapplication is period-wide unless instructed otherwise.

7 · Process costing Ch 3 · weighted average

1. Physical flow: opening WIP + started = transferred + ending WIP + loss.
2. Equivalent units: separate materials and conversion completion.
3. Cost/EU: cost to account for ÷ equivalent units.
4. Assign cost: transferred + ending WIP (+ separately treated loss).

8 · Spoilage schedule Ch 4 · W4

1. Add spoilage as a separate physical-flow line.
2. Mark inspection point; ask which categories reached it.
3. Read the stated normal-loss base exactly.
4. Normal loss = rate × stated base; abnormal = detected loss − normal.
5. Assign normal cost to qualifying good output; report abnormal cost separately.

loss splitPhysical spoilage = units to account for − good transferred − ending WIP
Abnormal units = detected spoilage − normal units

Normal does not mean desirable. It is expected under efficient conditions and absorbed by good output. Abnormal loss remains visible for investigation. Keep any disposal value or rework recovery separate unless the stated method says where it goes.

9 · ABC two-stage trace Ch 5 · W5

ABCDriver rate = activity-pool cost ÷ total driver volume
Product OH = Σ(driver rate × product driver use)
ABC unit cost = direct unit cost + product OH ÷ product units

Reconcile each pool before pricing or profitability claims. ABC redistributes existing overhead; it saves cash only if an activity changes and resources are removed or redeployed. It is most useful when overhead is material, complexity differs and credible drivers can be maintained.

10 · Linked budgets Ch 7 · W8

inventory linksProduction = sales + desired ending FG − opening FG
Purchases = cost of sales + desired ending inventory − opening inventory
Cash ending = opening cash + receipts − payments + financing

Keep inventory schedules on a cost or unit basis; collections use sales revenue. Follow each cohort across periods and prove its percentages total the expected collection. A profitable budget can still require borrowing because cash dates differ from accrual recognition.

Scenario discipline: slower collections shift cash later without immediately changing sales revenue; higher inventory policy raises near-term purchases and cash needs. Identify the maximum borrowing month and keep interest timing separate from principal.

11 · Flexible-budget bridge Ch 8 · W9

direct-input variancesAP = actual cost ÷ AQ
SQ allowed = actual output × standard input/unit
Price = AQ × (AP − SP)
Efficiency = SP × (AQ − SQ)
Total = AQ × AP − SQ × SP

12 · Relevant-cost tree Ch 9 · W10

decision amountIncremental profit = incremental revenue − relevant variable cost − relevant fixed cost − opportunity cost
Contribution per scarce unit = product CM ÷ scarce-resource use

Allocated common cost is irrelevant if it remains. A fixed cost is relevant when avoidable. State capacity and time-horizon assumptions, then add qualitative differences: quality, reliability, customer response, skills and supplier dependence.

13 · Performance + ethics Ch 6 + 10

returnsROS = operating income ÷ revenue
ROI = operating income ÷ total investment
RI = operating income − required return × investment
EVA = after-tax operating income − WACC × (total assets − current liabilities)

For each objective specify definition, owner, source and target. Pair speed with quality, sales with margin, and cost cuts with safety/service. Test timing; correlation does not prove the map.

14 · Harbour Lamps course overview worked example

Given: selling price $58; variable cost $40 per lamp; fixed cost $72,000/month; target profit $27,000; expected sales 6,000 lamps.

proof4,000 × $18 = $72,000 → profit $0
5,500 × $18 − $72,000 = $27,000

Trap: the course chapter’s separate desk-lamp drill uses $48 selling price and $30 total variable cost, also producing $18 contribution. Do not merge inputs from different questions.

15 · Tāmaki mix Ch 1 quick drill

Bundle = 3 Standard at $12 CM + 2 Premium at $22 CM; fixed cost $160,000.

Bundle CM = 3×12 + 2×22 = $80
BE bundles = 160,000 ÷ 80 = 2,000
Units = 6,000 Standard + 4,000 Premium

Proof: 2,000 × $80 = $160,000. If bundles are fractional, round bundles up before multiplying every product quantity.

CVP answer skeleton

1. Classify selling price, unit variable costs and total fixed cost.
2. Compute CM with its unit; for a mix, draw one composite bundle.
3. Write profit = total CM − fixed cost and solve for the requested unknown.
4. Round only the decision quantity, then prove the target is met.
5. State the relevant range, capacity and stable-mix assumptions.

16 · High–low check Ch 2 practice

Given: 900 machine-hours cost $26,600; 300 hours cost $18,800.

workb = (26,600 − 18,800) ÷ (900 − 300)
= 7,800 ÷ 600 = $13/MH
a = 26,600 − 900×13 = $14,900
Y = $14,900 + $13MH

Interpret: $13 is estimated variable cost per machine-hour; $14,900 is total fixed cost within the observed relevant range. Two-point evidence is provisional if either month is unusual.

17 · City Services reciprocal Ch 2 worked example

IT = 90,000 + .10(60,000 + .20IT)
.98IT = 96,000 → IT = $97,959.18
HR = 60,000 + .20(97,959.18)
HR = $79,591.84

Allocate these full reciprocal totals using operating shares that exclude self-service. Do not mistake the sum of reciprocal totals for extra external cost: circular services have been resolved inside the equations.

Method switch test

18 · Waitematā Foods Ch 3 quick drill

Given: 920 units transferred; 320 ending units; materials 100% complete; conversion 40% complete.

Physical proof: 920 + 320 = 1,240 units. The guide’s fuller Koru Drinks drill has 140 opening + 1,100 started = the same 1,240 total; keep each question’s facts separate.

19 · Manukau Mixers loss Ch 4 quick drill

Given: 4,600 good units; 300 spoiled at end; normal rate 4% of good output; $15 per EU at inspection.

unitsNormal = 4% × 4,600 = 184
Abnormal = 300 − 184 = 116

costNormal cost = 184 × $15 = $2,760 → good output
Abnormal cost = 116 × $15 = $1,740 → separate

Proof: 184 + 116 = 300 spoiled; $2,760 + $1,740 = $4,500 detected-loss cost. Apply the normal rate to the stated base, never automatically to units started.

Tui Ceramics inspection drill

Given: 10,000 units started; 8,400 good transferred; 600 ending WIP at 50% conversion; inspection at 80%; normal spoilage is 8% of good units passing inspection.

Physical spoilage = 10,000 − 8,400 − 600 = 1,000 units
Ending WIP is before inspection → not detected loss
Normal = 8%×8,400 = 672 units
Abnormal = 1,000−672 = 328 units

20 · North Shore Cases ABC Ch 5 worked example

Pools: setup $360,000/120 setups; dispatch $560,000/28,000 orders. Custom: 90 setups, 8,000 orders, 10,000 units, $120 direct/u. Standard: remaining 30 setups, 20,000 orders, 20,000 units, $85 direct/u.

Decision: complexity makes Custom consume most setups. This is a cost signal, not automatic saving. A price or process recommendation must test driver causality, demand, avoidability and implementation cost.

21 · Karangahape Traders Ch 7 quick drill

Given: July sales $240,000; August $300,000; COS 60%; ending inventory 25% of next month’s COS; July opening inventory $36,000. Collections: 70% current, 30% next.

July COS = .60×240,000 = $144,000
July ending = .25×(.60×300,000) = $45,000
July purchases = 144,000 + 45,000 − 36,000
= $153,000
August collections = .70×300,000 + .30×240,000
= $282,000

Aoraki Cycles linked May plan

22 · Southern Packs variance Ch 8 worked example

Given: standard 2.5 kg at $8/kg per finished unit; actual output 1,200; actual quantity 3,180 kg costing $27,030.

AP = 27,030 ÷ 3,180 = $8.50/kg
SQ = 1,200×2.5 = 3,000 kg
Price = 3,180×(8.50−8.00) = $1,590 U
Efficiency = 8×(3,180−3,000) = $1,440 U
Total = 27,030−24,000 = $3,030 U

Proof: 1,590 + 1,440 = 3,030 U. Standard quantity comes from actual output. Investigate only after reconciliation: price, material quality, waste, defects, delivery and downtime may interact.

23 · Fast variance extensions Ch 8 practice

Cause note: size + direction → operational hypothesis → related variance/non-financial measure → evidence required. Variances identify questions; they do not prove causes or assign blame.

Variable-overhead drill

Standard support is 1.5 hours at $13 per finished unit. Actual output 1,000 units; actual hours 1,550; actual overhead $20,460.

AR = 20,460÷1,550 = $13.20/h
SQ allowed = 1,000×1.5 = 1,500 h
Spending = 1,550×(13.20−13.00) = $310 U
Efficiency = 13×(1,550−1,500) = $650 U
Total = $960 U

Proof: actual $20,460 − flexible standard (1,500×$13 = $19,500) = $960 U. Pair spending with rate evidence and efficiency with the operational use of the allocation base; do not infer a cause from the sign alone.

24 · Waiheke special order Ch 9 worked example

Given: 1,500 jackets at $74; variable cost $52 each; setup $6,000; idle capacity 900; remaining 600 displace regular jackets contributing $28 each.

Accept on the stated financial facts before qualitative effects. The conclusion depends on the capacity fact; with 1,500 idle units opportunity cost would be zero. Check customer response, quality, workforce effects and regular-market relationships.

25 · Waitematā returns Ch 10 quick drill

Given: revenue $2,400,000; operating income $300,000; investment $1,250,000; required return 14%.

ROS = 300,000 ÷ 2,400,000 = 12.5%
ROI = 300,000 ÷ 1,250,000 = 24.0%
Charge = 14%×1,250,000 = $175,000
RI = 300,000−175,000 = $125,000

ROI conflict: a project returning 18% exceeds a 12% required return but lowers a division currently at 24%; RI can encourage acceptance while ROI can encourage rejection.

26 · Method chooser all chapters · fast recall