Chapter 16 Managerial accounting concepts and principles
1) Direct costs are identified with and can be traced to a cost object. Indirect costs cannot be identified with or traced to a cost object. 2) Costs by function:
A) Product costs consist of manufacturing costs: direct materials, direct labor and factory overhead. B) Period costs consist of selling and administrative expenses. 3) A) Prime costs which consist of direct materials and direct labor costs. B) Conversion costs which consist of direct labor and factory overhead costs. 4) Materials inventory – consist costs of direct and indirect materials which have not entered the manufacturing process. Work in process inventory – consist direct materials, direct labor and manufacturing overhead that have entered the manufacturing process but are not yet completed. Finished goods inventory – consist completed products that have not been sold. 5) Cost of goods manufactured
Raw material inventory beginning Add: Purchased raw materials
Total raw material available
Deduct raw material inventory ending Raw materials used in production
Deduct indirect materials used in production Direct labor
Manufacturing overhead applying to work in process
Total manufacturing cost
Add: beginning work in process inventory
Deduct ending work in process inventory
Cost of goods manufactured
6) Cost of goods sold
Finished goods inventory beginning
Add: cost of goods manufactured
Goods available for sale
Deduct finished goods inventory ending
Unjustified cost of goods sold
Add underapplied overhead (or deduct overapplied)
Adjusted cost of goods sold
7) Income statement
Cost of goods sold
Selling and administrative expenses:
Net operation income
Chapter 17 Job Order Costing
1) Job order and process cost system
Job order cost system provides product costs for each quantity of product that is manufactured. Process cost system provides product cost for each manufacturing department or process. 2) Predetermined factory overhead rate=estimated total factory overhead costs/estimated activity base 3) Underapplied factory overhead and overapplied factory overhead Underapplied if applied overheadactual overhead (deduct, so debit factory overhead) 4) I should deduct indirect materials if I have word raw materials. Otherwise I include indirect materials in direct materials and factory overhead.
Chapter 26 Cost Allocation and Activity Costing Base.
Single and ABC method step by step.
1. Start from single method
A) Make a table of total cost for both products (direct materials, direct labor, manufacturing overhead) B) Count total amount of units = (# of units of Product A * # of hours to make product A)+ (# of units of Product B * # of hours to make product B) C) Count predetermined factory overhead rate= estimated factory overhead/estimated activity base (total # of units) D) Count manufacturing overhead for each product (Manufacturing overhead product A = Predetermined rate * # of hours to make product A) E) Fill out the blank spaces in step A and count Total cost. 2. ABC method
A) Make a table of total cost for both products (direct materials, direct labor, manufacturing overhead) B) Count predetermined factory rate per EACH ACTIVITY. Rate=Estimated overhead cost(factory overhead) PER EACH activity/ TOTAL estimated activity (Total means for both products not just for one) C) Multiple the rate on expected activity only for product A. D) Sum of all activities for product A divide on number of units which were produced (those units don't need to multiply on number of hours, just write as they were listed) E) Multiply the result of step D on...
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