man. accounting chapter 7-9 study notes

8/18/2019 Man. Accounting Chapter 7-9 Study Notes

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a. Direct nonmanufacturing costs are traced to products

i. ex: sales commissions, shipping, warranty repairs

i. ex: factory securty guard wages, plant controller's salary

2. Some man. costs may be excluded from product costs *excl. DM, DL, & shipp. b/c can trace & incorp. dir. cost

Manufacturing Costs on-Man. CostsDirect Costs Indirect Costs Indirect Direct

roduct Costs roduct Costs eriod eriod

ABC!

Manufacturing Costs on-Man. Costs

Direct Costs Indirect Costs Indirect Direct

roduct Costs "# Costs! $roduct or $eriod roduct %. Calc. acti.rates! diide '"'AL cost for each acti. b

). Assign "# costs to C"s using actiit( rates & actii

Called 2nd stage alloc.! rates used to apply "# costs to prod

ABC leels of actiit(!

Actiit(-Based Costing ABC0 internal cost. method: pro)ides man. with cost infofor strategic decisions that potentially a3ect capacity! suppmnt, not replacecurr.cost. system. ABC incl. +anuf. & non-+an. costs 1hen calc. entire cost ofprod, not 2ust its +anuf. cost

ABC s.Absorp.

%. 0onman. $ man. costs may be assigned to products, but only on acauseande3ect basis

b. 4anufuacturing costs, or organi-ationsustaining costs, are not assigned toproducts, but treated li*e period costs instead

a. (C systems trace all direct nonman. costs to prod. 5sales commiss,shipping costs, $ warrarnty repair costs6

b. (C syst. allocates indir. nonman. costs to prod. when prod. caused costs5"# def. expand to 77 indir. costs 5man. $ nonman.6

+. 4any "# cost pools are used, each of which is allocated to prod. $ other cost

ob8ects using its own uni9ue meas. of acti).

'rad.Absorpt.Costing

Actiit(! an e)ent that causes the consumption of "# resources

Actiit( Cost $ool! costs from single act. meas. accum. in a buc*et

Actiit( Measure! an allocation base 5basis of allocating "# costs, such as machinehours, *ilowatt hours, or s9. foot6 or cost dri)er 5unit of act. that causes change inacti)ity's cost. in (C costing. &he acti)ity measure should dri)e the costs beingallocated

&ransaction dri)ers: simple counts of of times acti)ity occurs

Duration dri)ers: measure the amt of time re9. to perform acti)ity

3. 4nit-leel actiities: performed each time unit is produced, is proport. to ofunits being produced 5ex. elecricity6

5. Batch-leel! perf each time a batch is handled or processed, regardless of how

many units are in the batch 5placing purch. orders, setting up e9uip., arrangingshipments to customers

%. $roduct-leel actiities! relate to spec;c prod. $ typically must be carried outrgdless of how many batches are run or units of prod. prod. or sold 5prod. design,ad)erising product man and sta36


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ad)erising product man and sta36


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man. accounting chapter 7-9 study notes

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