ch17-1 (Activity-Based-Costing) 9.28.2018.pptx

ch17-1 (Activity-Based-Costing) 9.28.2018.pptx - CUS...

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17-1 CUS feedback Remember to bring your smartphone or laptop for survey next Monday We are going to spend 15 mins to do the survey.
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17-2 Activity-Based Costing CHAPTER 17 Chapter Outline LEARNING OBJECTIVES LO 1 Discuss the difference between traditional costing and activity-based costing. LO 2 Apply activity-based costing to a manufacturer. LO 3 Explain the benefits and limitations of activity-based costing. LO 4 Apply activity-based costing to service industries.
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17-3 How do we allocate overhead?
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17-4 How do we allocate overhead?
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17-5 Allocates overhead using a predetermined rate . Job order costing : direct labor cost may be the relevant activity base. Process costing : machine hours may be the relevant activity base. Traditional Costing Systems LO 1 Traditional vs. Activity-Based Costing LEARNING OBJECTIVE 1 Discuss the difference between traditional costing and activity-based costing.
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17-6 Atlas Company produces two abdominal fitness products—the Ab Bench and the Ab Coaster. Direct materials cost per unit is $40 for the Ab Bench and $30 for the Ab Coaster. Direct labor cost is $12 per unit for each product. Both products require one direct labor hour per unit, are allocated overhead cost of $30 per unit. Illustration of a Traditional Costing System LO 1 DM=40 DL=12 MOH=30 DM=30 DL=12 MOH=30 Ab Bench Ab Coaster
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17-7 Tremendous change in manufacturing and service industries. Decrease in amount of direct labor usage. Significant increase in total overhead costs. Inappropriate to use plantwide predetermined overhead rates when a lack of correlation exists. Complex manufacturing processes may require multiple allocation bases ( Activity-Based Costing) . The Need for a New Approach LO 1
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17-8 An approach for allocating overhead costs. Allocates overhead to multiple activity cost pools. Assigns the activity cost pools to products or services by means of cost drivers.
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  • Spring '09
  • AZIZ
  • direct labor cost

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