Ch04_5e - 4-1HANSEN & MOWENHANSEN &...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 4-1HANSEN & MOWENHANSEN & MOWENCost ManagementCost ManagementACCOUNTING AND CONTROLACCOUNTING AND CONTROL4-2Activity-Based CostingActivity-Based Costing44-3Functional-Based Product Costing Model1Unit-Level Product CostingUnit-Level Product Costing4-41Overhead costs are assigned to products using predetermined overhead rates.Predetermined Overhead rateBudgeted annual overhead Budgeted annual driver level=Applied overhead = Overhead rate Actual driver usageUnit-Level Product CostingUnit-Level Product Costing4-5Unit-Level Product CostingUnit-Level Product Costing1Suncalc, Inc.Budgeted overhead $360,000Expected activity (in direct labor hours) 120,000Actual activity (in direct labor hours):Pocket calculator 40,000Currency translator 60,000100,000Actual overhead $320,000Units produced:Pocket calculator80,000Currency translator 90,000Predetermined overhead rate = $360,000 / 120,000 = $3 per DLHOverhead Assignment: Plantwide Rates4-6Unit-Level Product CostingUnit-Level Product Costing1Per-Unit Overhead CostPocket Currency Calculator TranslatorUnits produced 80,000 90,000Direct labor hours 40,000 60,000Overhead applied to production ($3 DLH) $120,000 $180,000Overhead per unit* $1.50 $2.00*Applied overhead/Units produced.4-7Unit-Level Product CostingUnit-Level Product Costing1Overhead VariancesThe difference between actual overhead and applied overhead is an overhead variance.If actual overhead > applied overhead: underapplied overheadIf actual overhead < applied overhead: overappliedoverheadDisposal of variance: If immaterial, assign to cost of goods sold.If material, allocate among inventories and cost of goods sold.4-8Unit-Level Product CostingUnit-Level Product Costing1FabricationAssemblyTotalOverhead$280,000$80,000$360,000Direct labor hours:Pocket calculator10,00030,00040,000Currency translator10,00050,00060,000Total20,00080,000100,000Machine hours:Pocket calculator5,0001,0006,000Currency translator15,0002,00017,000Total20,0003,00023,000Overhead Application: Departmental RatesFabrication rate =Assembly rate =$280,00020,000= $14 per MH= $1 per DLH$80,00080,0004-9...
View Full Document

This note was uploaded on 11/22/2009 for the course HR GM600 taught by Professor Na during the Spring '09 term at Keller Graduate School of Management.

Page1 / 27

Ch04_5e - 4-1HANSEN & MOWENHANSEN &...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online