ACCT 2102 Chapter 4 Notes

ACCT 2102 Chapter 4 Notes - a. POHR = Estimated (or...

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Chapter 4 Relating costs to specific cost objects on a per unit level Dependent upon the operating environment 2 environments 1. Job Order – a wide variety of products; costs accumulated by JOB a. Construction company 2. Process – homogeneous products; costs accumulated by DEPARTMENT a. Coca Cola Sister Hazel – acoustic album – Before the Amplifier, Inc. 2 Costing systems for accounting for indirect costs 1. Actual Costing = DM + DL + actual MOH a. Advantages – accurate b. Disadvantages – not timely 2. Normal Costing = DM + DL + applied MOH a. Advantages – timely b. Disadvantages – not as accurate Estimating applied MOH 1. Calculate the predetermined overhead rate (does not affect accounting records)
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Unformatted text preview: a. POHR = Estimated (or Budgeted or Forecasted) Annual Overhead/Estimated Annual Activity Level i. Labor Intensive environment = focus on DL costs ii. Highly automated environment = focus on DM costs 2. Apply overhead to production throughout the year a. Applied MOH = POHR x Actual Activity Level 3. Reconcile the difference b/w actual and applied (called overhead variance) a. b/c youre estimations arent perfect The MOH costs (actual and applied) are accumulated in a temporary MOH account that is closed to COGS at the end of the period Debit Actual MOH Credit Applied MOH...
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ACCT 2102 Chapter 4 Notes - a. POHR = Estimated (or...

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