Cost Notes - Chapter 4: Activity-Based Costing Unit Level...

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Chapter 4: Activity-Based Costing Unit Level Product Costing o CHART o Assigns only manufacturing costs to products o Assigning Direct Materials Cost and Direct Labor cost are not a problem Directly Trace o Overhead cost Driver Tracing and Allocation o Predetermined Overhead Rate Calculated at the beginning of the year Overhead Rate = Budgeted Annual Overhead/Budgeted annual driver level o Normal Cost System A cost system that uses predetermined overhead rates and actual costs for direct materials and direct labor o Unit Level Drivers Factors that measure the demands placed on unit-level activities by products Most commonly used unit-level drivers are: Units Produced Direct labor hours Direct labor dollars Machine hours Direct materials dollars Increase as units produce o Applied Overhead Total overhead assigned to actual production at any point in time Applied Overhead = Overhead Rate x Actual Driver Usage Once this is assigned, the unit cost is calculated by: Total applied overhead/units produced Overhead Assignment: Plantwide Rates o Used to assign or apply overhead costs to production as the
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This note was uploaded on 09/28/2011 for the course ACCT 3337 taught by Professor Staff during the Spring '08 term at University of Houston.

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Cost Notes - Chapter 4: Activity-Based Costing Unit Level...

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