Cost 2 Def

Cost 2 Def - Fixed Overhead: as efficiently as possible,...

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Fixed Overhead : as efficiently as possible, plan only essential activities, fixed costs are predetermined well before the budget period begins Variable Overhead : as efficiently as possible, plan only essential activities, costs determined day-to-day ongoing operations Variable Vs Fix Plan : timing, fix costs planed at start for fix plan, whereas day-to-day decisions determine variable planing Standard Costing : Traces direct costs to output by multiplying the standard prices or rate by the standard quantities of inputs allowed for actual outputs produced / Allocates overhead costs on the basis of the standard overhead-cost rates time the standard quantities of the allocation bases allowed for the actual outputs produced Variable Overhead Flexible-Budget Variance = Actual Variable Overhead Costs - Flexible-budget Variable Overhead Amount Variable Overhead Efficiency Variance = Actual Quantity of the Cost-allocation base used - Budgeted Quantity of the Cost-allocation base Variable Overhead Spending Variance = Actual Variable overhead cost per unit - budgeted variable overhead cost per unit Fixed Overhead Flexible-Budget Variance/Fixed Overhead Spending Variance = Actual Cost incurred - Flexible-Budget Amount (no efficiency) Production-Volume Variance = Budgeted Fixed Overhead - Fixed Overhead Allocated > Overallacaoted relations Pg 90 study Absorption Costing Driven by unit level of sales, production, chosen denominator level, Gross Margin Variable Costing : variable product costs are capitalized; fixed product and period costs are expensed, only variable manufacturing costs are included no fix manufacturing costs allocated into inventory, Driven by unit level of sales, Contribution Margin Production > Sales = Absorption higher Income, Production < Sales = Variable Higher Income, Production = Sales = Equal Income Throughput Costing – only Direct Materials are capitalized; all other costs are expensed Supply Theoretical Capacity : level of capacity based on producing at full efficiency all the time
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Cost 2 Def - Fixed Overhead: as efficiently as possible,...

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