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Review Exam 2-Blackboard

# Review Exam 2-Blackboard - Review Exam 2 Wednesday October...

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Review Exam 2 Wednesday October 26 th 25 MCQs @ 4 each = 100 Points + 2 Bonus @ 2.5 each

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Cost Accounting: Tracing, Allocation & Systems Cost Accumulation Why? How much does it cost? (DM + DL + OH) How? Cost object Target: departments, products,… Total cost of cost object = Direct cost + Indirect (OH) cost Cost Classification - Traceability Direct Trace easily, conveniently & economically Indirect (OH) Allocate 2-step process Traceability as an independent concept (V, F, …..) Traceability is context sensible Depends on cost object
Cost Accounting: Tracing, Allocation & Systems Cost Allocation What? Dividing indirect cost into parts and distributing the parts among cost objects Cost Pools The accumulation of similar costs that are linked to a common cost driver into a single total Eliminate the need to allocate every single indirect cost Cost driver: any activity that causes or drives costs Two-step process: (1) Allocation rate = Total OH cost ÷ Cost driver activity (Total allocation base) (2) Allocated cost = Allocation rate × Weight of the cost driver

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Cost Accounting: Tracing, Allocation & Systems Joint Cost Terms: joint products, joint cost, split-off point, separable cost Allocating Joint Cost: Inventory valuation purposes total cost = allocated joint cost + separable cost Methods: Physical quantities : proportional measure (weight, volume, etc.) of the joint products at the split-off point Relative sales value : relative values (quantity x price) of the products at the split-off point Joint Costs Joint Product Joint Product Joint Product Split Off Separable Costs
Cost Accounting: Tracing, Allocation & Systems Costing Systems: Job-order Costing

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