Nov+Midterm+Review - Managerial Accounting November Midterm...

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Unformatted text preview: Managerial Accounting November Midterm Review Hoyt She What you need to know Week 8 Compute predetermined overhead rates Prepare schedules of cost of goods manufactured and cost of goods sold Compute underapplied or overapplied overhead cost Week 9 Weighted-average Method & FIFO Method Compute the equivalent units of production, cost per equivalent unit What you need to know Week 10 Absorption Costing vs. Variable Costing Calculation of unit costs and NOI Reconciliation of the two methods Lean Production Week 11 Understand the allocation of costs using Activity- based costing Assign costs to activity cost buckets using The predetermined overhead rate ( POHR ) used to apply overhead to jobs is determined before the period begins. Manufacturing Overhead Application Estimated total manufacturing overhead cost for the coming period Estimated total units in the allocation base for the coming period POHR = Ideally, the allocation base is a cost driver that causes overhead. Actual amount of allocation is based upon the actual level of activity (normal costing system). Based on estimates , and determined before the period begins. Application of Manufacturing Overhead Overhead applied = POHR Actual activity Problems of Overhead Application The difference between the overhead cost applied to Work in Process and the actual overhead costs of a period is referred to as either underapplied or overapplied overhead. Underapplied overhead exists when the amount of overhead applied to jobs during the period using the predetermined overhead rate is less than the total amount of overhead actually incurred during the period. Overapplied overhead exists when the amount of overhead applied to jobs during the period using the predetermined overhead rate is greater than the total amount of overhead actually incurred during the period. Equivalent units of production always equals: Units completed and transferred + Equivalent units remaining in work in process Weighted-Average Method Cost per equivalent unit = Cost of beginning Work in Process Inventory Cost added during the period Equivalent units of production + Cost Reconciliation Concept is to show: Total input costs = Total output costs For BOTH Weighted-average and FIFO methods : Total input costs = Cost of beginning WIP + Cost added Total output costs = Cost of ending WIP + Cost transferred out Cost Transferred Out Weighted-average Method Cost transferred out = units transferred out * cost per equivalent unit FIFO Method Cost transferred out = cost in beginning WIP + cost to complete the units in beginning WIP + cost of units started and completed this period Reconciling Costs Total Input Costs Cost of beginning Work in Process Inventory 10,039 $ Costs added to production during the period 199,751 Total cost to be accounted for 209,790 $ Total Output Costs Cost of ending Work in Process Inventory 15,390 $ Cost of units transferred out 194,400 Total cost accounted for 209,790 $ Assembly Department Cost Reconciliation Equivalent Units FIFO Method...
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Nov+Midterm+Review - Managerial Accounting November Midterm...

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