ACCT3104 Mod 02 students 2013a. 2Colour pp - ACCT3104...

This preview shows page 1 - 3 out of 31 pages.

ACCT3104 Managerial Costing and Control Lecture 2 I. Absorption and Variable Costing contd: Capacity Concepts and Breakeven; II. Relevant Costing and Decision Making Reading: Horngren: (i) Ch 9 from p314 + Appendix (ii) Ch 11 pp 390-397 & 410-411 Learning Objectives At the end of this week you should be able to : ° Describe and apply the different capacity concepts that can be used in Absorption Costing ° Identify the key factors in choosing a capacity level to calculate and absorb the fixed manufacturing overhead rate ° Understand the issues in planning and control of capacity costs ° Use the 5 step decision making process to make decisions ° Demonstrate ability to apply your knowledge of cost and revenue behaviour to firm specific decisions ° Analyse and evaluate a range of firm specific choices and make appropriate decisions based on the use of relevant costing principles ° Explain the opportunity cost concept and why it is important for decision making ° Evaluate the qualitative issues that relate to the decision(s) ° Understand the implications of decisions for the short-run or long-run operations of the firm
What was the difference between Absorption Costing and Variable costing? Treatment of Fixed Manufacturing Overhead TOTAL COSTS DIRECT COSTS INDIRECT COSTS (PRIME COSTS) (OVERHEADS) MANUFACTURING O/H SELLING & DISTRIBUT ADMINISTRATIVE FINANCE DIRECT MATERIALS DIRECT LABOUR Variable Raw Materials Factory Payroll Indirect materials Advertising Telephone & Faxes Semifinished Parts Indirect labour Travelling Travel Finished parts for Utilities Freight & Cartage Payroll taxes Assembling Repairs Telephone & faxes Supplies Power & Light Entertainment Sales Commission Fixed Depreciation of Plant Salespeople's salaries Office salaries Interest on loans Supervision Property taxes Executive salaries Rent Insurance Rent Property rates & taxes Depreciation of Depreciation of Depreciation of Plant Equipment Equipment Insurance of Plant Property taxes Facotry office Insurance CONVERSION COSTS MANUFACTURING COSTS POST MANUFACTURING COSTS (PRODUCT COSTS) (PERIOD COSTS) TOTAL COSTS DIRECT COSTS INDIRECT COSTS (PRIME COSTS) (OVERHEADS) MANUFACTURING O/H SELLING & DISTRIBUT ADMINISTRATIVE FINANCE DIRECT MATERIALS DIRECT LABOUR Variable Raw Materials Factory Payroll Indirect materials Advertising Telephone & Faxes Semifinished Parts Indirect labour Travelling Travel Finished parts for Utilities Freight & Cartage Payroll taxes Assembling Repairs Telephone & faxes Supplies Power & Light Entertainment Sales Commission Fixed Depreciation of Plant Salespeople's salaries Office salaries Interest on loans Supervision Property taxes Executive salaries Rent Insurance Rent Property rates & taxes Depreciation of Depreciation of Depreciation of Plant Equipment Equipment Insurance of Plant Property taxes Facotry office Insurance CONVERSION COSTS MANUFACTURING COSTS POST MANUFACTURING COSTS (PRODUCT COSTS) (PERIOD COSTS) Absorption Costing (and AASB102) requires “absorption” into unit product cost Alternative costing methods? ° Actual : actual rate ±

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture