CN08HO - Flexible Budgets, Variances, and Management...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 1 Flexible Budgets, Variances, and Management Control: II Chapter 8
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 2 Learning Objective 1 Explain in what ways the planning of variable overhead costs and fixed overhead costs are similar and in what ways they differ.
Background image of page 2
2004 UofW Business School Accounting 311 L.DuCharme 3 Planning of Variable and Fixed Overhead Costs Effective planning of variable overhead costs involves undertaking only those variable overhead activities that add value for customers using the product or service. The key challenge with planning fixed overhead is choosing the appropriate level of capacity or investment that will benefit the company over an extended time period.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 4 Learning Objective 2 Identify the features of a standard-costing system.
Background image of page 4
2004 UofW Business School Accounting 311 L.DuCharme 5 Standard Costing Standard input allowed for one output unit Standard cost per input unit × Cost Object Direct Cost
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 6 Standard Cost System Simple recording system Cost to run system is relatively low. All output units are costed at standard—no need to keep track of the actual costs/unit or the use of allocation bases.
Background image of page 6
2004 UofW Business School Accounting 311 L.DuCharme 7 Developing Budgeted Variable Overhead Allocation Rates Step 1: Choose the time period used to compute the budget . Pasadena Co. uses a twelve-month budget period. Step 2: Select the cost-allocation base. Pasadena budgets 26,000 labor-hours for a budgeted output of 13,000 suits in year 2004.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 8 Developing Budgeted Variable Overhead Allocation Rates Step 3: Identify the variable overhead costs . Pasadena’s budgeted variable manufacturing costs for 2004 are $312,000. Step 4: Compute the rate per unit of each cost-allocation base. $312,000 ÷ 26,000 hours = $12/hour
Background image of page 8
2004 UofW Business School Accounting 311 L.DuCharme 9 Developing Budgeted Variable Overhead Allocation Rates What is the budgeted variable overhead cost rate per output unit (dress suit)? 2.00 hours allowed per output unit × $12 budgeted variable overhead cost rate per input unit = $24 per suit (output unit)
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2004 UofW Business School Accounting 311 L.DuCharme 10 Learning Objective 3 Compute variable overhead variances.
Background image of page 10
2004 UofW Business School Accounting 311 L.DuCharme 11 Useful approach --calculate 4 VOH budgets Actual “no name” Flexible Budget Actual $VOH AQ Alloc.base used X BR/unit Alloc.base For actual output: BQ Alloc.base
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/07/2008 for the course ACCTG 311 taught by Professor Ducharme during the Spring '08 term at University of Washington.

Page1 / 38

CN08HO - Flexible Budgets, Variances, and Management...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online