16-19 (40 min.) Alternative joint-cost-allocation methods, further-process decision.
The Wood Spirits Company produces two productsturpentine and methanol (wood alcohol)
by a joint process. Joint costs amount to $120,000 per batch of output. Each batch to
17-24 (25 min.) Weighted-average method, assigning costs.
1. & 2. Solution Exhibit 17-24A shows equivalent units of work done to date for Tomlinson
Corporation for direct materials and conversion costs.
Solution Exhibit 17-24B s
2-17 (15 min.) Direct, indirect, fixed, and variable costs.
1. Yeastdirect, variable
Packaging materialsdirect (or could be indirect if small and not traced to each unit), variable
Depreciation on ovensindirect, fixed (unless units o
All problems and solutions
The wood spirits company produces two products turpentine and methanol (wood alcohol)- by joint
process. Joint costs amount to $120,000 per back of output. Each batch totals 10,000 gallons: 25%
methanol and 75% turpentine
5 Basic Steps:
1. Develop a Predetermined Overhead Rate
Predetermined OH Rate = Budgeted Overhead $
Budgeted Overhead Base
a. ACTUAL levels of Overhead $ incurred, and
b. ACTUAL Overhead Base incurred;
3. Apply Overhead to W
CHAPTER 2: AN INTRODUCTION TO COST TERMS AND PURPOSES
Products, services, departments, and customers may be cost objects.
Costs are accounted for in two basic stages: assignment followed by accumula
% Complete % Complete % Complete % Complete
Units Started - computed
STEP 2 - EQUIVALENT UNITS
Total Units to Account f
Process Costing (Chapter 17)
NOT: Custom-order manufacturing: Job Costing
Accumulate costs in WIP by the job (WIP Job 42q)
15: Mass-production manufacturing: large quantity of identical units travel down assembly line thru
many departments - cutting, asse
(2030 min.) Flexible budget.
Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2014,
it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed
costs of $54,000. The budg
School of Business and Economics
Department of Business Administration
Course No. :
Course Title :
Quantitative Techniques in Business
Credit Units :
3 units (lecture) and 5 hours laboratory
ACCT 502: ADVANCED COST / MANAGERIAL ACCOUNTING
UNIVERSITY OF SOUTH CAROLINA
MOORE SCHOOL OF BUSINESSSCHOOL OF ACCOUNTING
Dr. Jason Rasso
Spoilage, Scrap & Rework
Spoilage units messed up (spoiled) during production
- Can't be reworked as regular units of product and must be disposed of.
costs the firm money;
need to figure out how to calculate and account for costs of spoilage.
(20 min.) Fixed-manufacturing overhead, variance analysis (continuation of 8-16).
Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct
manufacturing labor-hours per suit. Data pertaining to fixed manufacturing ov
17-18 (25 min.) Zero beginning inventory, materials introduced in middle of process.
Pilar Chemicals has a mixing department and a refining department. Its process-costing system
in the mixing department has two direct materials cost categories (chemical
FMOH variances differ a lot from VMOH variances:
FMOH costs don't vary with respect to level of production (within relevant range)
However, GAAP still mandates that we apply FMOH costs to every inventory unit produced
Idea is that ultimat
Job Order Costing
Cost: resources sacriced or opportunities foregone to achieve some objective
Cost Object: any entity (person, department, service, product, etc.) whose cost we wish to measure
The goal of any cost system is to assign costs to cos
Standard Costing (Direct Costs) - Chapter 7
Firms often have expectations about
(1) how many units or services should be sold or produced/provided
(2) how much DM, DL, and MOH a job or production run or service should require
(3) what the costs of inputs
Low Cost Competitive Strategy
Equivalent Units of Work
Dosages of Work
WIP comprised of SEPARATE DEPTS
What Method are we using?
Weighted Average (Rollback method)
(1015 min.) Accounting for manufacturing overhead.
Budgeted manufacturing overhead rate =
= $22 per direct labor-hour
Manufacturing Overhead Allocated
(212,000 direct labor-hours $22 per direct labor-hour = $4,
THE EFFECTS OF TIME AND RISK ON VALUE
1. How much would you pay to receive $50 in one year and $60 in the second year
if you can earn 15 percent interest?
2. What $ amount invested at (EOY) the end of each year at 10 percent annually wi
1. Use the information on this page to fill in the budget on the next page.
2. All budget numbers must be referenced from this page and cannot be manually typed in.
3. Further, all calculations must be completed using excel formulas and
FINA 366 Valuation Homework Problem
Orig. Loan Amount = 500,000
Terminal Cap = (same as below)
Selling Costs = 35,000
Hold Period = 5 years
3% / yr
40% (see "OER")
Chapter 15 Study Guide
Description: In this chapter we learn about the allocation of support department costs, common costs,
and common revenues.
A) Key Terms:
1) Allowable Cost: Cost that the contract parties agree to include in the costs to be reimburse
Process Costing Notes 11/10/15
Custom Order Manufacturing Job Costing Accumulate by the Job (WIP Job XY)
Mass Production Manufacturing (i.e. Toothpicks) Process Costing Accumulate by Department (i.e.
WIP Assembly Dept., WIP Painting Dept.)
Class Notes 8/25
1. Introduction to Cost
a. Cost: a resource sacrificed or foregone to achieve a specific object
i. Implies intentionality (i.e. waste is not a cost)
b. Actual Cost: backward looking cost
c. Budgeted Cost: forward looking cost
d. Cost Obje
Chapter 16 Chapter Guide
Acc 402 Stikeleather
What are we studying in this chapter and why? In this chapter we learn about the allocation of joint
costs to joint products and the accounting for byproducts.
A) Key Terms:
1) Byproducts: products from a join
ACCT 402 EXAM 1
a. What we charge for goods/services provided
2. 4 basic aspects of behavior
Integrity maintain and broaden confidence
ALLOCATION OF SUPPORT DEPT COSTSI COMMON COSTS, AND COMMON REVENUE
Key concept of this chapter involves ways to allocate:
(1) Costs of support departments (e.g., plant maintenance dept in factory, or IT)
(2) Costs shared among multiple users
Not a "standa
Acct 402, Cost Accounting
Spring 2017, University of South Carolina
This is the second course in management accounting; introductory managerial accounting
(Acct226) is a prerequisite. In this advanced course, we will spend most
F2016: Acct 402 Exam 1 Study Guide and Tips
General: For each chapter, you should ensure that you have a good conceptual understanding of
To obtain a good conceptual understanding, I recommend that you:
1. Review your notes in depth. Compare
Ch 8. - VMOH and FMOH variances
So far we've considered 4 Direct Cost variances used in Standard Costing systems (DM & DL eff, DM & DL
There was also a production volume variance, but that doesn't appear in any j/e's but instead is
used for 3-lev
ACCT 402 Exam 2 Study Guide
Chapters 16, 18, and 20
Chapter 16 JT Products and Byproducts
Chapter 18 Spoilage, Rework, and Scrap
Normal spoilage = recurring, unavoidable spoilage expected to occur even if operations
are running efficiently