Chapter 8 Class Outline Flexible budgeting
Terms to Learn
1. Denominator Level the denominator in the budgeted fixed overhead rate computation.
2. FMOH Flexible-Budget Variance the difference between actual FMOH costs and FMOH
costs in the flexible budget
Chapter 9 Class Outline
What are we studying in this chapter? This chapter is really about highlighting the
importance of distinguishing the costs of producing units from the costs of providing the capacity
to produce units. Recognizing the importance of
Chapter 7 Class Outline Flexible budgeting
What are we studying in this chapter and why? In this chapter we learn about flexible budgeting,
variance analysis, and standard costing for direct cost inputs, which enable the firm improve planning
Chapter 4 Class Outline Job Costing
What are we studying in this chapter and why? In this chapter we learn about job costing systems, and how
this type of costing system is used to assign costs to distinct products or services.
Terms to Learn:
Every firm incurs a variety of costs.
A merchandiser incurs the cost of:
Purchasing a ready-for-sale product
The costs of selling the product
Administering the firm
A manufacturer incurs costs for the purchase of:
Materials and components
Standard costs are tools for:
The manager of a cost center, and his or her superiors, receive information showing the
efficiency of the operation. Comparisons of planned production with actual production indicate
Under actual costing, all of the overhead incurred during a period is applied to the jobs worked
on in that period. To assign all the overhead costs to the jobs, we calculate the overhead rate by
dividing total actual overhead by the total
Cost Accounting Standards Board
The Cost Accounting Standards Board (CASB) was a potent force in support of making
The CASB specified rules for allocating costs by firms that do certain kinds of business with the
Cost Accounting and Formulas
Cost accounting is a valuable tool you use to reduce and eliminate costs in a business. We
also use cost accounting to determine a price for your product or service that will allow
us to earn a reasonable profit. Familiarize y
Reviewing accounting basics
Accountants use many principles to guide their decision-making process, such as the matching
principle and the principle of conservatism.
Matching principle: This principle states that your companys revenue should be
Checking out cost accounting basics
Just like in any discipline, you use specific cost accounting terms and ideas to communicate
meaning and understand procedures. Understanding basic concepts in crucial, so to start using
cost accounting analysis, you sh
Cost Centers, Profit Centers, and Investment Centers
What is a cost center?
A cost center is a segment whose manager is responsible for costs but not for revenues. A cost
center can be relatively small, like a single department with a few people, but can
Buchwald, Art. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 23, 1991. pg.
Art Buchwald argues that L. Gordon Crovitz was wrong to criticize him for his lawsuit against
Cost Volume Profit (CVP)Analysis
Use cost-volume-profit (CVP) analysis
to analyze decisions.
Understand the effect of cost structure
Use Microsoft Excel to perform CVP
4. Incorporate taxes, multiple pro