Activity-based costing, a form of refining a costing system
A. Purpose: underlying structure of operations looked at in greater detail for more
understanding of how resources used and, hence, more accurate costing (so, if an activity
is not needed, then s
Visual Prompt: How does this image express a culture to you?
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Culture is often difficult to define, but it
influences everything from who you are as an
individual to how
The use of flexible budgets and variance analysis in performance measurement and evaluation is
an important aspect of control
It is important to understand why variances arise and to use that knowledge to promote learning
FC is flat within the relevant range- meaning the costs do not change irrespective of level of
Not all fixed costs are fixed- some are discretionary and can be altered if needed in the short run.
However for this course, we assume fixed costs a
As part of controlling activities, you would have to do a level 3 analysis for all lined items on the
You need to asked the manager who is responsible for such line item to provide an explanation as
part of the performance measurement and plann
Other changes that can be incorporated in BEP calculation- see next three slides:
A. calculate whether changes in total fixed costs improves profit
B. compare whether a change in selling price per unit (changes CM per unit) improves profit
C. compare diff
Direct materials plus direct labour and an ALLOCATION OF manufacturing overhead is added
to the work in progress account
Once all the work has been completed, the balance gets transferred to finished goods and will be
only be transferred out when sold
Area of integrity that management accountants must follow are:
Avoid activities that could affect their ability to perform duties.
Refrain from activities that could discredit the profession.
Communicate unfavorable as well as favorable information.
Normal costing refers to the practice of assigning relevant costs to a job based on standard or
budgeted cost-allocation rate.
The standard/budgeted rate is better because it has been normalized for the variations expected
throughout the year.
The budgeting models used the basic financial statements model. The approached typically starts
with projected sales.
In contrast to the job order costing systems that have been studied in the past weeks, sales are the
result rather than the beginning.