صفحه 1:
Cost Accounting
Foundations and
ٌ Evolutions
Kinney, Prather, Raiborn
CAO LOG 100 7
Chapter 3
Predetermined Overhead
Rates, Flexible Budgets, and
Absorption/Variable Costing
صفحه 2:
¢ Explain why and how overhead
costs are allocated to products
320 5
* Describe what causes
underapplied or overapplied
0 RNa
the end of the period
صفحه 3:
ie.
۰
5
* Explain how different capacity
measures affect predetermined
overhead rates
* Describe two methods of analyzing
mixed costs - high-low method
and least squares regression
اك
صفحه 4:
ie.
۰
5
+ Explain how managers use flexible
budgets to set predetermined
overhead rates
* Contrast absorption and variable
costing
* Describe how changes in sales or
production levels affect net income
under absorption and variable costing
صفحه 5:
ie.
۰
* Allows overhead 9 assigned وت aa
period, fulfilling the matching princip!
* Adjusts for variations not related to
activity
* Compensates for fluctuations in activity
level that do not affect fixed overhead
* Allows managers to be aware of product,
product line, customer, and vendor
profitability
صفحه 6:
* Relationship between the overhead
cost and the activity
- production volume
- direct labor hours
- direct labor cost
- machine hours
- number of purchase orders or parts
- machine setups
- material handling time
صفحه 7:
۹
۰
5
If overhead is underapplied
FF Cost of Goods Sold increases
Income decreases
If overhead is overapplied
۱ Cost of Goods Sold decreases
11
صفحه 8:
ie.
۰
¢ Theoretical capacity
- All production factors are operating
ی
- Disregards
* Machinery breakdown
* Holiday downtime
- Results in
* Significant underapplied overhead
* Lowest product cost
صفحه 9:
ie.
۰
4
- Theoretical capacity reduced by
ongoing, regular operating
interruptions (holidays, downtime,
and start-up time)
- مذ مغلناوة؟ توللهنوت]
* Underapplied overhead
* Low product cost
صفحه 10:
ie.
۰
* Normal capacity
3
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- Attainable level of activity
- When normal capacity is greater than
expected capacity, may result in
* Underapplied overhead
* Higher product cost
صفحه 11:
ie.
۰
7
- Anticipated activity level for the upcoming
period based on projected product demand
~ Determined during the budget process
- Should closely reflect actual costs
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صفحه 12:
ie.
۰
5
A mixed cost contains both
a variable and fixed component
0
Mixed Cost ee
صفحه 13:
ie.
۰
5
To determine
variable and fixed
predetermined overhead rates,
separate mixed costs into
variable and fixed components
صفحه 14:
صفحه 15:
ie.
۰
5
* Two Methods
- High-Low Method
- Least Squares Regression
Analysis
صفحه 16:
ie.
۰
5
Separate overhead costs into fixed
and variable components in order
to estimate the amount of
overhead at various levels of the
denominator activity
صفحه 17:
ا اك
costs and cost behavior
* Separates costs into fixed and
عتصعصماه ماطهزتم۲
* Provides budgeted costs at various
اك
٠ Shows impact of a change in the
denominator level of activity
pW ee Olek TCs
صفحه 18:
ie.
۰
* Plantwide Overhead Rate
- Homogeneous activities throughout plant
* Departmental Overhead Rate
الا 0 COD ae
departments
- Diverse pe requiring different times
ودع صتاصدمع0 صذ
- Usually eee ۱ و
planning, control, and دمنواءع making
صفحه 19:
ie.
۰
5
Absorption costing Variable costing
۰. 0 _ + Fixed manufacturin
[( overhead is a peel
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product cost Vale es
۱۳۵00 an
product ی
margin to equal
contribution margin
صفحه 20:
* No change in inventory level
- Absorption Income = Variable Income
* Increase in inventory level
- Absorption Income > Variable Income
- Phantom Profits
۱۱9۹۱۱۱ 1671
- Absorption Income < Variable Income
صفحه 21:
¢ How does underapplied overhead
affect cost of goods sold and net
income?
* عه 005 اعمط تنح شقطتالا 11560 0
separate mixed costs into variable
and fixed costs?
عع اع ت۱۱
absorption and variable costing?
pW ee Olek TCs