Beruflich Dokumente
Kultur Dokumente
Midterm Review
ACC2002 Managerial Accounting
Qi (Susie) Wang
Wang 2014
Direct
Labor
Prime
Cost
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Manufacturing
Overhead
Conversion
Cost
2
Indirect
Labor
Other
Costs
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Income Summary
Expense closed into
Income Summary at end
of accounting period
ALL the cost will be summarised under each job - easy to trace which job
below to where
POHR =
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Direct
Material
Direct
Labor
Overhead
Applied
Mfg. Overhead
actual mfg
overhead
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Indirect Overhead
Material Applied to
Work in
Indirect
Process
Labor
9
Raw Materials
Material
Direct
Purchases Material
Indirect
Material
Work in Process
(Job-Cost Record)
Direct
Material
Mfg. Overhead
Indirect
Material
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10
Work in Process
(Job-Cost Record)
Direct
Material
Direct
Labor
Mfg. Overhead
Indirect
Material
Indirect
Labor
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11
Direct Labor
& Overhead
(Conversion)
Products
Finished
Goods
Cost of
Goods
Sold
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Materials
cost per
equivalent
unit
Conversion
cost per
equivalent
unit
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Equivalent Units of
Ending WIP
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in units
ONLY for outputs
(#4 = #3 #2)
in $
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Cost of goods
completed &
transferred out
Transferredin costs
always added at the beginning of the production process
ALWAYS 100% completed
Need not make any assumption added beginning or throughout
Direct material
Direct labor
Applied manufacturing
overhead
17
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Cost Drivers
Setting up machines
Machining
Number of setups
Machine hours
1,500 setups
50,000 machine hours
Inspecting
Number of inspections
2,000 inspections
Activity Cost
Pools
Setting up
machines
Machining
Inspecting
Total
Units Produced
Overhead per Unit
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Activity-Based
Overhead Rates
Product A
Expected Use of
Cost
Cost Drivers
Assigned
1,500
Product B
Expected Use
Cost
of Cost Drivers Assigned
$200/setup
500
$100,000
1,000
$200,000
$10/machine hour
$50/inspection
30,000
500
$300,000
$25,000
$425,000
25,000
$17
20,000
1,500
$200,000
$75,000
$475,000
5,000
$95
what we need to find out is the overhead per unit - combined with DL and DM per unit to get total product cost per unit (estimated)
19
for pricing decision: eg 150% * total product cost per unti
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Monthly Basic
Cable Bill
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Variable
Utility Charge
Fixed Monthly
Utility Charge
Activity (Kilowatt Hours)
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Total
Costs
Fixed
Costs
Variable
Costs per
Unit
Number
of Units
Steps:
Determine the variable cost per unit as follows:
23
Total Cost
if we high-low method -> next step is to estimate the cost at a certain activity level
If it is within the activity level, we can use this function
BUT if it is outside the relevant range, we cannot use this function to predict the cost unless qn assumes that the current cost
behaviour continues into the future periods
Relevant Range
Activity
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CVP Analysis
at the break even point the firm makes 0 profit
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Unit
Sales
sales volume
price in units
Unit
Sales
variable volume
expense in units
Fixed expense
Unit CM
Break-even point
=
(in units)
if selling price and variable cost not given, total given use total/units -> units selling price
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Contribution margin
Sales
Fixed expense
CM Ratio
= CM Ratio
Break-even point
=
(in sales dollars)
break even point / selling price = break even points
(SALES DOLLAR)
(UNITS)
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CVP Analysis
what will be the effect on unit CM if fixed expense, selling price changes?
sales mix
Break-even point
Break-even
point
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Fixed expenses
Weighted-average unit contribution margin
29
Operating leverage
factor
Contribution margin
Net income
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CVP Analysis
Safety Margin
The difference between budgeted sales
revenue and break-even sales revenue.
Safety Margin in dollars = Total sales - Break-even sales
Safety Margin in units = Total sales units - Break-even units
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