elements of normal inefficiency‚ machine breakdown time‚ etc.‚ and can be attained by employees working at a reasonable‚ though highly efficiently‚ pace. For each of the four product cost factors‚ (Direct Materials‚ Direct Labor‚ Variable Overhead‚ and Fixed Overhead) there are two standards developed. These two standards are Standard Quantity (or Usage) and Standard Price or Rate. Multiplying Standard Usage times Standard Price or Rate will give you Standard Costs. A quantity (or usage) standard
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| Activity-Based Costing Method | 590 | 1‚100 | 760 | 1‚250 | Overhead Cost | Widgets | Gadgets | Smidgets | Smadgets | Traditional Costing Method | 200‚000 | 600‚000 | 800‚000 | 400‚000 | Activity-Based Costing Method | 390‚000 | 600‚000 | 210‚000 | 800‚000 | I deduct the main reason for that are: Traditional Costing Method use the Overhead Rate (200% of direct labor) and the Activity-Base Costing Method just use the Overhead Cost Drives. As for Traditional Costing Method‚ the company just
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applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $276‚100 for the year‚ and machine usage is estimated at 125‚500 hours. For the year‚ $291‚988 of overhead costs are incurred and 130‚200 hours are used. Compute the manufacturing overhead rate for the year. (Round answers to 2 decimal places‚ e.g. 1.25.) Manufacturing overhead rate $ 2.20 per machine hour Answer: Manufacturing Overhead Rate = Estimated Overhead ÷ Estimated Machine Hours
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CH 1 | 1 CORRECT | | Managerial accounting is concerned with: | | | A) | reporting financial information to stockholders. | | | B) | reporting financial information to regulators. | | | C) | providing information for use within the organization. | | | D) | the financial consequences of past activities. | | | | | | Feedback:The correct answer is C: Managerial accounting is concerned with providing information to managers for use within the organization. | | 2
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choose the most appropriate and effective overhead rate‚ particularly‚ because it guides management in its tasks of product pricing‚ job costing‚ and budgeting. Businesses can use the single company-wide method or can opt for the departmental method. Auerbach Enterprises manufactures air conditioners for many makes of both automobiles and trucks. The two main products are MaxiFlow and Alaska. Currently‚ the company uses a company-wide predetermined overhead (OH) rate but is considering using departmental
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very practical and therefore widely used costing system‚ in businesses that make a range of products which‚ although different‚ pass through standard and repetitive processes and machinery. Standard cost is the estimated cost of material‚ labor‚ overheads and other costs for each unit of production or purchase in a given accounting period. It is used as the benchmark against which cost variances and financial performance are measured‚ the valuation for inventory and a basis for pricing. It’s best
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fixed manufacturing overhead. Under absorption costing‚ fixed manufacturing overhead is treated as a product cost and hence is an asset until products are sold. Under variable costing‚ fixed manufacturing overhead is treated as a period cost and is charged in full against the current period’s income. 7-2 Selling and administrative expenses are treated as period costs under both variable costing and absorption costing. 7-3 Under absorption costing‚ fixed manufacturing overhead costs are included in
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for your company‚ is the first step to being successful. Once you find someone to help you navigate those waters‚ let them help you sail the rough seas of direct and indirect inventory‚ direct and indirect labor costs‚ and how to allocate factory overhead as well. While it all may sound confusing‚ having the right person with the right knowledge and advice‚ can make all the difference to you and the success of your business. We learned in Chapter 19 that cost accounting systems calculate‚ register
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E 22-19 | | |Budgeted Balance Sheet | |July 31‚ 2012 | |Assets
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ATC 5-1 (Pg. 246) (Using ABC to improve product pricing) Answer the four questions posed in the case. Include in your answer the basic differences between volume based (traditional) overhead application procedures and the ABC method. Case Study Computation of gross profit margin for each product based on ABC data (A) Partiulars GS-157 HS-241 OS-367 Selling Price per Unit $19.30 $17.50 $15.10 ABC Cost per Unit $12.50 $11.67 $13.75
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