Cost Allocation and Responsibility Accounting

Slides:

Advertisements

Similar presentations

Standard Costs – Overview

Advertisements

Chapter 11 Standard Costs and Variance Analysis

Wrap Rate Technique Chapter Introduction The Wrap Rate technique is a method used to allocate profit and other overhead costs to actual.

Management Accounting for Business Dr. Mohamed A. Hamada Lecturer of Accounting Information Systems 1-1 Practical Cases on Job-order costing systems.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall. Chapter 23 1.

CHAPTER 15 Cost Analysis for Control. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved Decision Making Strategic, Operational,

Cost Analysis for Control

Factory Overhead. Manufacturing Overhead Job No. 1 Job No. 2 Job No. 3 Charge direct material and direct labor costs to each job as work is performed.

Standard Costs and Variance Analysis

Using Variances under Standard Cost System

Prepared by Debby Bloom-Hill CMA, CFM. Slide 11-2 CHAPTER 11 Standard Costs and Variance Analysis Standard Costs and Variance Analysis.

1 PowerPointPresentation by PowerPoint Presentation by Gail B. Wright Professor Emeritus of Accounting Bryant University MANAGERIAL ACCOUNTING 10 TH EDITION.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Manufacturing Overhead Variances Managerial Accounting Prepared by Diane Tanner University of North Florida Chapter 46.

LEARNING OBJECTIVE: Compute the variable manufacturing overhead rate and efficiency variances. Explain how direct materials standard and direct labor standards.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 17-1 JOB ORDER COST SYSTEMS AND OVERHEAD ALLOCATIONS Chapter 17.

Chapter 3 Job Order Costing. Review: Control and Subsidiary Accounts Most financial statement line items are totals of multiple lower level accounts Subsidiary.

ACTG Chapter 6 Fundamentals of Product and Service Costing.

McGraw-Hill/Irwin 3-1 Product Costing and Cost Accumulation in a Batch Production Environment 3 Chapter Three.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Financial & Managerial Accounting The Basis for Business Decisions FOURTEENTH EDITION Williams.

Chapter 41 Cash, Short-term Investments and Accounts Receivable Chapter 4.

Chapter 17 – Additional Topics in Variance Analysis

Financial and Managerial Accounting

CHAPTER 8 Performance Evaluation. The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin 8-2 Learning Objective LO1 To describe flexible and static budgets.

1 PowerPointPresentation by PowerPoint Presentation by Gail B. Wright Professor Emeritus of Accounting Bryant University © Copyright 2007 Thomson South-Western,

@ 2012, Cengage Learning Performance Evaluation Using Variances from Standard Costs LO 4 – Computing Factory Overhead Variances.

Standard Costs and Operating Performance Measures

Controlling Manufacturing Costs: Standard Costs

Ch.11 Exercises Norwall Company’s Flexible budget manufacturing overhead (in condensed form) is given below : The following information is available for.

Slide 11-2 CHAPTER 11 Standard Costs and Variance Analysis Standard Costs and Variance Analysis.

Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition Copyright © 2011 by The McGraw-Hill.

Copyright © 2012 The McGraw-Hill Companies, Inc. PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker,

@ 2012, Cengage Learning Performance Evaluation Using Variances from Standard Costs LO 2 – Understanding How Standards are Used in Budgeting.

FLEXIBLE BUDGET Pertemuan 8 dan 9 Matakuliah: > Tahun: >

Managerial Accounting: An Introduction To Concepts, Methods, And Uses

Chapter 10. Are standards the same as budgets? A standard is the expected cost for one unit. A budget is the expected cost for all units. Standards vs.

Standard Costing System Chapter 4 Managerial Accounting Concepts and Empirical Evidence.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Financial & Managerial Accounting The Basis for Business Decisions FOURTEENTH EDITION Williams.

Chapter 18 Process Costing

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Product Costing and Cost Accumulation in a Batch Production.

Chapter Twelve Cost Accumulation, Tracing, and Allocation © 2015 McGraw-Hill Education.

24 - 1©2002 Prentice Hall, Inc. Business Publishing Accounting, 5/E Horngren/Harrison/Bamber Flexible Budgets and Standard Costs Chapter 24.

Copyright © 2003 Pearson Education Canada Inc. Slide Chapter 14 Cost Allocation.

Flexible Budgets and Overhead Analysis Chapter 7.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D.,

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin.

Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.

© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Accounting Systems For Measuring Costs Chapter 17.

Chapter 23 Flexible Budgets and Standard Cost Systems.

Flexible Budgets and Standard Costs Chapter 24. Objective 1 Prepare a Flexible Budget for the Income Statement.

GLENCOE / McGraw-Hill. Controlling Manufacturing Costs: Standard Costs.

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Job Order Cost Systems and Overhead Allocations Chapter 17.

Chapter 18 Introduction to Managerial Accounting Demonstration Problems © 2016 Pearson Education, Inc.18-1.

Chapter 23 Flexible Budgets and Standard Cost Systems Demonstration Problems © 2016 Pearson Education, Inc.23-1.

Chapter 18 Process Costing. Describe the flow of costs through a process costing system 18-2.

ACC 561 Week 4 Assignment Wiley PLUS Check this A+ tutorial guideline at WileyPLUS Exercise.

Copyright © 2015 McGraw-Hill Education. All rights reserved

Chapter 22 Master Budgets

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System Appendix 11A Appendix 11A: Predetermined Overhead Rates and Overhead Analysis.

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System Appendix 8A.

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System Appendix 10A.

Power Notes Chapter M6 Performance Evaluation, Variances from Standards Learning Objectives 1. Standards 2. Budgetary Performance Evaluation 3. Direct.

Lecture-16 Main Ahmad Farhan (ACA)

MANAGEMENT ACCOUNTING

AMIS 212 Introductory Managerial Accounting

Activity-Based Costing

Topic Six by Dr. Ong Tze San

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System Appendix 10A.

Power Notes Chapter 21 Performance Evaluation, Variances from Standards Learning Objectives 1. Standards 2. Budgetary Performance Evaluation 3. Direct.

Power Notes Chapter M6 Performance Evaluation, Variances from Standards Learning Objectives 1. Standards 2. Budgetary Performance Evaluation 3. Direct.

Presentation transcript:

Cost Allocation and Responsibility Accounting Chapter 24 Cost Allocation and Responsibility Accounting Demonstration Problems © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Aragon makes handheld calculators in two models: basic and professional. Aragon estimated $851,500 of manufacturing overhead and 655,000 machine hours for the year. The basic model actually consumed 180,000 machine hours, and the professional model consumed 475,000 machine hours. Compute the predetermined overhead allocation rate using machine hours (MHr) as the allocation base. How much overhead is allocated to the basic model? To the professional model? © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Compute the predetermined overhead allocation rate using machine hours as the allocation base. Predetermined Overhead Allocation Rate = © 2016 Pearson Education, Inc.

E24-14 Requirement 1: Compute the predetermined overhead allocation rate using machine hours as the allocation base. Predetermined Overhead Allocation Rate = Total estimated overhead costs Total estimated quantity of the overhead allocation base © 2016 Pearson Education, Inc.

E24-14 Requirement 1: Compute the predetermined overhead allocation rate using machine hours as the allocation base. Predetermined Overhead Allocation Rate = Total estimated overhead costs Total estimated quantity of the overhead allocation base $851,500 total estimated overhead costs 655,000 total estimated machine hours © 2016 Pearson Education, Inc.

E24-14 Requirement 1: Compute the predetermined overhead allocation rate using machine hours as the allocation base. Predetermined Overhead Allocation Rate = Total estimated overhead costs Total estimated quantity of the overhead allocation base $851,500 total estimated overhead costs 655,000 total estimated machine hours $1.30 per machine hour © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: How much overhead is allocated to the basic model? To the professional model? Predetermined Overhead Allocation Rate × Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: How much overhead is allocated to the basic model? To the professional model? Predetermined Overhead Allocation Rate × Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Basic model $1.30 per MHr 180,000 MHrs $ 234,000 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: How much overhead is allocated to the basic model? To the professional model? Predetermined Overhead Allocation Rate × Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Basic model $1.30 per MHr 180,000 MHrs $ 234,000 Professional 475,000 MHrs $ 617,500 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. One subunit of Xtreme Sports Company had the following financial results last month: Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 Direct labor 13,500 14,200 Indirect labor 26,500 23,500 Utilities 12,700 11,600 Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirements Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Based on the data presented, what type of responsibility center is this subunit? Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%? Should only unfavorable variances be investigated? Explain. © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 Direct labor 13,500 14,200 Indirect labor 26,500 23,500 Utilities 12,700 11,600 Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 Indirect labor 26,500 23,500 Utilities 12,700 11,600 Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 Utilities 12,700 11,600 Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 3,000 U 12.77% U Utilities 12,700 11,600 Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 3,000 U 12.77% U Utilities 12,700 11,600 1,100 U 9.48% U Depreciation 26,000 Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 3,000 U 12.77% U Utilities 12,700 11,600 1,100 U 9.48% U Depreciation 26,000 0.00% Repairs and maintenance 4,000 5,000 Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 3,000 U 12.77% U Utilities 12,700 11,600 1,100 U 9.48% U Depreciation 26,000 0.00% Repairs and maintenance 4,000 5,000 1,000 F 20.000% F Total $ 110,900 $ 106,400 © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 1: Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded to two decimal places. Xtreme – Subunit X Actual Flexible Budget Budget Variance % Variance Direct materials $ 28,200 $ 26,100 $ 2,100 U 8.05% U Direct labor 13,500 14,200 700 F 4.93% F Indirect labor 26,500 23,500 3,000 U 12.77% U Utilities 12,700 11,600 1,100 U 9.48% U Depreciation 26,000 0.00% Repairs and maintenance 4,000 5,000 1,000 F 20.000% F Total $ 110,900 $ 106,400 $ 4,500 U 4.23% U © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: Based on the data presented, what type of responsibility center is this subunit? © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: Based on the data presented, what type of responsibility center is this subunit? Based on the data presented, the responsibility center is a cost center. © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: Based on the data presented, what type of responsibility center is this subunit? Based on the data presented, the responsibility center is a cost center. Requirement 3: Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%? © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 2: Based on the data presented, what type of responsibility center is this subunit? Based on the data presented, the responsibility center is a cost center. Requirement 3: Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%? The indirect labor and repairs and maintenance should be investigated. © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 4: Should only unfavorable variances be investigated? Explain. © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. Requirement 4: Should only unfavorable variances be investigated? Explain. Both unfavorable and favorable variances should be investigated. A favorable cost variance could indicate costs are being cut that might impact future operations. © 2016 Pearson Education, Inc.

© 2016 Pearson Education, Inc. End of Chapter 24 © 2016 Pearson Education, Inc.