Solution manual cost management HMCost3e SM ch04
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Solution manual cost management HMCost3e SM ch04
CHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 is calculated using budgeted overhead and budgeted levels of the associated driver. Predetermined rates are used because actual overhead may be incurred nonuniformly throughout the year.2Under- and overapphed overhead are measures of the difference between the actual and applied overhead assigned to Solution manual cost management HMCost3e SM ch04 production. Underapplied overhead means too little was applied, and overapplied means too much was applied.3Plantwide overhead rates assign overheadSolution manual cost management HMCost3e SM ch04
to products in proportion to the amount used of the unit-based driver. If all products consume overhead in proportion to this unitbased driver, no disCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 t-based dnver (the product diversity factor) No Significant distortion will occur unless the activities that are consumed in different proportions make up a significant proportion of the total overhead costs Thus, two key factors are product diversity and significant non-unitlevel overhead costs.4No Solution manual cost management HMCost3e SM ch04 n-unit-related overhead activities are those overhead activities that are not highly correlated with production volume measures. Examples include setuSolution manual cost management HMCost3e SM ch04
ps, materials handling, and inspection. Non-unit-based cost drivers are causal factors that explain the consumption of non-unit-related overhead. ExamCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 umed by a product.6Agree. Prime costs can be assigned using direct tracing and therefore do not cause cost distortions. Overhead costs, however, are not directly traceable and can cause distortions For example, using unit-baseddrivers to trace non-unit-based overhead costs would cause distortions.7A Solution manual cost management HMCost3e SM ch04 ctivity-based product costing is a costing approach that first assigns costs to activities and then to products. The assignment is made possible throuSolution manual cost management HMCost3e SM ch04
gh the identification of activities, their costs, and the use of cost drivers.8The six steps are: (1) Identify, define, and classify activities and keCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 jects and specify the amount of each activity consumed by specific cost objects; (5) calculate primary activity rates; and (6) assign activity costs to cost objects.9The cost of resources is assigned to activities using direct tracing and resource drivers. Resource drivers such as effort expended an Solution manual cost management HMCost3e SM ch04 d material usage trace costs to activities using causal relationships. Assigning costs to activities requires unbundling (he general ledger. General lSolution manual cost management HMCost3e SM ch04
edger accounts accumulate costs by department and by account—not by activity. Thus, the costs in the general ledger account must be reassigned to actiCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 y expected to be consumed by each product.11Two types of activity drivers are transaction drivers and duration drivers. Transaction drivers measure the demands placed on an activity using the number of times an activity is performed. Duration drivers measure demands by the time it takes to perform a Solution manual cost management HMCost3e SM ch04 n activity.12Unit-level activities are those that occur each time a unit of product is produced. Batch-level activities are those that are performed eSolution manual cost management HMCost3e SM ch04
ach time a batch of products is produced Product-level or sustaining activities are those that are performed as needed to support the various productsCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 panhttps://khothuvien.cori!produced by a company. Facility-level activities are those that sustain a factory's general manufacturing process.13TDABC simplifies ABC by eliminating the need to do detailed interviews and surveys to assess activity costs. By using objectively determined capacity cost r Solution manual cost management HMCost3e SM ch04 ates, activity rates can be calculated directly.14Updating a TDABC model is easy becauseactivity rates are updated simply by updating the capacity cosSolution manual cost management HMCost3e SM ch04
t rate. Most changes inoperating conditions arereflected by changes in either resource costs or system time. These changes are reflected in the capaciCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 vity cost or a series of simultaneous equations based on consumption ratios. The Pareto principle approach creates an approximately relevant ABC system. The simultaneous equation approach creates a reduced system that duplicates the accuracy. The Pareto approach is easy to understand and implement. Solution manual cost management HMCost3e SM ch04 The simultaneous equation approach creates a system that duplicates the accuracy of the more complex system, and it may be even smaller in size than tSolution manual cost management HMCost3e SM ch04
he Pareto approach. Preserving accuracy probably produces the most benefit and thus has the most merit of the two approaches.45384z 2015 Cengage teamiCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It i Solution manual cost management HMCost3e SM ch04 Cornerstone Exercise 4.11Plantwide rate $2,000,000/50,000 S40.00 per hour Applied overhead:Deluxe Regular$40.00 X 10,000400000$40.00 X 40,00016000002Overhead per unit (deluxe) $400,000/20,000 $20Overhead per unit (regular) $1,600,000/200,000 $83There would be an increase of $400,000 ($40 X 10, Solution manual cost management HMCost3e SM ch04 000) of overhead assigned to the deluxe speakers and so profitability for this product line would decrease by this amount. Overhead assignments affectSolution manual cost management HMCost3e SM ch04
product cost and profitability and thus can affect many decisions (e.g., pricing). This conclusion, in turn, implies that the way overhead is assigneCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It iCHAPTER 4 ACTIVITY-BASED COSTINGDISCUSSION QUESTIONS1A predetermined overhead rate IS simply an estimate of the overhead used per unit of driver. It iGọi ngay
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