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# Chapter 16 Managerial Accounting Concepts And Principles

1100 words - 5 pages

Chapter 16 Managerial accounting concepts and principles
1) Direct costs are identified with and can be traced to a cost object.
Indirect costs cannot be identified with or traced to a cost object.
2) Costs by function:
A) Product costs consist of manufacturing costs: direct materials, direct labor and factory overhead.
B) Period costs consist of selling and administrative expenses.
3) A) Prime costs which consist of direct materials and direct labor costs.
B) Conversion costs which consist of direct labor and factory overhead costs.
4) Materials inventory – consist costs of direct and indirect materials which have not entered the manufacturing process.
Work in ...view middle of the document...

Process cost system provides product cost for each manufacturing department or process.
4) I should deduct indirect materials if I have word raw materials. Otherwise I include indirect materials in direct materials and factory overhead.

Chapter 26 Cost Allocation and Activity Costing Base.
Single and ABC method step by step.
1. Start from single method
A) Make a table of total cost for both products (direct materials, direct labor, manufacturing overhead)
B) Count total amount of units = (# of units of Product A * # of hours to make product A)+ (# of units of Product B * # of hours to make product B)
C) Count predetermined factory overhead rate= estimated factory overhead/estimated activity base (total # of units)
D) Count manufacturing overhead for each product (Manufacturing overhead product A = Predetermined rate * # of hours to make product A)
E) Fill out the blank spaces in step A and count Total cost.
2. ABC method
A) Make a table of total cost for both products (direct materials, direct labor, manufacturing overhead)
B) Count predetermined factory rate per EACH ACTIVITY. Rate=Estimated overhead cost(factory overhead) PER EACH activity/ TOTAL estimated activity (Total means for both products not just for one)
C) Multiple the rate on expected activity only for product A.
D) Sum of all activities for product A divide on number of units which were produced (those units don't need to multiply on number of hours, just write as they were listed)
E) Multiply the result of step D on number of hours and fill out into the table and then count total cost.
F) Repeat steps C-E for product B.

Chapter 19 Cost behavior and cost-volume profit analysis
1) Fixed and variable cost
| Per unit | Total |
Fixed cost | Increase of units, decrease of cost | The same |
Variable cost | The same | Increase of units, increase of cost |

2) Mixed cost
a) Variable cost per unit= (High total cost – Low total cost)/(High units produced-Low units produced)
b) Total cost= Fixed cost + (Variable cost per unit*units produced)
c) Fixed cost=Total cost – (Variable cost per unit*unit produced)
3) Income statement in contribution margin format
Sales
Variable costs
Contribution Margin
Fixed costs
Income from operations
4) Contribution margin and contribution margin ratio
Contribution margin=Sales-Variable costs
Contribution margin ratio= Contribution margin/Sales
5) Unit contribution margin
Unit contribution margin=Sales price per unit – Variable cost per unit
Change in income from operation=Change in sales units*Unit...

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