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AGUS SISWANDI.SE.AKt
Chapter 1 -
Chapter Four
ActivityBased Costing
Chapter 1 -
Learning Objectives
Discuss the importance of unit costs.
Describe functional-based costing approaches. Explain why functional-based costing approaches may produce distorted costs.
Unit Costs
The unit cost is the total cost associated with the units produced divided by the number of units produced
Although the concept is simple, the practical reality of the computation can be somewhat more complex because of the following issues:
What is meant by total cost?
Chapter 1 -
Measurement Systems
Two possible measurement systems are actual costing and normal costing.
Actual costing assigns the actual costs of direct materials, direct labor, and overhead to products.
Normal costing assigns the actual costs of direct materials and direct labor to products; however, overhead cots are assigned to products using predetermined rates. Chapter 1 -
Time Chapter 1 -
Assign Costs
Products
Belring, Inc.
Belring, Inc. produces two telephones: a cordless and a regular model. The company has the following actual and budgeted data:
Budgeted overhead Expected activity (DLH) Actual activity (DLH) Actual overhead
Chapter 1 -
Regular
100,000 $738,000 90,000
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Predetermined Overhead Rate Budgeted overhead Expected activity = = $360,000 100,000 DLH $3.60 per DLH =
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$3.60 x 90,000
Total mfg. costs Units produced Unit cost
324,000
$1,062,000 100,000 $ 10.62 ========
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Assembly $108,000 ======= 3,000 77,000 80,000 ===== 1,000 9,000 10,000 =====
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