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ACCT 2102 Week 4 notes

by: Randi

ACCT 2102 Week 4 notes ACCT 2102

Marketplace > University of Georgia > Accounting > ACCT 2102 > ACCT 2102 Week 4 notes
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About this Document

We covered chapter 4 refined costing
Principles of Accounting II
Class Notes
refinedcosting, departmental, activity based costing, transactionbases, ABC, productlevel, facilitylevel, unitlevel, batchlevel, Accounting, traditionalcosting
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This 3 page Class Notes was uploaded by Randi on Sunday September 11, 2016. The Class Notes belongs to ACCT 2102 at University of Georgia taught by Farmer in Fall 2016. Since its upload, it has received 5 views. For similar materials see Principles of Accounting II in Accounting at University of Georgia.


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Date Created: 09/11/16
Week  4  Notes   ACCT 2102 PROF.  FARMER     Chapter  4:  Refined  Costing     • Refined  Costing   o Improving  the  way  that  MOH  is  allocated   o 2  types:   § Departmental   § Activity  Based  Costing           Traditional  Costing             Refined  Costing       POHR  =  total  MOH/total  allocation  base   POHR1  =  portion  of  total  MOH/   total  appropriate  allocation  base         POHR2  =  portion  of  total  MOH/   total  appropriate  allocation  base       Etc…  (can  be  as  many  POHRs  as   necessary)         COST  OBJECT:   DM   DM   DL  =  wage  rate  X  DL  hours   DL  =  wage  rate  X  DL  hours   MOH  =  POHR  X  allocation  base  for  cost  object   MOH  1=  POHR  X  allocation  base   for  cost  object     MOH  2  =  POHR  X  allocation  base   for  cost  object       Total  cost  under  traditional         total  cost  under  refined           • What  is  the  relationship  between  the  numerator  in  the  traditional  column   and  the  numerators  in  the  refined  column?   o They  are  equal!     o Take  the  total  MOH  and  divide  it  up  in  different  ways   Week  4  Notes   • DM  and  DL  will  be  the  same  in  both  the  traditional  and  refined  columns   o MOH  usually  will  not!     • Compare  the  totals  for  the  cost  object  to  get  cost  distortion   o MOH  is  the  product  cost  category  that  causes  cost  distortion     • The  refined  column  should  be  higher  if  the  traditional  system  is  overcosting   the  cost  object   o The  traditional  column  will  be  higher  if  it  is  undercosted     • If  a  company  only  has  two  cost  objects,  the  cost  distortion  for  the  two  objects   will  equal  or  offset  each  other           Week  4  Notes   Activity  Based  Costing     • ABC  is  the  most  refined  level     • There  are  different  levels:   o Unit  level  activity:  Perform  an  activity  of  production   on  every  unit   § Example:  Assembly   o Batch  level  activity:  Performing  an  activity  on  a  group   of  units   § Use  transaction  bases  (number  of  setups,   number  of  moves)   o Product  level  activity:    Performed  on  a  product  line   § Can  see  outside  of  the  factory   § Example:  designing/marketing  campaign  for  a   product   o Facility  level  activity  (General  factory):  Everything   else   § Typically  things  considered  MOH   § Cost  drivers  are  DL  hours  or  Machine  hours   § Examples:  rent,  utilities,  supervisor  salary                                              


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