New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Acct 226 Week 6 Notes

by: Madeline Lacman

Acct 226 Week 6 Notes ACCT 226 - 001

Madeline Lacman

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

these notes cover chapter 6 and the beginning of chapter 7
Introduction to Managerial Accounting
Debbie Huguley Brumbaugh (P)
Class Notes
Accounting, acct226
25 ?




Popular in Introduction to Managerial Accounting

Popular in Accounting

This 3 page Class Notes was uploaded by Madeline Lacman on Tuesday October 4, 2016. The Class Notes belongs to ACCT 226 - 001 at University of South Carolina taught by Debbie Huguley Brumbaugh (P) in Fall 2016. Since its upload, it has received 4 views. For similar materials see Introduction to Managerial Accounting in Accounting at University of South Carolina.


Reviews for Acct 226 Week 6 Notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/04/16
Variable costing… supports decision making  Variable costing correctly identifies the additional variable costs incurred to make one more unit Decentralization and Segment Reporting  A segment is any part or activity of an organization about which a manager seeks cost Keys to Segmented Income Statements  There are 2 keys to building segmented income statements  Contribution format should be used because it separates fixed from variable costs and it enables the calculation of a contribution margin  Traceable fixed costs should be separated from common fixed costs to enable the calculation of a segment margin Identifying Traceable Fixed Costs  Traceable fixed costs arise because of the existence of a particular segment and would disappear over time if the segment itself disappeared Identifying Common Fixed Costs  Common fixed costs arise because of the overall operation of the company and would not disappear if any particular segment were eliminated  Ex: we don’t have a computer division, but still have a company president Segment Margin  Segment margin: best gauge of the long-run profitability of a segment  Computed by subtracting the traceable fixed costs of a segment from its contribution margin  Don’t allocate common costs to segments Levels of Segmented Statements  Webber, Inc has 2 divisions  Computer and TV divisions  Our approach to segment reporting uses the contribution format  Cost of goods sold consists of variable manufacturing costs  Fixed and variable costs are listed in separate sections  Common costs should not be allocated to the divisions Traceable Costs Can Become Common Costs  Fixed costs that are traceable to one segment can become common if the company is divided into smaller segments  Divisional margin = Product line margin – common costs Segmented Income Statements – Decision Making and Break-even Analysis  Once a company prepares contribution format segmented income statements, it can use those statements to make decisions and perform break-even analysis  A business segment’s break-even point is computed by dividing the traceable fixed costs by its contribution margin ratio  Notice the $25,000 of companywide common fixed costs are excluded from the segment break-even calculations because the common FC are not traceable to segments Omission of Costs  Costs assigned to a segment should include all costs attributable to that segment from the company’s entire value chain  Business Functions making up the value chain o R&D o Product Design o Manufacturing o Marketing o Distribution o Customer Service Inappropriate Methods of Allocating Costs Among Segments  Failure to trace costs directly  Inappropriate allocation base Common Costs and Segments  Common costs should not be arbitrarily allocated to segments based on… Companywide Income Statements  Both US GAAP and IFRS require absorption costing for external reports  Since absorption costing is required for external reporting, most companies also use it for internal reports rather than incurring the additional cost of maintaining a separate variable cost system for internal reporting  When you go to calculate the fixed OH, per unit that youre assigning, you calculate the cost per unit for each period based on the number of units Chapter 7 Activity-based costing  ABC is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity  ABC is a good supplement to our traditional cost system How Costs are Treated Under Activity-based Costing  Activity measure – an allocation base in an activity-based costing system  The term cost driver is also used to refer to an activity measure  ABC defines 5 levels of activity that largely do not relate to the volume of units produced  Manufacturing companies typically combine their activities into 5 classifications  Unit-level activity  Batch-level activity  Product-level activity  Customer-level activity  Facility (organization)-level activity  Manufacturing overhead is allocated to products using a single plantwide overhead rate based on machine hours


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Allison Fischer University of Alabama

"I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.