Introduction to Managerial Accounting
Introduction to Managerial Accounting ACT 220
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This 2 page Class Notes was uploaded by Olga Stroman on Tuesday September 22, 2015. The Class Notes belongs to ACT 220 at Colorado State University taught by Sally Whitney in Fall. Since its upload, it has received 66 views. For similar materials see /class/210335/act-220-colorado-state-university in Accounting at Colorado State University.
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Date Created: 09/22/15
H 3 Example Emblems Hlassm Company s predetemrned overhead rate ls based on drrect labor costs The up an 3 60 144 r 1 percentage ofdrrect labor costs must be A at 1 92 Predetermrned overhead rate x 2000 Predetemrned oyerhead rate 1920 7 2000 7 96 Q r Jobrorder costrng system Durlng the month the folloWlng costs were rncurred on Job 1041 drrect Tn addlll n currednnlh lb 1m and Job 1041 requlred 390 MHs IfJob 1041 conslsted of5000tles the cost ofgoods sold per tle was A leer quot171171 hr 1 Cost of goods sold per unrts 7558001755013650 r500 7 Q On January 1 Hessler Company s Work rn1gtrocess account had a balance of17000 Durlng the year drrect matenals costrng 27000 were placed rnto productron Drrect labor cost for the yearwas 52000 h A t 4 m m a at rm M l b 4 Lu nttalua lh d WA Lhelrjob cost sheetswere completed durlng the year On Decerrber 31 thebalance 1n the Work ln Process lnventory account was A Flnd leference betwem Le and R1 ht 00 39 Flnlshed Goods 164000 Balance 170 Drrect Materals 27 000 ct Labor Zr 00 rk ln Balance ln the Wo Process lnventory account was 10000 Q 7 CH 4 EYample Pmb lems Q 39 followl39rg lnforrnau39on pertalns to one of lts processlrg departments for the current rnontln Unlts comleted 000 7 Unrts completed 7 Unrts ln endlng rnyentory 57500 x 100 57500 ts 7 Equry alent ml 7 2750072000 799500 27 Q Last month the Weldlng Department of Eager Company started 8400 unrts rnto productron The department had 2100 unrts ln process at the beglnnlng othe month whrch were 60 whrch r B were 30 complete wrth respect to conyersron costs A total of7 300 unrts were completed and ansfered to the next department durlng the month Usln the the equryalent unrts of pmdudlon for conyesron costs for the month would e Work ln process beglnnlng 2100 unrts x 40 840 Unrts started and completed 5200 Work ln process endrng 3200 unrts x 30 960 Equry 31ml unrts ofproductron 7000 100 7 60 40 7300 unrts 7 2100 unrts 5200unrts What was the number ofequlvalml unrts produced uslng the flrstrln flrslroul method7 Beglnnlng Workrlnrprocess 70 complete 10700 unrts Unrts started rnto productron durlng the year 157000 um 145600 unrts 22100 unrts Unrts completed dunng the year Endlng Workrlnrprocess 25quot a complete A Beernnrne work rn process BI 10700 unrts x 100 770 complete 3210 Unrts arted nd completed 157000 started7 221001n E1 or 145600 completed 710700 ln BI 134900 Endlng work ln process 22100 unrts x 25 complete 5525 EU39P ln the Packaglng Department 143635 mrrl39l MHZ ll la ml 1 m the nertdepartment durlng the month totaled Operatrng Departments Departments Personnel Custodral oyerhead costs 1300 1100 3000 7000 Employees 3 18 30 47 Space occupred 000s ofsquare feet 20 10 40 80 A Allocatron base 30 47 7 77 Allocatron 3077 x 1300 506 CH 1 Manaies 7ilannrni controllrng decrsron maklng o manaie rrsks 0 Product seylce o Orianlzatlonbuslness process CH 2 1 hr ml sales7c0Gs 7yarrable costs lhetlxed p 39 spread over more unlts By detlnlu on total varlable cost changes ln proportlon to changes ln the actl39vl39ty level humane tum rrnnr rrnln 55m wawmmnkr tr Warmth 0 ml N to rrl slxmnuo lnn Nawrnk new n Hm n7 mu oltrl yrrrrhmr manner comm tnmrun t earnedquot a r 0 mo anaclwnnum av mo quan eru 00m rm rrrl Dilucambmn rrk nelmwl ma tn aerlc a moment a red 4 m rutmw warren Mumn mu 0 ton nnlulv M l 111 t CH 5 rnformatron ls used for valulng unsold unrts ln endrng rny eatory and for detemnrng cost of goods so d Selllng and Shl ln costs should be rgnored these costs are m not comp onent of Suppose atotal ot30000 otoyehead ls apphed to Jobs What accountwrll be deblted7 o Thelournal entry would deblt Work ln process for 30000 and credlt Ma ufacmrl39rg overhead for 30000 Ifdemand falls due to a recessron or other reason the estrmated total amount othe I ls llkely to fall or decrease l 1 I u um 11 n llnml rat pan n n H l cost added r equry 31ml unrts ofproductron A 1 r lrnr h l l rrrvtnrh ml rum ll rnt department ls l39grlored ln subsequent allocatlons fladhtcnal Fauna Conulbu thon Foam I A Vanable cost vanes In total ln dlrect propomon to changes In the level of actwlty mm x 5m 5 we Co o amples of varlable costs lnclude costs of goo old for a men handlsln mow w39rJ39 company dlrect ma erlals dlr ct abor y able elements of manu acturlng o erhe amwmm such mdrect matenals Supp hes and power an nable elements of selhng and Song ma ndlmztlullw nupotlwa admlnlstratlye expenses such as Commlsslons and shlpplng costs constant ll expressed Sol 5 low on 1 p239 1m basrs F d wnlill ilvl Hm I i quot lnl Ml Nat oncmllng lncolno Examples of xed cost lnclude eralgerllne depreclatlon lnsurance propety taxes rent a W l l gt tang lrt mwny unl s ed by sttrrte nutstrle t Such 5 a landlord M WWW mm ng your monme rental 7 7 bX y e l GWCHQMI a the total xed cost the yertlcal lntercept ofthe hne t b Lhe Varlable Cost aunlt ofactlvll the 510 e othe llne Purpose ot Cos Classl ca on Cos Glassmcatlons X p Y quot gt the level of actwrty 1 gt Prepmtng external Iinanctal Pmducl eosls inventoriable slamments U39 lerials l 199 lm cm at Manulaclurlng ovalhead 3 Conp te pen 9055 expensed total cost at ether the h Varlable Cost elemmt Nonma ulaclurlrrg cusls Selling cusls Dlrect materlals 290 Admlnlslvahve oosls Dre labor 210 r Labor wage rate r 14 Fixsd cos conslan quot1 Mal 21014 15 131 drect labor hours ldentlfy the penods of the lowest and hlghest actwlty 2 Compute the yarlable cost per unlt uslng the two po ln 1 lnts yarlable cost A In the flxed cost element by deductmg the yanable cost element from the lgh or low actwlty leed cost element Total cost 7 tn Iasponss to changes tn EmilHy Mlxed cost has varluble and lured elamenls 21 PerDLHlSDLHs315dMdL815 r t Di erenlia cosl dlflers between allemallvesl Sun sl pasl cost not a ecled by Moklng doctstons 39 81550 16 30 a use slcnl Opperluntly cost lotgone benelll m a car Murmur EIrr news Am m Mann m a unun tmrtnnartau tnnmdtnnnrnmma woman um ntev wennwawmmdnntter u watt tr was mm nunmnc39ullw mm mm mannnr you 1 mm tntrntct has prov lded the consequently the d rent nun wt 1 am th ouc thamn mantaruth WWWmnuttwtnw namamnmam Murmur t Menmcm Morgans mamsemtnm m na mnlrtlmmlwm r amtman 39Nnts urntwmrrtuttmtmnummeswme mt trauma mu mnrwn ltmudaaamumdlmmmuau ml followlng data for the month ofNovemba 1 1 Thae rrect matena s drect abor and manufactunng overhead applle Total manufactunng cost number of unrts m the job o were no beglnmng d lrsted Allocatlon ofany under applied or crver applied manufacturlng DEBIT Joh mer Custth Pmcass Costing Work ln Process of 250 325065000 0 055000 250 z n vanllohsara Iked ml dunng each ported will each job havlng dttleram productton A slngle product ts pmduced enhev 39 on a corutnuous bails at tar lang 4 Ewnlplf nertods ot Vlmat AH ums ol producl are Byklea Corporatlon uses the welghtedravafage method ln lts process 05ng system Thls month the requrrernenrs rdcnrtcal 2 Costs am accumulalsd by rndt 2 Costs are accllmulalad by comp 16m ofmese um m begmmg M May were vrdual 19h epartmant n a Linn cosls are cumpuled bytao on a Urttl costs are computed Mama 5 5 31000 75f WIPE mg m m shag by depmmm Conyerslon costs 2700 40a complete streptug and mum Depmrnsrll durtn tln m nth acct Remncttattcn mom 2513 10 ac accullrled tot Costct begtnntngwort tn prxcsstnvertlcrmxntutlw Mammal COS 132000 Gm EM Conyerslon costs 219100 ed to pvoduullun durtngme penczl Exhlhll 4 Tctal nstta be accounted tcr Costs accounted tcr as tolldwe Cod ct Cndlng work tr pmcanc incnlmy tcoc page tatt Cmtotunttstrarstarrcdcuu eepagslSl Tul utcr conyerslon costs Calculate equlyalent unlts ofmatenals a Transferred out 6700 b 90 complete 450 90 500 c Equwalent unlts 7150 67 00450 Calculate materlal unlt cost Beglnnlng cost 3000 b Cost added 132000 11 cost rmuultlu General Cost Classlflcatlons lrect matenals d r t labor Norrnanufactunng Costs Adn unlstratwe costs general management C 7135000 Executhe compensatlon general accountlng publlc relatlons d Unmcost135000715018 88 general admlnlstratlon 1 H t L t f I sellm costs A A A Ca cu a eequlva en unl so Converslon L r a Trans o the customer Advemslng sales Commlsslon sales salanes coss of flnlshed goodswarehouses Product Costs Vasus Perlod Costs Matmmg Prlnclple based on accmal concept that costs mcurred to generate partrcular revenue should b Cost added 221 800 Product costs lnclude all costs lnyolyed ln acqulrlng or maklng a product In the case of C v 7 7 manufactured goo s ese costs conslst ct matenals drect labor and c l l 1 5L 1me 2011221300 692563203 manufacturlng overhead Product costs attach to unlts of product as the goods are 39 a C a 0 0 ma em 5 pu hased f t d they remaln attached as the goods o lnto l entory awaltlng sales Fwdud costs are asstgned t myentorv accnunt tn the balance shawl 39 Calculate Cost ofconvemon treated cs an expense m the perlod In whtch the relatedpraductx are sold n ersxon equwalmt mm mm cost a 1 Au sen Calculate total 8 r r 7 Pa tnd cost are d on Lhe lnoome statement 1n the pet 117d ln whldr the are 84967207n15t703 expmse lncuned uslng the usual rules ofaccrual accountlng Reconcxhatwn o Sales Commlsslons adv lslng Costslnr Matenalbegmnmgcooo executwe salanes publlc relaLlons and of ces are allpenod costs lnarllll21 tl1rlng cost ls the sum ofdlrect matenals cost and dlrect labor cost Cost 4 conyerslon beglnnlng 2700 materlal conyerslon added 219100 1 o g gt 6 E 2 d 8 d N o o 8 Prlrne Cost ti onverston cost tr costs are mowredta convert materth mta theftmrhedprodutt Cost Classlflcatlons for Predlcatlng Cost BehaVlOr Cost behavror the way In wthh a costs reacts to changes m the level of actwlty Categonzed as l7arlablefnc d andmnced Costs Out 7 Cost ofTrans outimataflal 6700 18 88126496 Cost ofTrans out conyer endlng W1 materlal 8499 endlng WTP converslon 7207 356800 Materlal equlyalent unlts unlt cost 450 18 88 8496 225 32 03 7207 Slon 6700 32 03 214601