Apportioning costs Flashcards
What must I know about apportioning costs? P95
Recovery rate: - ABI
* calculate - appropriate cost drivers
* calculate -suitable bases of absorption
* Interpret significance - under/over recoveries of overhead costs
Costs - UPAS
* calculate the over/under absorption of costs
* make costs journals postings
* concept of activity base costing
* attribute overhead cosTs to production and** s**ervice centres- direct and step down
Whatthe relationship between cost units and overhead costs? P96
- does not relate - specific unit
- shared amongst all cost units they relate to
- costs centre collection beforehand - function
What are the costs centres classified by function? P96
F SPA
* Finance - rising finance
* selling and distribution - attracting customers & delivering goods to them
* Production - factory overheads / operating overheads
* Administration - rent ,administrative, ooffice
What is absorption costing? P97
- Full costs- onne unit of output - proportion of the overheads
- proportion of the fixed costs - absorbed into products costs
What are the three stages involved in absorption costs ? P97
AAA
* Allocation
* Apportionment
* Absorption
How are the costs collected - absorption costing ? P97
- Cost centres - organisation’s operations
What is the allocation process of absorption costing? P97
- charging cos centes– costs incurred entirely by cost centre
- e.g. paint spraying machine to paint shop
- supervisor salary to cost centre they supervise
What is the apportionment process of absorption costing ?v P97
- sharing out a costs
- two or more different cost centres
- OR department
- suitable basis
What is the apportionment calculation? P98
total costs/ total quantity * quantity relating to cost centre
What could be a apportionment basis for gas? - p99
- Area of cost centre
- volume of cost centre
- number of radiators
What could be a apportionment basis for electricity ? - P99
- Area of cost centre
- volume of cost centre
- wattage of appliances ?
What could be a apportionment basis for inventories insurance? - P99
- value of inventories
What could be a apportionment basis for building insurance? - P99
- value of building used
- area of building used
What could be a apportionment basis for plant insurance?
- value of plant
What could be a apportionment basis for employer’s liability insurance ?
- payroll costs
- number of employees
What could be a apportionment basis for depreciation?
value of equipment
What could be a apportionment basis for telephones ?
number of extensions
What could be a apportionment basis for internet broadband ?
no of computer terminals
What could be a apportionment basis for maintenance?
- value of equipment
- area
What could be a apportionment basis for supervisor pay?
payroll costs
What could be a apportionment basis for rent?
area
What could be a apportionment basis for rates?
area
What could be a apportionment basis for canteen
number for employees
What is primary allocation & apportionment? P104
- OH costs - collected into each cost centre
- double check - costs centre totalls - total of the total column
Why does the method of allocation and apportionment need to be checked regularly ? P104
- still valid
- e.g. reorganisation of factory/ office departments = change in floor area
- supervisor salary costs - two department share
What are service departments? P104
- Not see products as made e.g. canteen/ production office = service department
- service department oh - approtioned - cost centres products pass through
- all OH costs - captured in production costs centres
- All overhead costs - unit costs of a product
What two stage approach is needed with service departments? P104
- Primary apportionment - all costs centres
- Secondary apportionment - production cost centres