CH.17 Flashcards
Plantwide Overhead Rate
-Will use one overhead rate
-The cost object is the unit of product
-The base will either be direct labor hrs or machine hours
What is the formula for plant wide overhead rate?
Formula: Total budgeted overhead costs/ Allocation base (Either direct labor or machine hours)
After the plant-wide overhead rate is determined, what’s the next step? What formula (s) should be used?
Next, you determine the overhead allocated rate using its formula. Its formula is plantwide overhead rate * direct labor hrs used
What is the departmental overhead rate formula?
The formula for this is Budgeted dept overhead cost/ Budgeted dept allocation base
After the departmental overhead rate is determined, what’s next?
Next, you multiply the departmental overhead rate by the __ hours per unit rate. After that, you add those figures together to obtain the overhead allocated amount
How do you find the product cost per unit? (Departmental overhead)
In order to find the product cost per unit, you combine the direct material + direct labor overhead
What three goals do activity-based costing hope to accomplish?
-Identify activities and assign budgeted costs to activity costs
-Compute an overhead activity rate for each activity cost pool
-Allocate overhead costs to cost objects (aka products)
What is the first step for activity-based costing (ABC)?
You identify the activities and their budgeted overhead costs.
What is the formula for ABC?
The formula for ABC is budgeted activity cost / budgeted activity usage.
How do you find the allocated cost for ABC and what step is it after?
The allocated cost takes place AFTER the overhead activity rate is determined. The formula to find the allocated cost is actual activity usage * activity rate. Add up all of the allocated costs to find the total allocated cost amount.
How do you find the overhead cost per unit? (ABC)
Once the total allocated cost is determined, you divide that by the units produced to determine the overhead cost per unit.
Finally, how is the product cost determined? (ABC)
Product cost= (Direct materials + direct labor + overhead)
