ACCT2126 Management Accounting and Business
Topic 4 – 4 sessions: Product Costing – Overhead Allocation using single or multiple cost drivers
Building on your prior learning in this course you are required to be able to demonstrate an understanding of: • Product costing systems and product costing methods.
• Supporting cost schedules for the Income Statement and their relationship to the income statement for manufacturing and service organisations. • Actual costing and normal costing; Overhead variances including cause and treatment. • Cost allocation methods using the examples of single or multiple cost drivers; Selection and evaluation of cost allocation bases; Comparison and evaluation of cost allocation methods. • Determination of selling price and/or mark-up and profit.
Set readings for this topic
Chapter 4 pages 96-109, Chapter 5 pages 136-138; 143-144
and the lecture slides for this topic are the basis for this topic.
What you need to do this topic:
1. Complete the set reading for this topic and lecture slides. 2. Complete the Questions outside of classroom for self-studying:
Interteaching Questions and Exercises _ To be completed before class
1. Define cost accumulation. Explain the differences between job-order costing and process costing. Watch a video in Blackboard “Washburn Guitars Custom Shop” and “How It's Made Potato Chips” for your understanding. Is Washburn Guitars a job costing or process costing? How about the manufacturing process of potato chips, should the company follow job costing or process costing.
2. Define cost measurement. Why is actual costing rarely used for product costing? Describe the way to dispose of under- or overallocated overhead costs.
3. Describe why multiple overhead rates are often preferred to a plantwide single rate?. Using the video “How It's Made Honey” to illustrate your answer.
4. Provide an example of an...
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