managerial accounting

• -a company produces many units of a single product
• - one unit of product is indistinguishable from other units of product
• - identical nature of each unit of product enables assigning the same average cost per unit

• --Weyerhaeuser (paper manufacturing)
• -- Reynolds Aluminum (refining aluminum Ingots)
• -- Coca-Cola (mixing and bottling beverages)

• -- many different products are produced each period
• -- Products are manufactured to order
• -- the unique nature of each order requires tracing or allocating costs to each job, and maintaning cost records for each job.

• -- Boeing (aircraft manufacturing)
• -- Walt Disney Studios (movie production)
• -- Bechtel International (large scale construction)

• estimated total MOH cost for the coming period
• estimated total units in the allocation base for the coming period (direct labor hours)

makes if possible to estimate total job costs sooner

• -- estimate level of production for the period
• -- estimate total amount of the allocation base for the period
• -- estimate total manufacturing overhead costs

Beg. Raw Materials inventory + Purchase of raw materials = Total Raw Materials Available - Ending raw marterials inventory = Raw materials used in production - Indirect materials used in MOH + Direct labor + MOH applied in WIP inventory = Total Manufacturing cost + Beg WIP Inv. - End WIP Inv. = COGM

Beg. finished goods inv. + COGM = Goods available for sale - Ending finished goods inv. = Unadjusted COGS + Under/-Over applied Overhead = Adjusted COGS

POHR x Actual Activity

Use Applied Overhead = POHR x Actual Direct Labor Hours

exists when the amount of overhead applied jobs during the period using the POHR is less than the total amount of overhead actually incurred during the period.

exists when the amount of overhead applied to jobs during the period using the POHR is greater than the total amount of overhead actually incurred during the period

Net Operating Income will increase

• -- Unit-Level
• -- Batch-Level
• -- Product Level
• -- Facility Level

• Activities include
• processing units on machines, processing units by hand, consuming factory supplies
• Activitity Measure
• machine-hours, direct labor hours, units produced

• Activities include
• processing purchase orders, processing production orders, setting up equipment, handling materials
• Activity Measure
• purchase orders processed, production orders processed, number of setups, pounds of material handled

• Activities include
• testing new products, administering parts inventories, designing products
• Activity Measure
• hours of testing time, number of part types, hours of desing time

• Activities include
• general factory administration, plant building and grounds
• Activity Measure
• direct labor-hours, direct labor-hours

Estimated Overhead Cost / total expected activity

• Expected Activity x Activity Rate
• Add them all up and divide by the number of units produced

Activity Rate x Actual Activity and add all the activities up

• Cost of beg. Work in process inventory + cost added during the period
• Equivalent units of production
• * do that for both Materials and Conversion and add them up