ACTG 2300 Lecture 16: Day 16 Notes

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Day 16 2/26
Exam 2
5 MC, 3 problems
Ch. 7 Activity Based Costing
Costing system to determine Unit PDT Cost
o DM, DL, OH (OH main focus)
Steps
1. Identify activities
2. Activity cost pool
3. Activity cost driver rates
a. Activity cost pool / total activity cost driver
4. Allocate the Activity OH Cost to the Cost Objects
a. Cost driver of product * Cost Driver Rate
Ch. 8 Budgeting (never actual, all budgeted)
Operating vs. Financial Budgets
Exercise 8-6 (p. 374)
S&A Expense: non-manufacturing costs that are treated as period costs
Can include both variable and fixed expenses
o Variable
EX: sales commission
o Fixed
EX: executive salaries
o Depreciation can be S&A if it is on equipment that is not
manufacturing
Period costs are expensed in the same period they are incurred
o They are included in the income statement
VS. manufacturing expenses that are product costs
o Included in balance sheet under inventory
Budget S&A (operating)
1st
2nd
3rd
4th
Total
Variable
S&A Exp
(2.5*15,000)
= 37,500
(2.5*16,000)
= 40,000
(2.5*14,000)
= 35,000
(2.5*15,000)
= 32,500
(2.5*15,000)
= 145,000
Fixed
S&A Exp
+insur
5,000
5,000
10,000
+prop
8,000
8,000
+adver
8,000
8,000
8,000
8,000
32,000
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