Student Version o Repetition is an important component

Student Version o Repetition is an important component, a key part of learning. In memory, the more times patterns of thought are repeated, the more likely you will be able to recall information. o These Power. Point slides have been modified from the lecture decks by making them fill-in-the-blank. Why? So that you get an opportunity to repeat a visual cue (from the lecture or the book) via completing text here. o In addition, most text book exhibits have been removed as they are available in your text directly. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

d n a n o i t a c o d l e l s A a t B s o y t i C v i g t n c i t A s o C 1 1 r e t p a h C c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning Obje c t Iden i v e t ify th alloc ree atin ng fa ctory methods u over head sed for costs prod to ucts. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 1

________ Allocation Methods o Most companies have accounting systems that trace revenues to individual product lines. In addition, they need to subtract the cost of manufacturing their products from revenues in order to determine the profit from sales. Determining the cost of a product is termed ________. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

PRODUCT COSTING ALLOCATION METHODS

Product Costing Allocation Methods o Three methods of allocating factory overhead costs are: Ø ________ factory overhead rate method Ø ________ - ________ method c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning Obje ctive Use a sin over gle h ead rate plantwide for p rodu factory ct co sting. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 2

________ Factory Overhead Rate Method o Under the ________ factory overhead rate method, ____ of the factory overhead is allocated to ____ products using ________. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Ruiz Company Illustration Ruiz Company o Ruiz Company manufactures two products, snowmobiles and riding mowers. Both products are manufactured in a single factory. There is $1, 600, 000 of factory overhead budgeted for the period. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Ruiz Company Illustration Ruiz Company o Each product is budgeted 10, 000 direct labor hours as shown below: c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Ruiz Company Illustration Ruiz Company o The single plantwide rate is calculated as follows: Total Budgeted Factory Overhead Costs Total Budgeted Plantwide Allocation Base $_____ direct labor hours = $___ per direct labor hour (1, 000 × 10 dlh) + (1, 000 × 10 dlh) c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Ruiz Company Illustration Ruiz Company o Snowmobile: Ø $80 per dlh × 10 direct labor hours = $800 o Riding Mower: Ø $80 per dlh × 10 direct labor hours = $800 ________ Cost per Unit c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

RUIZ COMPANY ILLUSTRATION

Single Plantwide Factory Overhead Rate Method o The primary ____ of the single plantwide overhead rate method is that it is ____ and ____ to ____ in practice. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning O bject Use multi i v e p l e pro facto du ry y ove uctio n de rhea partm d rat es fo r pro ent duct costi ng. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 3

________ Factory Overhead Rate Method o The ________ factory overhead rate method uses ________ for ________ to allocate factory overhead costs to products. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

________ FACTORY OVERHEAD RATE METHOD

Department Overhead Rates and Allocation Ruiz Company o ________ Department Factory Overhead Rate: $__________ = $ ________ per dlh _______ direct labor hours c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Distortion of Product Costs o The following conditions indicate that a ________ factory overhead rate may cause product cost distortions: Ø Condition 1: Differences in ____ department factory overhead ____. Ø Condition 2: Differences among ____ in the ____ of ________ within a department and across departments. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning O b jectiv Use activ ity-ba e sed c ostin g for prod uct costi ng. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 4

____ - ________ Method o The ____ - ____ costing method provides an alternative approach for allocating factory overhead that uses ________ overhead rates based on ________. o ____ are the types of ____ , or ____, involved in a manufacturing or service process. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

ACTIVITY-BASED COSTING METHOD

Activity Rates and Allocation o The budgeted activity costs are assigned to products using factory overhead rates for ____ activity. These rates are called ________ because they are related to ____. Activity Rate = c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Activity Rates and Allocation o The term ________ , rather than allocation base, is used because the ____ is related to an ____. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Distortion of Product Costs Ruiz Company o If Ruiz Company used the $800 factory overhead cost allocation (single plantwide rate) instead of activity-based costing, the following would likely result: Ø The snowmobile would be ____ because its factory overhead cost is ____ by $ _____($_____ – $_____). Ø The riding mower would be ____ because its factory overhead cost is ____ by $_____ ($_____– $_____). c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning O b jectiv Use activ e sellin ity-base ga dc costin nd a dmin istrat g to alloc ate ive e xpen ses to pr oduc ts. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 5

Activity-Based Costing for Selling and Administrative Expenses Abacus Company o Abacus Company has two products, Ipso and Facto. Both products have the same total sales volume. The selling and administrative expenses of Abacus Company are allocated to its two products on the basis of sales volume. However, Ipso and Facto consume selling and administrative activities differently. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Activity-Based Costing for Selling and Administrative Expenses c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Activity-Based Costing for Selling and Administrative Expenses o Assuming that Ipso had 10 warranty claims and Facto had 90 warranty claims, the field service activity expenses would be allocated as follows: Ø Ipso: $ ____ = ____ warranty claims x $ ____ per warranty claim Ø Facto: $ ____ = ____ warranty claims x $ ____ warranty claim c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Lear ning Obje c t i Use v e activ ity-b base d cos ting i servi na ce bu sines s. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. 6

Activity-Based Costing in Service Businesses Hopewell Hospital o Hopewell Hospital uses an activity-based costing system to determine how hospital overhead is allocated to patients. Each activity has an estimated patient activity-base usage. c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

Activity-Based Costing in Service Businesses o The budgeted costs for radiological testing are $960, 000, based on total estimated activity-base usage of 3, 000 images. Activity Rate = Radiological Testing Activity = Rate = $ ____ per image c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

d n a n o i t a c o d l e l s A a t B s o y t i C v i g t n c i t A s o C d n E e Th c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.