Accounting Tools

FEBRUARY 11, 2024

This approach applies actual direct costs to a product, as well as a standard overhead rate. It includes the actual cost of materials, the actual cost of labor, and a standard overhead rate that is applied using the product's actual usage of whatever allocation base is being used (such as direct labor hours or machine time).

Financial Reporting 74

Financial Reporting Cost Accounting Budgeting Accounting 74

Accounting Tools

FEBRUARY 5, 2024

What is Fixed Manufacturing Overhead Incurred? Fixed manufacturing overhead incurred is that component of factory overhead that does not vary with production volume. A business still incurs these costs, because they are necessary to the ongoing operation of the firm’s manufacturing operations.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

JULY 30, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Fixed Overhead? Fixed overhead is a set of costs that do not vary as a result of changes in activity. Since fixed overhead costs do not change substantially, they are easy to predict, and so should rarely vary from the budgeted amount.

Cost Accounting 75

Cost Accounting Budgeting Accounting Accounting 75

Accounting Tools

AUGUST 23, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is the Manufacturing Overhead Rate? A manufacturing overhead rate is the standard amount of factory overhead cost assigned to each unit of production.

Accruals 40

Accruals Cost Accounting Billing Accounting 40

Accounting Tools

MARCH 11, 2024

What is an Allocation Rate? An allocation rate is the standard amount of overhead applied to a unit of production or other measure of activity. An allocation rate can also be used as part of an internal accounting effort, to ensure that overhead costs are applied throughout a business.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

NOVEMBER 3, 2023

The production volume variance measures the amount of overhead applied to the number of units produced. It is the difference between the actual number of units produced in a period and the budgeted number of units that should have been produced, multiplied by the budgeted overhead rate.

Budgeting 75

Budgeting Cost Accounting Accounting Accounting 75

Accounting Tools

DECEMBER 22, 2023

This activity level is used as the basis for a calculation of the standard factory overhead rate, which is then applied to units produced. Normal activity is the average level of production volume for an extended period of time that incorporates short-term fluctuations.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

NOVEMBER 4, 2023

Variable Manufacturing Overhead Variable manufacturing overhead includes the costs to operate a manufacturing facility, which vary with production volume. Fixed Manufacturing Overhead Fixed manufacturing overhead includes the costs to operate a manufacturing facility, which do not vary with production volume.

Cost Accounting 40

Cost Accounting Budgeting Accounting Accounting 40

Accounting Tools

JUNE 6, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is a Predetermined Overhead Rate? A predetermined overhead rate is an allocation rate that is used to apply the estimated cost of manufacturing overhead to cost objects for a specific reporting period.

Reconciling 40

Reconciling Cost Accounting Accounting Accounting 40

Accounting Tools

AUGUST 31, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is a Departmental Rate? A departmental rate is the overhead rate per unit of activity that is charged by an individual department. This rate is only charged by production departments.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

AUGUST 30, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is a Departmental Overhead Rate? A departmental overhead rate is a standard charge based on the units of activity produced by a business segment. hours of machine time, then the overhead allocation will be $75.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

JULY 31, 2023

Related Courses Cost Accounting Fundamentals What are Manufacturing Support Costs? Manufacturing support costs are the overhead costs associated with the production process. Manufacturing support costs are allocated to the number of units produced, and then charged to expense as these units are sold.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

JULY 12, 2023

Related Articles Cost Allocation Methods Fixed Manufacturing Overhead Applied Fixed Manufacturing Overhead Incurred Manufacturing Overhead Manufacturing Overhead Rate Plantwide Overhead Rate

Accruals 40

Accruals Financial Statements Cost Accounting Tax 40

Accounting Tools

JUNE 11, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Overapplied Overhead? Overapplied overhead occurs when the total amount of factory overhead costs assigned to produced units is more than was actually incurred in the period.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

SEPTEMBER 28, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Actual Overhead? Actual overhead is indirect factory costs that have been incurred. Actual overhead may differ from applied overhead , which can be based on a standard overhead rate that differs somewhat from the actual amount of overhead incurred.

Cost Accounting 40

Cost Accounting Tax Accounting Accounting 40

Accounting Tools

JUNE 9, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is Overhead Allocation? Overhead allocation is the apportionment of indirect costs to produced goods. Types of Overhead There are two types of overhead, which are administrative overhead and manufacturing overhead.

Cost Accounting 40

Cost Accounting Tax Accounting Accounting 40

Accounting Tools

MAY 19, 2023

A predetermined allocation rate is typically used to assign costs to cost objects. The allocation rate is based on the planned amount of the cost pool and a planned activity level. If the actual costs and production volumes turn out to be different, an adjustment to the allocation rate may be made partway through the year.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

JUNE 16, 2023

How to Account for Indirect Materials Indirect materials can be accounted for in one of two ways: They are included in manufacturing overhead , and are allocated to the cost of goods sold and ending inventory at the end of each reporting period based on some reasonable method of allocation. They are charged to expense as incurred.

Record Keeping 40

Record Keeping Billing Auditing Cost Accounting 40

Accounting Tools

SEPTEMBER 19, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is Overhead Application? Overhead application is the assignment of factory overhead costs to the units produced in a reporting period. Overhead application is conducted in order to capitalize certain overhead costs into inventory.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

OCTOBER 11, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Actual Overhead? Actual overhead is the amount of indirect factory costs that are actually incurred by a business. Actual overhead costs are accumulated into one or more cost pools , from which they are assigned to cost objects.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

APRIL 6, 2024

This contains a calculation of the direct labor costs to be incurred during the budget period, based on estimates of which products will be manufactured and what labor rates will be paid. Manufacturing overhead budget. This contains an estimate of manufacturing overhead costs during the budget period.

Budgeting 74

Budgeting Accounts Receivable Accounts Receivable Account Receivables 74

Accounting Tools

NOVEMBER 20, 2023

Labor rate variance. Variable overhead spending variance. Subtract the standard variable overhead cost per unit from the actual cost incurred and multiply the remainder by the total unit quantity of output. Fixed overhead spending variance. Variable overhead efficiency variance. Selling price variance.

Budgeting 75

Budgeting Financial Analysis Billing Cost Accounting 75

Accounting Tools

JULY 18, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is the Rate of Absorption? The rate of absorption is the predetermined rate at which overhead costs are charged to cost objects (such as products, services, or customers).

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

SEPTEMBER 6, 2023

It can be too difficult to derive a cost-effective methodology for the assignment of indirect costs; the result is that many of these costs are considered part of corporate overhead or production overhead, which will exist even if a specific product is not created or an activity does not occur.

Financial Analysis 40

Financial Analysis Cost Accounting Accounting Accounting 40

Accounting Tools

MAY 21, 2023

Related Courses Activity-Based Costing Cost Accounting Fundamentals What is a Standard Labor Rate? There are two definitions of the standard labor rate concept, which are noted below. Price Basis Standard Labor Rate The price basis standard labor rate is the price per hour that is charged to a customer for services rendered.

Payroll 40

Payroll Cost Accounting Billing Tax 40

Accounting Tools

OCTOBER 22, 2023

Gross Profit Variance The gross profit variance measures the ability of a business to generate a profit from its sales and manufacturing capabilities, including all fixed and variable production expenses. Actual net profits are $60,000. This is a favorable variance of $10,000.

Budgeting 40

Budgeting Financial Analysis Tax 40

Accounting Tools

JUNE 9, 2023

Job costing involves the accumulation of the costs of materials, labor, and overhead for a specific job. For example, job costing is appropriate for deriving the cost of constructing a custom machine, designing a software program, constructing a building, or manufacturing a small batch of products.

Cost Accounting 40

Cost Accounting Billing Invoicing Budgeting 40

Remote Quality Bookkeeping

JUNE 19, 2023

This article will explore some of the most common expenses related to running a small business and how you should categorize them when trying to get an accurate picture of the expense side of your business. These overhead costs aren’t always set in stone, but they are recurring expenses unrelated to your production or revenue levels.

Bookkeeping 52

Bookkeeping Budgeting Tax Payroll 52

Remote Quality Bookkeeping

JUNE 19, 2023

This article will explore some of the most common expenses related to running a small business and how you should categorize them when trying to get an accurate picture of the expense side of your business. These overhead costs aren’t always set in stone, but they are recurring expenses unrelated to your production or revenue levels.

Bookkeeping 52

Bookkeeping Budgeting Tax Payroll 52

Accounting Tools

JUNE 8, 2023

Assumes Inclusion of Inventory Losses The calculation assumes that the long-term rate of losses due to theft, obsolescence, and other causes is included in the historical gross profit percentage. Limited Applicability The calculation is most useful in retail situations where a company is simply buying and reselling merchandise.

Financial Statements 40

Financial Statements Auditing Accounting Accounting 40

Accounting Tools

MAY 19, 2023

Activity-based costing (ABC) is a methodology for more precisely allocating overhead costs by assigning them to activities. The system can be employed for the targeted reduction of overhead costs. Doing so should reduce the amount of overhead cost being used.

General Ledger 40

General Ledger Purchase Order Collections Cost Accounting 40

Accounting Tools

JUNE 14, 2023

However, a large number may also mean that management has decided to maintain high inventory levels in order to achieve high order fulfillment rates. Calculation Change A company may change its method for calculating the cost of goods sold, such as by capitalizing more or fewer expenses into overhead.

Accounting 40

Accounting Accounting 40

Accounting Tools

AUGUST 6, 2023

This cost includes all direct materials , direct labor , and factory overhead associated with the construction of the finished goods or services that were sold. Understanding Inventory Turnover When the inventory turnover ratio is high, it indicates that a business is selling off its inventory at a rapid rate.

Purchase Order 40

Purchase Order Budgeting Collections Accounting 40

Accounting Tools

SEPTEMBER 21, 2023

Under this approach, you add together the direct material cost , direct labor cost , and overhead costs for a product, and add to it a markup percentage in order to derive the price of the product. Related Articles Pocket Price Price Ceiling Price Efficiency Revenue Management Second-Order Revenue The Difference Between Margin and Markup

Billing 40

Billing Accounting Accounting 40