2

process costing:

PROCESS AC
OWIP: sản phẩm chưa làn xong trên dây chuyên unit $
OWIP xx xxx FG
DM xx xxx CWIP
DL xxx
MOH xxx
xx xxx
cost item D or I
A D
B I
C D
D D
E I
F I
G I
H D
cost item D or I
A D
B I
C I
D D
E D
F I
G D
H I
I I
1 annual relevant range: 0 -52,800 units/year
monthly capacity = 4,400 units
annual capacity = 12 x 4,400 = 52,800 units
V or F
F annual fee = fixed
F manager's salary (lương
V the more tshirt trade th
F subcription = fixed
F
V coffee can provide for e
F chi phí dọn dẹp k thay đ
V the more tshirt sold the
V or F
V used on recliners
F
F
V
V
V chỉ có 1 hóa đơn điện ch
V
F for whole factory
F
 2 annual manufactoring cocts
depreciation of machine ($9,500/10) 950
rent and other MOH ($1,300 x 12) 15,600
total fixed costs 16,550
annual variable manufactoring costs 3,720
material costs ($0.1 x 3,100 x12)

3 new relevant range: 52,800 - 105,500 units sản lượng gấp 2 lần năm ngoái)
total annual fixed manufacturing
depreciation of machine ($950 x 2) 1,900
rent and other 15,600
total 17,500
annual variable manufactoring 6,696
material costs (90% x $0.1 x 3,100 x12)

inventoriable costs (chi phí sản xuất làm ra sản phẩm đều ghi nhận vào đây)
DM
DL
MOH
period costs
selling and admin

A inventoriable (MOH)
B period
C inventoriable (MOH)
D period
E inventoriable (DM)
F inventoriable (MOH)

OWIP + Manufacturing costs = COGM + CW suy ra OWIP + DM + DL + MOH

DM / DL / MOH

unit $
xx xxx
xx xxx

xx xxx

A inventoriable cost (merchandising inventory)

B inventoriable cost (MOH)
C period cost (selling exp)
D period cost (service company)
E inventoriable cost (manufacturing cost)
F period cost (marketing)
G period cost (service company)
H period cost (selling exp)
I period cost (selling cost)

chi phí nào liên quan trực tiếp đến sản xuất thì ghi vào inventoriable cost
chi phí nào k liên quan trực tiếp đến sản xuất thì ghi vào period cost

OWIP + Manufactoring costs incurred = COGM + CWIP

DM / DL / MOH
OWIP + DM + DL + MOH = COGM + CWIP
FOH / VOH
Beg DM inventory + DM purchased = DM used + ending DM inventory
(DM)2
Beg FG inventory + COGM(2) = COGS + Ending FG inventory

cost of FG available for sale

 merchandising (trading inven
annual fee = fixed manufactoring: input -> man
manager's salary (lương tháng), wage (lương sản phẩm)
the more tshirt trade the more
subcription = fixed service (NO INVENTORY) surv

coffee can provide for everuy customers not only for apparel section
chi phí dọn dẹp k thay đổi theo lượn áo bán ra
the more tshirt sold the more freight

used on recliners

chỉ có 1 hóa đơn điện cho toàn bộ nhà máy sau đo phải phân bổ cho từng sp

for whole factory

-
gấp 2 lần năm ngoái)
demand next year = 310 x 2 x 12 = 74,440 units
need to buy a new machine

đều ghi nhận vào đây)

OWIP + DM + DL + MOH = COGM + CWIP

merchandising (trading inventory) buy material and then resell to customer
manufactoring: input -> manufactoring ->output material
WIP
FG
service (NO INVENTORY) survice experience and serviec to
Summary
standard usage = 4DLH/unit budgeted VOH rate = $14/DLH
Budgeted output = 1,100 units actual output = 1,150 units
actual VOH = $65,205 actual input = 4,830 DLHs

spending variance = (actual rate - budgeted rate) x actual input

= actual VOH - budgeted rate x actual input
= $65,205 - $14 x 4,830
= $65,205 - $67,620
= $2,415F

Efficiency variance = (actual rate - budgeted rate) x actual input

= (4,830 - 4 x 1,150) x $14
= $3,220U

Flexible budget variance = spending variance + efficience variance

= $2,415 + $3,220
= 805U
(= actual VOH - budgeted input allowed for actual output x bugeted rate)
(= $65,205 - 4 x 1,150) = 805U

Spending variance of $2,415F rasults from lower actual VOH rate ($65,205/4,830)
The comp may be able to control/ save cost such as utilities or purchases inputs a

Unfavorable effience variance of $3,22,U occurs because the comp actually uses m
The reason could be the unit of output is more complex or production is more com

budgeted FOH = $70,400

actual Foh = $72,000

Spending variance = actual FOH - budgeted FOH

Flexible budget variance = $72,200 - $70,400 = $1,800U
Production volume variance = flexible budget - budgeted input allowed for actual
= $70,400 - 4 x $16
= $70,400 - $73,600
= $3,200F
Budgeted FOH rate = $70,400/4 x 1,100 = $16/DLH
Total FOH variance = spending variance + production vo;ume variance
= $1,800U + $3,200F = $1,400F
FOH spending variance of $1,800U because actual costs are higher tha budgeted.
FOH production volume variamce of $3,200F occurs because the comp utilizes cap
Summary
standard usage = DLH/unit budgeted VOH rate = $/DLH
budgeted output = unit actual output = 2,800,000 un
actual VOH = $680,400 actual input = 50,400 DLHs

allocation base = 0.02 x 3,200,000 = 64,000 DLHs

Flexible budget variance = actual VOH - budgeted input allowed for actual output
= $680,400 - 0.02 x 2,800,000 x $10
= $680,400 - $560,000
= $120,400U

Spending variance = (actual rate - budgeted rate) x actual input

= actual VOH - budgeted rate x actual input
= $680,400 - $10 X 50,400
= $680,400 - $504,000
= $176,400U

Efficiency variance = (actual input - budgeted input allowed for actual output) x b
= (50,400 - 0.02 X 2,800,000) X $10
= $56,000F

Spending variance of $176,000U arises becaude the comp needs to pay more for t

budgeted FOH = $4/DLH

actual FOH = $272,000

Spending variance = actual FOH - budgeted FOH

Flexible budget variance = $272,200 - $256,400 = $16,000U

Production volume variance = flexible budget - budgeted input allowed for actual
= $256,400 - 0.02 x 2,800,000 x $4
= $256,400 - $224,000
= $32,000U

Budgeted FOH rate = $4 x 0.02 x 3,200,00 = $256,000

Total FOH variance = spending variance + production volume variance

= $16,000U + $32,000U = $48,000U

FOH spending variance of $16,000U because actual costs are higher than budgete
FOH production volume variamce of $32,000F occurs because the comp produces
 VOH rate = $14/DLH
tput = 1,150 units
ut = 4,830 DLHs

actual input

ence variance

utput x bugeted rate)

ual VOH rate ($65,205/4,830) $13.5 compared to budgeted rate of $14.

utilities or purchases inputs at a lower price.

ause the comp actually uses more DLHs (4,830) than they expect for the actual level of output (4,600).
plex or production is more complicated that reqiures more hours labor of work.

geted input allowed for actual output x bedgeted rate

n vo;ume variance

osts are higher tha budgeted.

because the comp utilizes capacity more intensively.
 budgeted VOH rate = $/DLH
actual output = 2,800,000 units
actual input = 50,400 DLHs

put allowed for actual output x budgeted

actual input
actual input

allowed for actual output) x budgeted rate

comp needs to pay more for the VOH ($680,400/50,400) $13.5/hour compared to $10 budget. The reason could be

geted input allowed for actual output x bedgeted rate

2,800,000 x $4

n volume variance

costs are higher than budgeted.

s because the comp produces less than the capacity.
labor cost = $30/hour
sales provision of 10%
max supply of materials = 2,000 x $10 = $20,000

1. identify constrain: material supply

2. determine contribution margin/unit of contrain
CM/unit = net unit selling price - variance cost/unit
CM/kg = Cmper unit / kg used per unit

A B C D
USP 70 60 100 80
Saes provision 7 6 10 8
Net sale per unit 63 54 90 72
Less VC per unit
DM 5 3 6 8
($10*0.5) ($10*0.3) ($10*0.6) ($10*0.8)

DL 30 36 60 30
($30*1) ($30*1.2) ($30*2) ($30*1)
CM per unit $28 $15 $24 $34
$56 $50 $40 $42.5
CM per kg ($28/0.5) ($15/0.3) ($24/0.6) ($34/0.8)
Ranking 1 2 4 3
Demand (in unit) 3,000 8,000 4,000 5,000
Materials needed (kg) 1,500 kg 500
(3,000*0.5) (2,000-1,500)
Units produced 3,000 1,667
(500/0.3)
Contribution $84,000 $25,000
($56*1,500) ($50*500)

3. Ranking products based on contribution margin per unit of constrain

Maximun contribution from the product mix (3,000 units of A and 1,667 units of B)
(= $84,000 + $25,000 = $109,000)

capacity = 4,000 machine hours - scare resource

decision made to maximine operating income
constraint = 4,000 machine hours
1. identify constraint - machine hours
2. calculate contribution margin per machine hour
3. ranking periority is give to customer with higher contribution margin per machine hour

Trent
contribution margin $42
per machine hour ($126,000/3,000MHs)
contribution margin $42
per machine hour ($126,000/3,000MHs)
ranking 2
demand machine 2,000 MHs
hour (4,000-2,000)
$84,000
contribution
($42*2,000)
fixed cost
operating income

Upgrade
Variance
$3,375,000
maufactoring
($150*7,500*3)
cost
Current disposal
Equipment cost $3,000,000
Total $6,375,000

1. Techguide will be better off by $337,500 ($6,375,000-$6,037,500) over 3 years if it replace the current equipmen
2. Techguide will choose to replace if costs of repacing equipment are lower than upgrading
(=$6,375,000 - $1,687,500 + 450,000 = $5,137,500)
n per machine hour

Julie Total
$55
($55,000/1,000
 ($55,000/1,000
MHs)
1
2,000 MHs

$110,000 $194,000
($55*2,000) ($84,000+$110,000)
$170,000
$24,000

Replace
$1,678,500
($75*7,500*3)
-450,000
$4,800,000
$6,037,500

if it replace the current equipment

VC = $4,000
FC = $17,600

1. Single rate
a)Practical capacity
Cost rate = Budgeted cost/Practical capacity
= $21,600/80,000
= $0.27 per KwH
b) Expected monthly usage
Cost rate = Budgeted cost/Expected monthly usage
= $21,600/40,000
= $0.54 per KwH

Livonia Warren Dearborn

Cost $4,320 $5,940 $6,210
allocated ($0.27*16,000) ($0.27*22,000) ($0.27*23,000)
(a)
Cost $6,480 $5,400 $3,320
allocated ($0.54*12,000) ($0.54*10,000) ($0.54*8,000)
(b)

2. Dual rate
Variable cost rate = VC/Expected monthly usage
= $4,000/40,000
= $0.1 per KwH usage
Fixed cost rate = FC/Practical capacity
= $17,600/80,000
= $0.22 per KwH capacity

Livonia Warren Dearborn

$1,200 $1,000 $800
VC
($0.1*12,000) ($0.1*10,000) ($0.1*8,000)
$3,520 $4,840 $5,060
FC
($0.22*16,000) ($0.22*22,000) ($0.1*23,000)
Total cost $4,720 $5,840 $5,860

1. Rate per roundtrip

a) Budgeted costs/Budgeted round-trip = $115,000/50 = $2,300

Dark
$69,000
Budgeted cost rate*Budgeted round-trip ($2,300*30)
b) Budgeted costs/Budgeted round-trip $115,000/50 = $2,300

Dark
$69,000
Budgeted cost rate*Actual round-trip ($2,300*30)

c) Actual costs/Actual round-trip = $96,750/45 = $2,150

Dark
$64,500
Actual cost rate*Actual round-trip ($2,150*30)

2.Advabtage and disadvantage of each method

Direct method
Budgeted costs Government Corporation
$600,000 $320,000 $280,000
AS (600,000*0.4/0.75) (600,000*0.35/0.75)

$2,400,000 $800,000 $1,600,000

IS (2,400,000*0.3/0.9) (2,400,000*0.6/0.9)
Total $1,120,000 $1,880,000

Step-down, allocate AS first

AS IS Government
Cost to be
$600,000 $2,400,000
allocated

Allocated IS ($600,000) $150,000 $240,000

(600,000*0.25) (600,000*0.4)
$850,000
Allocated AS ($2,550,000)
(2,550,000*0.3/0.9)
Total 0 0 $1,090,000

Step-down, allocate IS first

AS IS Government
Cost to be
$600,000 $2,400,000
allocated

Allocated IS $240,000 ($2,400,000) $720,000

(2,400,000*0.1) ($2,400,000*0.3)
 $448,000
Allocated AS ($840,000)
(840,000*0.4/0.75)
Total 0 0 $1,168,000

Compare results
Government Corporation
Direct $1,120,000 $1,880,000 bộ phận nào dùng nhìu chi phí hơn sẽ
phân bổ lệch Step down - AS first $1,090,000 $1,910,000
Step down - IS first $1,168,000 $1,832,000

Let AS - the total costs to be allocated of AS

Let IS - the total cots to be allocated of IS

AS = $600,000 + 0.1IS AS = $861,538

IS = $2,400,000 + 0.25AS IS = $2,615,385

AS IS Govt
Cost to be $600,000 $2,400,000
allocated

Allocate AS ($861,538) $215,385 $344,615

($861,538*0.25)

Allocate IS $261,538 ($2,615,385) $784,616

($2,615,385*0.1) ($861,538*0.4)
Total 0 0 $1,129,231
Westland Total

$5,130 $21,600
($0.27*19,000)

$5,400 $21,600
($0.54*10,000)

Westland Total
$1,000
4,000
($0.1*10,000)
$4,180
17,600
($0.22*19,000)
$5,189 21,600

Milk Total
$46,000 $115,000.00
($2,300*20)
 Milk Total
$34,500 $103,500
($2,300*15)

Milk Total
$32,250 $96,750
($2,150*15)

Corporatiom

$210,000
(600,000*0.35)
$1,700,000
(2,550,000*0.6/0.9)
$1,910,000

Corporatiom

$1,440,000
(2,400,000*0.6)
 $392,000
(840,000*0.35/0.75)
$1,832,000

ào dùng nhìu chi phí hơn sẽ chịu nhìu chi phí của bộ phện phục vụ hơn

Corp

$301,538
($861,538*0.35)
$1,569,231
($2,615,385*0.6)
$1,870,769
 Step 1: Step 2: Equivalent un
Physical cost Tranferred in
WIP beginning (June 1) 60
Transferred-in during June 100
to account for 160

Completed and transferred out during June 120 120

WIP ending (31 June) 40 40
To account for 160 160

Total cost Tranferred in

Step 3: WIP beginning 84,000 60,000
Costs added during June 206,400 117,000
To total cost accounted for 290,400 177,000

Step 4: Cost per equivalnet unit $1,106.25

Step 5: Completed and transferred out during June $132,750.00

WIP, ending (31 June) $56,592.86 $44,250.00
Total costs accounted for $56,592.86 $177,000.00

Physical cost Tranferred in

1 WIP beginning 7,500
Transferred-in during June 22,500
to account for 30,000

Completed and transferred out during June 26,300 26,300

WIP ending 3,700 3,700
To account for 30,000 30,000

Total cost Tranferred in

2 WIP beginning 3,767,960 2,932,500
Costs added during October 21,378,100 7,717,500
To total cost accounted for 25,146,060 10,650,000
Cost per EU 355
 $9,336,500
3
Completed and transferred out during October (355*26,300)
$1,313,500
WIP ending (31 October) (355*3,700)

Step 1: Step 2: Equivalent units

Physical cost DM
WIP beginning (April 1) 60
Transferred-in during April 510
To account for 570

Completed and transferred out during June 450 450

WIP ending (31 April) 120 120
To account for 570 570

Total cost DM
Step 3: WIP beginning $1,686 $1,530
Costs added during April $29,394 $17,850
To total cost accounted for $31,080 $19,380

$34
Step 4: Cost per equivalnet unit ($19,380/570)

$15,300
Step 5: Completed and transferred out during June (34*450)
$4,080
WIP, ending (31 April) (34*120)
Total costs accounted for
Step 2: Equivalent units
DM Conversion costs

120 120
0 20
120 140

DM Conversion costs
0 24,000
27,000 62,400
27,000 86,400

$225.00 $617.14

$27,000.00 $74,057.14
$0.00 $12,342.86
$27,000.00 $86,400.00

DM Conversion costs

26,300 26,300
0 2,220
26,300 28,520

DM Conversion costs
0 835,460
9,704,700 3,955,900
$ 9,704,700.00 4,791,360
369 168
 $9,704,700 $4,418,400
(369*26,300) (168*26,300)
$150,960
$0
(168*2,220)

Step 2: Equivalent units

Conversion costs

450
18
468

Conversion costs
$156
$11,544
$11,700

$25
($11,700/468)

$11,250
(25*450)
$450
(25*18)