StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Participation Exercise #4 - Assignment Example

Cite this document
Summary
In the world of manufacturing it is important for management to control its overhead and understand how it is assigned to products because of its impact on the measurement of individual products profitability. Thereafter it is reported in the company financial statements…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.8% of users find it useful
Participation Exercise #4
Read Text Preview

Extract of sample "Participation Exercise #4"

Overhead costs In the world of manufacturing it is important for management to control its overhead and understand how it is assigned to products because of its impact on the measurement of individual products profitability. Thereafter it is reported in the company financial statements. Overhead is viewed as two types of costs namely; manufacturing overhead and nonmanufacturing costs. Manufacturing overhead refers to indirect-factory related costs that are incurred when a product is manufactured.

Electricity used to operate the factory equipment is an example of manufacturing overhead (Kimmel, Weygandt and Kieso). Manufacturer’s expenses that occur apart from the actual manufacturing is the second component of overhead (nonmanufacturing costs).Predetermined overhead rate is useful in ‘applying’ overhead cost in a manufacturing setup. It is calculated at the beginning of the company’s accounting cycle. The formula for calculating the pre-determined overhead rate is as follows: Predetermined Estimated total manufacturing overhead costs Overhead Rate.

= Estimated total activity base (Labour hours etc)According to generally accepted accounting principles (GAAP) manufacturing overhead must be included in the cost of Work in Process Inventory and Finished Goods Inventory on a manufacturer’s balance sheet. Pre-determined rate therefore is used to divide and allocate manufacturing overhead costs to each unit produced. It is defined as the rate used to apply manufacturing overhead to work- in- process inventory (Kimmel, Weygandt and Kieso).

Limitations of using a predetermined overhead.From the formula for calculating predetermined overhead rate, overhead is obtained by multiplying predetermined overhead rate by actual driver units. The difference between applied overhead and the amount of overhead actually incurred is referred to as over-or-under-applied overhead. Over-applied overhead increases the cost of production hence lower the company’s level profits. Under-applied overhead gives high rates of profits which may not be the correct position of the organization (Kimmel, Weygandt and Kieso).

Work citedKimmel, Paul D, Jerry J Weygandt, and Donald E Kieso. Accounting. Hoboken, N.J.: Wiley, 2011. Print.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Participation Exercise #4 Assignment Example | Topics and Well Written Essays - 250 words”, n.d.)
Participation Exercise #4 Assignment Example | Topics and Well Written Essays - 250 words. Retrieved from https://studentshare.org/finance-accounting/1691303-participation-exercise-4
(Participation Exercise #4 Assignment Example | Topics and Well Written Essays - 250 Words)
Participation Exercise #4 Assignment Example | Topics and Well Written Essays - 250 Words. https://studentshare.org/finance-accounting/1691303-participation-exercise-4.
“Participation Exercise #4 Assignment Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/finance-accounting/1691303-participation-exercise-4.
  • Cited: 0 times

CHECK THESE SAMPLES OF Participation Exercise #4

Prescription Methods in Pulmonary Rehabilitation

In 2014, all the patients, who participate in pulmonary rehabilitation at the Repatriation General Hospital, will be asked to do this maximal exercise cycle test as part of the standard pre pulmonary rehabilitation assessment.... If you participate in this research project, there is a 50% chance that you will and a 50% chance that you will not get this maximal exercise cycle test (we will decide this with the help of a computer program).... If you will not be asked to do the maximal exercise cycle test, you will be offered the same pulmonary rehabilitation program that has been offered in the Repatriation General Hospital until the end of 2013....
5 Pages (1250 words) Essay

Sport in Australia

Speaking to reporters after the launch of the report, Peter McKay, the Group's chairperson, said that most people participated in sporting activities in order to maintain their physical fitness or as pastime activity.... In effect, sports provided a major leisure activity for… “This possibly explains why few Australians are engaged in professional sports,” said Peter McKay....
5 Pages (1250 words) Assignment

Week 4 discussion

There is need for adoption of a uniform structure throughout the exercise as this presents participants with a level playing ground.... Any exercise must have certain objectives to be met and as such defining objectives is important in designing cyber competitions.... it is very important to decide the overall topology over which the competition is run keeping in mind the available/chosen equipment for the exercise.... The next consideration after deciding on the topology is to formulate the exercise scenario, come up with rules to govern the competition and also define the metrics for evaluating the competition's efficiency basing on the set objectives....
2 Pages (500 words) Assignment

Participation Exercise #5

These guide one in decisions on whether participation exercise 5: Question One: Any potential business needs to identify their point of making profits and the costs they need give them a profit.... The business incurs fixed costs and variable costs.... The variable costs vary based on volumes available for sale hence having an impact on the profits that the… Having volumes from which the organization obtains profit defines the breakeven point of that business....
1 Pages (250 words) Assignment

Fixed Cost vs. Variable Cost

The fixed costs remain the same throughout or for a longer period in the business while the… These and other factors such as the selling price allocated to the products, and the volumes produced impact the breakeven point that the business has to consider. Variable costs include costs incurred in the production of each participation exercise 6: To achieve a breakeven point, there is need to have volumes that provide for a profit afterreduction of the costs incurred....
1 Pages (250 words) Assignment

Participation Exercise #7:

The failure of the segments to provide the necessary profits originates from the untraceable participation exercise #7 In development of business profits basing on the selling prices and the costs incurred, some products may affect the company's profitability dragging it further due to their failure to surpass their costs and provide profits....
1 Pages (250 words) Assignment

Participation Exercise #8

It also considers the fixed and variable costs referred to as participation exercise#8 Both absorption costing and variable costing provides good costing methods to businesses.... The two provide different costing approaches that distinguish them.... The absorption costing system is more acceptable under the Generally Acceptable Accounting Systems due to its efficiency… Absorption costing is a system of accounting that takes into account the all costs incurred in the production process ranging from direct costs of labor, and materials....
1 Pages (250 words) Assignment

Participation Exercise #9

The costing system easily allocates the actual costs that each activity… The traditional costing system works better for retail companies while the traditional system works better for manufacturing participation exercise #9: Question One: What is the difference between “traditional” and “activity-based” costing?...
1 Pages (250 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us