ch8 Accounting for overheads.ppt

Ch8 Accounting for overheads 制造费用的核算 Topic list What is overheads Absorption costing ? Ledger entries Topic1 Overheads Overheads is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department. How overhead is shared? Topic2 Absorption costing Absorption costing is a method of accounting for overheads. It is basically a method of sharing out overheads incurred amongst units produced. Absorption costing stages allocation（分配） 1.1 allocation The direct process of charging the cost items to a cost unit or cost centre. Types of cost centre: Production department Production area service department Administration department Selling or a distribute department Overhead cost centre(common expense) Example: p155 1.2 Apportionment — Stage 1 The indirect process of sharing the common overhead (such as heat and light, rent and rates,the canteen and so on) out between the other cost centre. 重点关注 bases of apportionment 1.2 Apportionment — Stage 2 The sharing of the service cost centre overhead costs amongst the production cost centres. Example: A factory consists of two production cost centres (P and Q) and two service cost centres (T and V). The total overheads allocated and apportioned to each cost centre are as follows: The work done by the service cost centres can be represented as follows: The service cost centre costs are apportioned to production cost centres using a method that fully recognises any work done by one service cost centre for another. What are the total overheads for production cost centre P after the reapportionment of all service cost centre costs? A ￡325,600 C ￡355,000 B ￡349,600 D ￡379,000 Either the ‘repeated distribution method’ (交互分配法)or the ‘algebraic method’ （代数法）may be used to apportion service cost centre overheads to production cost centres where reciprocal se