金陵科技学院-管理会计（双语）Lecture 4.pptVIP

120,000 240 210,000 100 = $500 per purchase order = $2,100 per set up Assign OH costs to products Volume-related: A gets 2,000 x $5 = $10,000 B gets 20,000 x $5 = $100,000 Purchasing: A gets 80 x $500 = $40,000 B gets 160 x $500 = $80,000 Set-up: A gets 40 x $2,100 = $84,000 B gets 60 x $2,100 = $126,000 Total OH per product add all allocations: A = $10,000+$40,000+$84,000 =$134,000 divided by 1,000 =$134 per unit B = $100,000+$80,000+$126,000= $306,000 divided by 10,000 =$30.60 per unit Comparision Product A Product B Total OH allocated to A and B Traditional $40 unit $40 unit $40,000 + $400,000 = $440,000 ABC $134 unit $30.60 unit $134,000 + $306,000 = $440,000 Under or over? Under by $94 unit Over by $9.40 unit SAME AMOUNTS ! Total amount of OH($440,000)is allocated to all products whether the plant-wide rate or ABC rate is used. ABC does not change the amount of OH to be allocated but the amount of OH shared by each product. Firms produce only one product? ADVANTAGES OF ABC Increased accuracy of OH allocation in multiple-product firms.Why? Because more cost drivers Analysis of costs may indicate non-value added costs which can be reduced or eliminated. How ABC Developed ABC resulted from: Change in manufacturing environment, and Dissatisfaction with inaccuracies of existing costing systems. e.g. Costing figures don’t make sense Additional Payroll Issues LAST WEEK’S LECTURE, entry for payroll was: Wages DR 64,000 Wages Payable CR 64,000 This ignores payroll-related issues that must always be considered: Withholdings Payroll on-costs 1. WITHHOLDINGS Withholdings Items retained from employee’s wage and forwarded to third party on employee’s behalf They include items such as: Income tax Employee contributions to superannuation Health insurance payments etc Lecture example (1) entry would be: DR WAGES 64,000 CR WAGES PAYABLE 44,800(70%of $64000) CR INCOME TAX PAYABLE 19,200(30%of $64000) When amounts paid, a