管理会计课后习题Ronald Hilton 第七章.docx

CHAPTER 7A CLOSER LOOK AT OVERHEAD COSTSANSWERS TO REVIEW QUESTIONSWhen we refer to manufacturing overhead costs we are describing the indirect manufacturing costs of products. These are the factory costs that are incurred in producing products but cannot be traced directly to them. They include all manufacturing costs other than direct material and direct labour, such as the costs of supervision, power, factory security and so on. From a product costing perspective, we can expand our definition of overheads to include all product-related costs other than direct costs as managers may require comprehensive estimates of product costs for making product-related decisions (see Chapter 4). However, as Australian accounting standard AASB 102 Inventories requires that inventory valuations in external reports of manufacturing businesses only include manufacturing costs, a distinction is drawn between indirect costs within the manufacturing area, called manufacturing overhead, and other indirect costs incurred along the value chain, upstream and downstream, of the manufacturing or production area. Upstream costs and downstream costs, regardless of whether the entity is a manufacturer or a service provider include costs incurred before and after the production process, such as research and development, design and supply costs, marketing, distribution and customer service costs. The indirect costs of responsibility centres are costs assigned to a unit in an organisation such as a department or division where a manager is held accountable for performance. Indirect costs cannot be traced directly to the centre so they need to be assigned instead. Cost object: is something that is assigned a separate measure of cost because management need such cost information; for example, responsibility centres, products, projects and so on. (The various production departments in a manufacturing firm also provide examples of cost objects. For example, the material handling cost pool may be al