Absorption and Variable Costing with Over- and Underapplied Overhead Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows: Manufacturing costs (per unit): Direct materials (3 lbs. © 1.45) $4.35 Direct labor (0.4 hr. © 17.00) 6.80 Variable overhead (0.4 hr. © 4.00) 1.60 Fixed overhead (0.4 hr. © 8.00) 3.20 Total $15.95 Selling and administrative costs: Variable $1.60 per unit Fixed $221,000 During the year, the company had the following activity: Units produced Units sold 26,500 23,850 Unit selling price $35 Direct labor hours worked 10,600 Actual fixed overhead was $12,000 less than budgeted fixed overhead. Budgeted variable overhead was $4,600 less than the actual variable overhead. The company used an expected actual activity level of 10,600 direc the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold. Required:

Q: Q.How do managers plan for variable overhead costs?

A: The cost which is dependent upon the level of output and changes if the level of output fluctuates…

Q: How does the planning of fixed overhead costs differ from the planning of variable overhead costs?

A: Variable cost: The cost which fluctuates on the basis of the output level produced. The variable…

Q: How do managers plan for variable overhead costs?

A: Variable Cost: The cost which fluctuates on the basis of the output level produced. The variable…

Q: Describe one advantage and one disadvantage of prorating overapplied or underapplied overhead.

A:

Q: Define the terms under-allocated and over-allocated overhead. What factors contribute to each…

A: Expenses associated with manufacturing overhead: "Manufacturing overhead costs, also known as…

Q: TRUE OR FALSE When absorption costing is used for external reporting, variable costing can still be…

A: There are various approaches which can be prepared for reporting purpose. Two of which are variable…

Q: Is it possible to have under- or overapplied overhead costs in a process costing system? Explain.

A: Process Costing: Process costing is a method of cost accounting, which is used when the production…

Q: Describe management’s use of absorption and variable costing.

A: Absorption costing is also known as Full absorption costing. It is one of the managerial accounting…

Q: Explain variable overhead costs.

A: Variable Costing: “Variable costing is a method that allocates only variable manufacturing costs to…

Q: Describe planning for variable overhead costs.

A: Variable Cost: The cost which is not fixed is called a variable cost. This cost is directly…

Q: Variable manufacturing overhead costs are treated as period costs under both absorption and variable…

A: Variable manufacturing overhead cost is treated as product cost under both absorption and variable…

Q: Production cost under marginal costing includes [A] prime cost only [B] prime cost and fixed…

A: Under marginal costing, Fixed costs are not considered while calculating production cost. Marginal…

Q: Explain the difference between  - Absorption and Marginal Costing

A: The Question has covered the concept of Absorption and Marginal Costing. Absorption Costing The…

Q: Activity based Costing enables overhead cost to be ___________assigned to cost objects. a. Over b.…

A: Activity Based Costing is a method of accounting which is used to find the cost of activities…

Q: Variable Costing, Absorption Costing During its first year of operations, Snobegon, Inc. (located in…

A: Under Variable Costing, Contribution margin = Sales - Variable cost Operating Income = Contribution…

Q: Beginning inventory Units produced 45,000 Units sold 40,000 $ 81 Selling price per unit Selling and…

A: Formula: Unit cost under Variable costing: = Direct materials +Direct labor + Variable manufacturing…

Q: Discuss how traditional methods of allocating overhead to products may not provide a good measure of…

A: The overhead costs are allocated to production using various methods as traditional costing and…

Q: what are the two main factors that give to over/under absorption of overhead ?

A: When overheads are absorbed in a rate depending on actual data, the absorbed overhead should be…

Q: What are non-unit level overhead activities? Non-unit based cost drivers? Give some examples.

A: Under Activity-based costing, different overhead activities are identified and the cost of all such…

Q: why is adjustment necessary for under and over absorption of overheads in the absorption costing…

A: Here discuss about the details of adjustment which are needed for the over and under absorption of…

Q: Define fixed overhead costs.

A: Definition:   Manufacturing Overheads: The cost which is indirectly related to the production is…

Q: Why functional (or volume)- based costing approaches may produce distorted costs.

A: In a functional-based cost accounting system, costs are allocated to cost objects using unit-based…

Q: Advantages and disadvantages of Activity-Based Costing (ABC), Fixed Overhead Absorption, and…

A: Activity-based Costing (ABC): Activity-based costing (ABC) is a costing method that assigns costs to…

Q: What is Over-Absorption of Fixed Overhead?

A: Over Absorption of fixed Overhead Over absorption of overhead is define as when actual overhead…

Q: Why are fixed-overhead costs sometimes called capacity-producing costs?

A: Overhead costs Overhead cost or overhead expenses refer to the cost which is used to increase the…

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.  

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.