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Summary Samenvatting FIDM

- Financial Information and Decision Making
- P. Perego
- 2017 - 2018
- Erasmus Universiteit Rotterdam (Erasmus Universiteit Rotterdam, Rotterdam)
- Accountancy and Financial Management
258 Flashcards & Notes
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A snapshot of the summary - Samenvatting FIDM

  • 1 Eigen flashcards lecture 1, 2, 3

  • Indirect costs are related to a particular cost object but cannot be traced to it because
    - cost element is shared among cost objects (common costs)
    - physically impossible to trace
    - not cost effective to trace
  • Criticism traditional allocation method
    - Assumes all overhead is volume related
    - Organization-wide or departmental rates all related to single activity measure
    - Departmental focus, not process focus
    - Focus on costs incurred, not cause of costs
  • Over-absorbed overhead/over-recovery of overhead
    Actual overhead < absorbed overhead
  • Cost allocations act as
    an internal tax system
  • Joint costing: Physical measurement method
    Determine weighing of joint cost allocated accordingly with production in kg
  • Joint costing: Sales value at split-off method
    Determine weighing of joint cost allocated accordingly with sales value
  • Variable costing (=direct costing/marginal costing)
    Excludes fixed costs from product costs and writes them off in the year that the costs are incurred.
    Operating income = sales x (price - full costs) + (actual production - normal production) x fixed OH rate
  • Dysfunctional effect under absorption costing:
    - Managers can defer recognition of fixed manufacturing costs by building ending inventory
    - Incentive to over-produce
  • For which type of costing does level of sales determine break-even point
    Variable costing
  • Examples batch-related activities
    set-ups, purchase ordering and first-item inspection activities
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