Summary Samenvatting FIDM

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