Terms/Definitions
This is the most basic method of allocating overhead costs.
What is the plantwide overhead rate method?
These types of activities are carried out regardless of anything else.
What are Organization-Sustaining Activities?
This is the term used to describe a compilation of all budgets discussed in Chapter 8.
What is a master budget?
This is a more accurate method of allocating overhead costs because it uses multiple rates, but is not the most accurate.
What is departmental overhead rates method?
These types of activities are performed every time a batch is processed.
What are batch-level activities?
This is the first budget prepared when creating a master budget.
What is the sales budget?
This is the most accurate method of allocating overhead costs, but requires the most amount of work.
What is activity based costing?
This types of activities relate to specific customers.
What are Customer-Level Activities?
This noncash expense is subtracted from the MOH and Selling & Admin. Budgets to derive a cash disbursed line at the end.
What is depreciation?
This is the term used to describe what causes increases or decreases in levels of activity for activity based costing.
What are activity drivers?
These types of activities relate to specific products.
What are Product-Level Activities?
A general rule of thumb to follow when preparing the production budget or DM budget is to do this with ending and beginning inventory.
What is add ending inventory and subtract beginning inventory?
This is the formula used to calculate the activity rate for an activity cost pool.
What is Activity Estimated OH Cost / Estimated Activity Base?
These types of activities are performed every time a unit is produced.
What are Unit-Level Activities?
This is the order in which we should prepare all budgets.
What is the Sales Budget -> Production Budget -> DM Budget -> DL Budget -> MOH Budget -> Selling & Admin. Budget ->Cash Budget -> Budgeted Financial Statements?