Cost Accounting:

Objectives

After completing this chapter, you should be able to answer the following questions:

LO$.1$ Why and how are overhead costs allocated to products and services?

LO$.2$ What causes underapplied or overapplied overhead, and how is it treated at

the end of a period?

LO$.3$ What impact do different capacity measures have on setting predetermined

overhead rates?

LO$.4$ How are the high$-$low method and least squares regression analysis used in

analyzing mixed costs?

LO$.5$ How do managers use flexible budgets to set predetermined overhead

rates?

LO$.6$ How do absorption and variable costing differ?

LO$.7$ How do changes in sales or production levels affect net income computed

under absorption and variable costing?