COST SEGREGATION

V𝐚𝐫𝐢𝐚𝐛𝐥𝐞 𝐂𝐨𝐬𝐭=(𝒉𝒊𝒈𝒉𝒆𝒔𝒕 𝒍𝒆𝒗𝒆𝒍 𝒄𝒐𝒔𝒕

− 𝑳𝒐𝒘𝒆𝒔𝒕 𝒍𝒆𝒗𝒆𝒍 𝒄𝒐𝒔𝒕/𝑯𝒊𝒈𝒉𝒆𝒔𝒕
High-Low Point Method
𝒍𝒆𝒗𝒆𝒍 𝒉𝒐𝒖𝒓 − 𝑳𝒐𝒘𝒆𝒔𝒕 𝒍𝒆𝒗𝒆𝒍 𝒉𝒐𝒖𝒓
𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 =𝒕𝒐𝒕𝒂𝒍 𝒄𝒐𝒔𝒕 −(𝒉𝒊𝒈𝒉𝒆𝒔𝒕 𝒍𝒆𝒗𝒆𝒍 𝒉𝒐𝒖𝒓 ×
𝑽𝑪 𝒑𝒆𝒓 𝒉𝒓)
𝒕𝒐𝒕𝒂𝒍 𝒄𝒐𝒔𝒕 =(𝒄𝒐𝒔𝒕 𝒕𝒐 𝒔𝒆𝒓𝒗𝒆 × 𝑽𝑪 𝒑𝒆𝒓 𝒉𝒓) +
𝒇𝒊𝒙𝒆𝒅 𝒄𝒐𝒔𝒕

𝑺𝒍𝒐𝒑𝒆 (𝑽𝑪=𝒏 (∑▒𝒙𝒚)− (∑▒𝒙)

(∑▒𝒚) /𝒏 (∑▒𝒙^𝟐)−(∑▒𝒙)^𝟐
Least square regression method

hours maintenance cost

14,347,200,000.00 ### 3,700 37,000 ###
12,673,200,000.00 ### 1,600 23,000 ###
1,674,000,000.00 ### 4,100 37,000 ###
### 4,900 47,000 ###
1,494,000,000.00 ### 3,300 33,000 ###
1,253,160,000.00 ### 4,400 39,000 ###
240,840,000.00 ### 3,500 32,000 ###
### 4,000 33,000 ###
6.9507 ### 1,200 17,000 ###
VC ### 1,300 18,000 ###
### 1,800 22,000 ###
### 1,600 20,000 ###
### 35,400.00 358,000.00 ###

37,000.00 total cos𝒕=[𝑽𝑪 (𝑿) + 𝑭𝑪]

25,717.49 N − 𝑻𝑪 = 𝑭𝑪
11,282.51 Y = VC + FC
FC

hours maintenance cost

2,262,000.00 4,000.00 20 200 400.00
1,890,000.00 25,000.00 50 500 2,500.00
372,000.00 13,500.00 30 450 900.00
5,000.00 20 250 400.00
218,400.00 1,500.00 10 150 100.00
176,400.00 39,000.00 60 650 3,600.00
42,000.00 7,500.00 30 250 900.00
20,000.00 40 500 1,600.00
 8.8571 33,000.00 60 550 3,600.00
VC 30,000.00 50 600 2,500.00
8,000.00 40 200 1,600.00
2,000.00 10 200 100.00
188,500.00 420.00 4,500.00 18,200.00

4,500.00 total cos𝒕=[𝑽𝑪 (𝑿) + 𝑭𝑪]

3,720.00 N − 𝑻𝑪 = 𝑭𝑪
780.00 Y = VC + FC
FC
65.00
EFMC

M1 Exercise 1-3
Sales 1,950,000
COGS
Inv beg 195,000
pur 1,140,000
COS 1,335,000
Inv end - 142,500 1,192,500
GP 757,500
less: OE
sup 99,000
sal 171,000
com 30,000
ads 69,000
uti 19,500
tax 25,500
dep 18,000
ins 45,000 477,000
OP 280,500
 x*y x y x^
jan 5,616,000.00 3,600.00 1,560.00 12,960,000.00
feb 2,120,000.00 2,000.00 1,060.00 4,000,000.00
mar 3,915,000.00 2,900.00 1,350.00 8,410,000.00
apr 5,250,000.00 3,500.00 1,500.00 12,250,000.00
may 6,162,000.00 3,900.00 1,580.00 15,210,000.00
jun 2,625,000.00 2,100.00 1,250.00 4,410,000.00
jul 2,090,000.00 1,900.00 1,100.00 3,610,000.00
aug 850,000.00 1,000.00 850.00 1,000,000.00 ∑▒𝑦 = 𝑛𝑎 + 𝑣

1,960,000.00 ∑▒𝑥𝑦 = 𝑎∑▒

sep 1,237,500.00 1,250.00 990.00 1,562,500.00
oct 1,232,000.00 1,400.00 880.00
nov 3,068,000.00 2,600.00 1,180.00 6,760,000.00
11 34,165,500.00 26,150.00 13,300.00 72,132,500.00

meals served cost ∑x

highest - May 3,900.00 1,580.00 Na
lowest - August 1,000.00 850.00
2,900.00 730.00 ∑y

cost 730.00 2,377.27273

divide by: activity 2,900.00 26,150.00
variable cost 0.25172 ###

highest cost 1,580.00 x*y

less: VC×Highest served 981.72414
Fixed cost highest 598.27586

lowest cost 850.00 x^

less: VC×lowest served 251.72414
Fixed cost lowest 598.27586

fixed cost 598.27586 variable cost

variable cost 0.25172
× cost to serve 5,200.00 1,308.96552
1,907.24138 ∑x
or variable cost
1,907

∑y
served 5,200.00
variable cost 0.25563
total 1,329.25252 Na
fixed cost 601.39942 fixed cost E1
1,930.65194
or x^
1,931 variable cost
x*y

∑x
fixed cost E2
∑▒𝑦 = 𝑛𝑎 + 𝑣𝑐∑▒𝑥

∑▒𝑥𝑦 = 𝑎∑▒𝑥 + 𝑣𝑐∑▒𝑥^

26,150 E1
11
2,377.27273
13,300
31,617,727.27273

34,165,500 E2
31,617,727.27273
2,547,772.72727

72,132,500.00
62,165,681.81818
9,966,818.18182

0.25563

26,150 E1
0.25563
6,684.60642

13,300
6,684.60642
6,615.39358
11
601.39942

72,132,500
0.25563
18,438,905.26520
 34,165,500
18,438,905.26520
15,726,594.73480
26,150.00
601.39942
Flow of Cost
materials activity
beg raw material inventory XX
raw material purchases XX
raw material available for use #VALUE!
end raw material inventory (XX)
direct material used in production (DL) #VALUE!
production activity
direct labor used production (DL) XX DM+DL = PRIME COST
factory overhead used (FO) XX DL+FO = CONVERSION COST
total manufacturing cost #VALUE! DM+DM+FO = MANUF COST
beg goods in process inventory (WIP,B) XX
total goods in process #VALUE!
end goods in process inventory (WIP,E) (XX)
finished goods manufactured (COGM) #VALUE!
sales activity
beg finished goods inventory XX
finished goods available for sale (GAS) #VALUE!
end finished goods inventory (XX)
finish goods sold (COGS) #VALUE!

MERCHANDISING
beg merchandising inventory
net purchases XX
gross purchase
freight in XX
less: PRAD XX
total cost of goods available for sale (XX)
end merchandising inventory #VALUE!
cost of goods sold (XX)
#VALUE!

ADD: factory overhead applied if ever in

manufacturing cost

LESS: overhead applied factory overhead

or
ADD: under applied factory overhead
to get cost of goods sold actual
throughput costing
beg invetory XX
direct material XX
goods available for sale #VALUE!
end inventory (XX)
COGS #VALUE!

variable costing
beg invetory XX
direct material XX
direct labor XX
variable factory overhead XX
goods available for sale #VALUE!
end inventory (XX)
COGS #VALUE!

absorption costing
beg invetory XX
direct material XX
direct labor XX
variable factory overhead XX
fixed factory overhead XX
goods available for sale #VALUE!
end inventory (XX)
COGS #VALUE!
 JANA COMPANY

Materials
beg 90,000.00 345,000.00
300,000.00
390,000.00 345,000.00
end 45,000.00

WIP material
beg 45,000.00 372,000.00
345,000.00
390,000.00 372,000.00
end 18,000.00

WIP labor
beg 54,000.00 294,000.00
270,000.00
324,000.00 294,000.00
end 30,000.00

WIP overhead
beg 40,500.00 220,500.00
202,500.00

end 22,500.00

finished goods
beg 75,000.00 891,000.00
mat 372,000.00
lab 294,000.00
oh 220,500.00
961,500.00 891,000.00
70,500.00

cost of goods sold

891,000.00
 A15
direct material 9,000.00
direct labor 6,000.00
aplied factory overhead 9,000.00
work in process, beg of oct 24,000.00

A15 B18 B19

work in process, beg of oct 24,000.00 - -
direct material 2,500.00 12,000.00 25,000.00
direct labor 3,000.00 8,000.00 10,000.00
aplied factory overhead 4,500.00 12,000.00 15,000.00
total cost of goods manufactured 34,000.00 32,000.00 50,000.00
to finished goods - 34,000.00 - 32,000.00 - 50,000.00
work in process, end
A15 B19 Total
moved : total goods manufactured 34,000.00 50,000.00 84,000.00
*gross profit rate 40% 40% 40%
gross profit 13,600.00 20,000.00 33,600.00
Total C11 Total
24,000.00 24,000.00
39,500.00 18,000.00 57,500.00
21,000.00 5,000.00 26,000.00
31,500.00 7,500.00 39,000.00
116,000.00 30,500.00 146,500.00
- 116,000.00
30,500.00 30,500.00
The order point Economic order quantity

usage XX given: 2
multiply by: lead time XX multiply by: Q
total #VALUE! total
add: safety stock XX multiply by: C
order point #VALUE! total
divide by: C (if ever:×carrying cost
maximum daily usage XX total: square root
less:average daily usage XX
total #VALUE! square root=EOQ
multiply by: lead time in days XX
safety stock #VALUE! Q=desired annual quantity in unit
divide by: EOQ or order size
lead time XX number of order annually
multiply by: average lead time XX
total #VALUE! cost per order
add: safety stock XX multiply by: number of order
re order point #VALUE! total ordering cost

order point XX EOQ or order size

less:average daily usage*lead time XX divide by: 2
total #VALUE! Average inventory
add: order quantity XX
normal maximum inventory #VALUE! Average inventory
multiply by: carrying cost per order
order point XX total carrying cost
less:minimum daily usage*lead time XX
total #VALUE!
add: order quantity XX
absolute maximum inventory #VALUE!
 EOQ=Economic order quantity in unit
Q=desired annual quantity in unit
2.00 O-cost per order
XX C=carrying cost per order
#VALUE!
XX order size(EOQ) #of order ordering cost total OC
#VALUE! 400.00 125.00 1,000.00 125,000.00
XX 1,000.00 50.00 1,000.00 50,000.00
#VALUE! 1,250.00 40.00 1,000.00 40,000.00
2,000.00 25.00 1,000.00 25,000.00
#VALUE! 2,500.00 20.00 1,000.00 20,000.00
5,000.00 10.00 1,000.00 10,000.00
XX 10,000.00 5.00 1,000.00 5,000.00
XX
#VALUE!

XX
XX
#VALUE!

XX
2.00
#VALUE!

XX
XX
#VALUE!
 carrying
Ave Inv cost/unit total CC total OC&CC
200.00 25.00 5,000.00 130,000.00
500.00 25.00 12,500.00 62,500.00
625.00 25.00 15,625.00 55,625.00
1,000.00 25.00 25,000.00 50,000.00
1,250.00 25.00 31,250.00 51,250.00
2,500.00 25.00 62,500.00 72,500.00
5,000.00 25.00 125,000.00 130,000.00
 Moving Average cost

Received Issued
Quantity Cost Total cost Quantity Cost Total cost
3/1
3/4 4,700.00 70.00 329,000.00 244,691.59
3/7 3,800.00 64.39 244,691.59
3/10 2,900.00 64.39 186,738.32
3/13 6,500.00 75.00 487,500.00
3/17 5,000.00 70.96 354,795.28
3/19 - 1,800.00 70.96 - 127,726.30
3/24 4,000.00 80.00 320,000.00
3/25 4,500.00 74.16 333,717.26
14,400.00 1,236,907.73

Received Issued
Quantity Cost Total cost Quantity Cost Total cost
3/1
3/4 4,700.00 70.00 329,000.00

3/7 3,800.00 60.00 228,000.00

3/10 2,200.00 60.00 132,000.00

700.00 70.00 49,000.00
3/13 6,500.00 75.00 487,500.00

3/17 4,000.00 70.00 280,000.00

1,000.00 75.00 75,000.00
3/19 - 1,000.00 75.00 - 75,000.00
- 800.00 70.00 - 56,000.00
3/24 4,000.00 80.00 320,000.00

3/25 800.00 70.00 56,000.00

3,700.00 75.00 277,500.00
14,400.00 966,500.00
 Balance
Quantity Cost Total cost
6,000.00 60.00 360,000.00
10,700.00 64.39 689,000.00
6,900.00 64.39 444,308.41
4,000.00 64.39 257,570.09
10,500.00 70.96 745,070.09
5,500.00 70.96 390,274.81
7,300.00 70.96 518,001.11
11,300.00 74.16 838,001.11
6,800.00 74.16 504,283.86

Balance
Quantity Cost Total cost
6,000.00 60.00 360,000.00
6,000.00 60.00 360,000.00
4,700.00 70.00 329,000.00
2,200.00 60.00 132,000.00
4,700.00 70.00 329,000.00

4,000.00 70.00 280,000.00

4,000.00 70.00 280,000.00
6,500.00 75.00 487,500.00

5,500.00 75.00 412,500.00

800.00 70.00 56,000.00
6,500.00 75.00 487,500.00
800.00 70.00 56,000.00
6,500.00 75.00 487,500.00
4,000.00 80.00 320,000.00
2,800.00 75.00 210,000.00
4,000.00 80.00 320,000.00
6,800.00 530,000.00