Part 2 – Section B.4. Overhead costs

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???? demonstrate an understanding of the fixed and variable nature of overhead expenses ???? determine the appropriate time frame for both variable and fixed overhead expenses ???? demonstrate an understanding that overhead rates can be determined in a variety of ways, e.g., plant-wide rates, departmental rates, and individual cost driver rates and describe the benefits and limitations of each of these methods ???? identify the components of variable overhead expense ???? determine the appropriate allocation base for variable overhead expenses ???? calculate the per unit variable overhead expense ???? identify the components of fixed overhead expense ???? identify the appropriate allocation base for fixed overhead expense and demonstrate an understanding that because the allocation base is generally variable (e.g., direct labor hours), fixed factory overhead is often over or under applied ???? calculate the fixed overhead application rate ???? demonstrate an understanding of overhead control accounts, overhead allocation accounts, and the expensing of over or under applied overhead expenses ???? compare and contrast traditional overhead allocation with activity-based overhead allocation ???? calculate overhead expense in an activity-based setting and describe the benefits derived from activity-based overhead allocation ???? demonstrate an understanding of the need to allocate the cost of service departments such as Human Resources or Information Technology to production departments ???? understand and use the direct method, the reciprocal method, and the step-down method to allocate service department costs