Presupuesto de gastos indirectos de fabricación

Mónica Avilés

3 Jul 201708:17

Summary

TLDRThis script discusses the intricate process of calculating manufacturing overhead rates for budgeting. It defines indirect manufacturing costs, which include indirect materials, labor, and factory expenses not directly attributable to specific products. The script outlines the establishment of cost centers and the classification of costs into variable, fixed, and semi-variable categories. It also describes methods for budgeting indirect manufacturing costs, emphasizing collaboration with production and service departments and the importance of distributing these costs fairly across products.

Takeaways

🔍 Manufacturing overhead costs are a complex part of operational budgeting, involving indirect materials, indirect labor, and factory overhead expenses that cannot be directly attributed to specific products or tasks.
🏭 Indirect materials are necessary for product creation but are not identified by the product itself, while indirect labor does not affect the construction or composition of the finished product.
📊 Overhead costs include various factory expenses such as depreciation, insurance, supplies, maintenance, electricity, and water, which pose significant control and cost allocation challenges.
📈 Establishing cost centers is the first step to overcome the problem of overhead costs, with cost centers being groups of similar activities overseen by a specific person.
🔑 There are two main types of cost centers: productive cost centers, where material transformation of products occurs, and service cost centers, which indirectly support production departments.
🔄 Cost classification by variability is essential for budgeting, with costs categorized as variable, fixed, or semi-variable based on their behavior relative to production volume or other activity bases.
📉 Fixed costs remain constant regardless of changes in production, sales, or work volume, while variable costs change in direct proportion to these factors.
📈 Semi-variable costs vary with changes in production, sales, or activity but not in direct proportion, and their per-unit cost can fluctuate.
📋 The budgeting of manufacturing overhead costs involves close collaboration with department heads and includes estimating specific needs, calculating production costs, and distributing costs across departments.
📊 The final step in budgeting is to compute the rates or rates of manufacturing overhead costs for each productive department, ensuring a fair allocation of incurred costs to the products.

Q & A

What are indirect manufacturing costs?
-Indirect manufacturing costs are expenses that cannot be easily attributed to specific units, jobs, or products. They include indirect materials, indirect labor, and various factory overheads such as depreciation, insurance, supplies, maintenance, and utilities.
What is the purpose of establishing cost centers?
-Cost centers are established to group similar activities and functions for which a specific person is responsible. They help in controlling and assigning costs to products by identifying areas where costs are incurred.
What are the two types of cost centers mentioned in the script?
-The two types of cost centers mentioned are productive cost centers, where material transformation of products occurs, and service cost centers, which indirectly support production departments.
How do variable costs behave in relation to production volume?
-Variable costs change in direct proportion to changes in production volume or any other base of activity. They are fixed in total but variable per unit.
What are fixed costs in the context of manufacturing?
-Fixed costs are those that remain constant regardless of changes in production, sales, or the volume of work done. They do not vary with the level of activity.
What are semi-variable costs and how do they differ from variable and fixed costs?
-Semi-variable costs change with production, sales, or any other base of activity but not in direct proportion. Unlike variable costs, they do not change in direct relation, and unlike fixed costs, they are not constant for all levels of activity.
How are fixed manufacturing costs budgeted?
-Fixed manufacturing costs are budgeted based on information from the previous period, unless significant changes related to charges are made or will be made, such as the acquisition of new machinery.
What is the process for budgeting variable manufacturing costs?
-Variable manufacturing costs are budgeted based on the expected production rate and the respective budget. Historical records often provide a good basis for estimating these costs.
What methods are used to separate the fixed and variable components of semi-variable costs?
-Methods such as the high-low method and the least squares method are used to separate the fixed and variable components of semi-variable costs by analyzing their behavior.
How is the budget for indirect manufacturing costs formulated?
-The budget for indirect manufacturing costs is formulated in collaboration with the heads of productive and service departments. It involves converting specific production plan needs into work volume or activity for each department, estimating respective manufacturing costs, and prorating the total manufacturing costs over products based on rational bases.
What is the process for distributing factory costs to departments?
-Factory costs are distributed to various departments, either productive or service, either directly if the origin of each expenditure is known or by adjusting to appropriate bases if the cost does not refer to a specific department.

Outlines

00:00

🔍 Understanding Manufacturing Overhead Budgeting

This paragraph delves into the intricacies of manufacturing overhead budgeting, focusing on indirect manufacturing costs. It explains that these costs include indirect materials, indirect labor, and other factory-related expenses that cannot be easily attributed to specific products or units. The concept of cost centers is introduced as a way to manage and allocate these costs, with a distinction between productive cost centers, where material transformation occurs, and service cost centers, which indirectly support production activities. The paragraph also discusses the classification of costs into variable, fixed, and semi-variable categories, which is essential for budgeting. Variable costs change directly with production volume, fixed costs remain constant regardless of activity levels, and semi-variable costs change with activity but not in direct proportion. The importance of this classification for budgeting and cost control is emphasized.

05:00

📊 Methods for Budgeting Manufacturing Overhead Costs

The second paragraph continues the discussion on budgeting by introducing methods to separate fixed and variable components of manufacturing costs. It mentions that these costs can be analyzed to determine their fixed and variable elements realistically. Common methods include the high-low method and the least squares method, which use historical data to estimate cost behavior. The paragraph outlines the steps for formulating the budget of manufacturing overhead costs in collaboration with department heads. It includes converting production plans into work volume, estimating manufacturing costs, prorating these costs across products, and calculating cost rates for each production department. An example is provided to illustrate the application of these concepts, showing how variable and fixed manufacturing overhead costs are calculated and allocated based on estimated production and direct labor hours.

Mindmap

Keywords

💡Manufacturing Overhead

Manufacturing overhead refers to the indirect costs associated with the production process that cannot be directly attributed to specific products or units. In the script, it includes materials, labor, and other factory expenses that are not directly tied to the construction or composition of the finished product. It's a crucial part of budgeting for operational costs, as it helps in assigning costs to products in a way that reflects the true cost of production.

💡Indirect Materials

Indirect materials are necessary for the production of a product but are not directly identifiable with the product itself. They are part of the manufacturing overhead and are essential for the production process. The script mentions indirect materials as one of the components of manufacturing overhead that need to be budgeted and allocated to products, illustrating the complexity of cost accounting in manufacturing.

💡Indirect Labor

Indirect labor is the labor that does not directly contribute to the construction or assembly of the finished product. It is a type of manufacturing overhead and is essential for supporting the production process. In the script, indirect labor is highlighted as a component of the overhead costs that need to be accounted for in the budgeting process, emphasizing the importance of recognizing all costs involved in production.

💡Cost Centers

Cost centers are organizational units responsible for a specific set of activities or functions, and they are accountable for the costs associated with those activities. The script discusses the establishment of cost centers as a first step in overcoming the problem of controlling and assigning costs to products. They can be either productive or service-oriented, and understanding cost centers is key to effective budgeting and cost control.

💡Productive Cost Centers

Productive cost centers are departments where the transformation of materials into finished products takes place. The script mentions that these centers are directly involved in the production process, and thus, their costs are directly related to the output. This concept is important for budgeting as it helps in identifying where the direct production costs are incurred.

💡Service Cost Centers

Service cost centers are departments that indirectly contribute to the production process by providing support services like maintenance, storage, and planning. The script explains that these centers do not directly produce products but are essential for the production departments to function. Understanding service cost centers is vital for allocating overhead costs appropriately.

💡Variable Costs

Variable costs are those that change in direct proportion to the volume of production or activity. The script describes variable costs as costs that are directly related to the level of production, such as raw materials used in manufacturing. They are a key component of the budgeting process as they fluctuate with production levels, impacting the overall cost structure.

💡Fixed Costs

Fixed costs, also known as period costs, remain constant regardless of the level of production, sales, or work volume. The script mentions fixed costs such as depreciation and insurance, which are essential to consider in budgeting as they do not change with production volume but still affect the overall cost of operations.

💡Semi-Variable Costs

Semi-variable costs change with production, sales, or activity levels but not in direct proportion. The script discusses the challenge of budgeting for semi-variable costs, which require analysis to separate their fixed and variable components. This concept is important for accurate cost estimation and budgeting in manufacturing.

💡Cost Allocation

Cost allocation is the process of distributing indirect costs across products or services. The script highlights the importance of allocating costs to products in a rational manner, ensuring that each product bears a fair share of the incurred costs. This process is crucial for accurate cost accounting and pricing strategies.

💡Budgeting

Budgeting in the context of the script refers to the process of planning and estimating costs for a specific period, often a year. It involves forecasting production levels, estimating costs, and allocating resources. The script emphasizes the importance of budgeting in managing manufacturing overhead and ensuring that costs are accurately assigned to products.

Highlights

The process of calculating manufacturing overhead rates is the most complex part of budgeting.

Manufacturing overheads are defined as indirect materials, indirect labor, and factory costs that cannot be directly attributed to specific units or products.

Indirect materials are necessary for product creation but are not identified by the product itself.

Indirect labor does not affect the construction or composition of the finished product.

There are various factory overhead costs such as depreciation, insurance, supplies, maintenance, electricity, and water.

Establishing cost centers is the first step to overcome the problem of controlling and assigning costs to products.

Cost centers consist of similar activities and functions for which a person is responsible.

There are two types of cost centers: productive and service centers.

Productive cost centers are where the material transformation of the products takes place.

Service cost centers indirectly contribute to the production departments' activities.

Common service cost centers include maintenance, storage, raw materials, production planning, and cleaning services.

Costs and expenses are classified based on their degree of variability for budgeting purposes.

Costs are classified into three basic groups: variable, fixed, and semi-variable.

Variable costs change directly with production volumes or any other base of activity.

Fixed costs remain constant regardless of changes in production, sales, or work volume.

Semi-variable costs vary with changes in production, sales, or activity base, but not in direct proportion.

Manufacturing overheads include variable, fixed, and semi-variable cost categories.

Fixed manufacturing costs are budgeted based on the previous period's information unless significant changes are expected.

Variable manufacturing costs are directly related to production and can be easily calculated based on the expected production rate.

Semi-variable manufacturing costs are more challenging to budget and require methods to separate fixed and variable components.

Methods such as high-low, and least squares are used to analyze and determine the fixed and variable components of semi-variable costs.

The budget for manufacturing overheads is formulated in collaboration with production and service department heads.

The budgeting process includes estimating specific needs, converting them to work volume, estimating manufacturing costs, and prorating them over products.

Service department costs are prorated to production departments based on the services provided.

The final step is to compute the manufacturing overhead rates for each production department, ensuring a fair allocation of costs to products.