Cost coverage
Cost coverage exists when the normal costs are higher than the actual costs . There is a cost shortfall when the actual costs are higher than the normal costs.
Normal costs> actual costs = excess coverage
Normal costs <actual costs = shortfall
application
The comparison between actual and normal costs is used to control costs.
- Cost control in cost unit time accounting : In the operating accounting sheet , actual overhead costs are compared with normal overhead costs, whereby the profitability of the individual cost centers can be checked.
- Cost control in cost unit accounting : The preliminary costing carried out with normal costs is compared with the final costing based on actual costs for a cost unit.
example
In cost unit time accounting, over / under cover can be determined in the operating accounting sheet. The example is based on the following assumptions:
A company calculates with normal surcharge rates, which are the average of the actual surcharge rates for the past twelve months:
Material area | 10% |
---|---|
Manufacturing area | 200% |
Administrative area | 20% |
Sales area | 15% |
The following direct costs were incurred in the current period :
Direct material costs | € 100,000 |
---|---|
Direct production costs | € 25,000 |
The result is the following accounting sheet:
Cost area | material | production | administration | distribution |
---|---|---|---|---|
Sum of actual overheads | 12,000 | 40,000 | 31,860 | 30,090 |
Surcharge basis | 100,000 | 25,000 | 177,000 | 177,000 |
Actual surcharge rate | 12.00% | 160.00% | 18.00% | 17.00% |
Normal surcharge | 10.00% | 200.00% | 20.00% | 15.00% |
Normal overhead | 10,000 | 50,000 | 37,000 | 27,750 |
Over / under cover | - 2,000 | + 10,000 | + 5,140 | - 2,340 |
Overall, there is a surplus of + € 10,800 across all cost areas.
Explanations of the individual table lines:
- Actual overhead
- Arbitrary assumptions about the amount of actual costs in the past period.
- Surcharge basis
- The basis of the surcharge in the material and production area is the individual costs from the task. In the administration and sales area, the manufacturing costs based on actual costs from the next table apply as the basis for the surcharge: Manufacturing costs (HK) = direct material costs (MEK) + material overhead costs (MGK) + direct production costs (FEK) + production overhead costs (FGK) = € 177,000.
- Actual surcharge rate
- Quotient of actual overhead costs and surcharge base
- Normal surcharge
- Acceptance from the task
- Normal overhead
- In all four cost areas, the normal overhead costs are the product of the normal surcharge rate and the surcharge base. In the administration and sales area, the surcharge is based on the HK calculated in the next table on a normal cost basis (185,000 €).
- Over / under cover
- Difference between normal overheads and actual overheads.
Actual costs | Normal costs | O / U coverage | |
---|---|---|---|
Material direct costs (MEK) | 100,000 | 100,000 | |
+ Material overheads (MGK) | 12,000 | 10,000 | - 2,000 |
+ Direct production costs (FEK, production wages) | 25,000 | 25,000 | |
+ Production overheads (FGK) | 40,000 | 50,000 | + 10,000 |
= Manufacturing costs (HK) | 177,000 | 185,000 | |
+ Administrative overheads (VWGK) | 31,860 | 37,000 | + 5,140 |
+ Distribution overheads (VTGK) | 30,090 | 27,750 | - 2,340 |
= Cost (SK) | 238,950 | 249,750 | + 10,800 |
Web links
literature
- Lothar Haberstock: cost accounting I, introduction with questions, tasks and solutions . 4th edition. Business publisher Dr. Th. Gabler KG, Wiesbaden 1980, ISBN 3-470-70408-2 .
- Wolfgang Kilger: Introduction to cost accounting . 3rd, revised edition. Business publisher Dr. Th. Gabler GmbH, Wiesbaden 1987, ISBN 3-409-21069-5 .