Cost Behavior. Material Cost: Direct material: 1. seen in the final product 2. economic/visible to trace Indirect Material:
|
|
- Marilynn Watts
- 6 years ago
- Views:
Transcription
1 1 Chapter 2 Introduction to Cost Terms and Purposes Cost A cost is the value of economic resources (e.g., money) sacrificed or used up to achieve a particular objective (e.g., produce a product or perform a service). Following are some examples of costs that may be incurred by a business organization: o On Jan. 1, 2007 ABC Co. purchased a machine for $100,000 to be used in producing a certain product X. The cost of acquiring the machine is the amount paid or to be paid in future so as to acquire the machine for the purpose of using it in production activities. o During 2007, ABC consumed 20% of the value of the machine in production. Part of the cost of producing product X is the amount of resources consumed from the machine during 2007, which is called depreciation $20,000 (100,000 * 20%). Cost Object A cost object is anything for which a separate measurement of cost is desired or needed (e.g., cost of a product, a machine, a service, or a process). Cost objects can vary in size from an entire company, to a division or program within the company, or down to a single product or service. Cost Driver(s) A cost driver is any activity (e.g., production volume) or factor (e.g., time) that causes the total amount spent on a particular cost object to change. For example, the total cost of renting a car is driven by all or some of the following factors: number of miles driven, number of days the car is rented, the type and/size of the car, etc. Each of these factors is a cost driver for cost of renting a car. Change in the cost driver result in a changes in the total costs incurred. As a manager, you should attempt to continuously reduce costs by efficiently managing the use of cost drivers. Thus, identifying the cost drivers is the first step to control costs. Drive the costs up or down. Material Cost: Direct material: 1. seen in the final product 2. economic/visible to trace Indirect Material: Labour Cost: Direct: related to production Indirect: unrelated to the production, such as security guards. Variable Overhead cost Rent/Insurance/Telephone charges -> Anything that s not direct material/labour. Fixed Overhead cost - Constant such as insurance. Cost Behavior
2 For the purposes of planning, control, and decision making, managers need to understand how the TOTAL amount spent on a particular cost object reacts to changes in a cost driver as measured, for example, by production or sales volume. - Unit variable cost is fixed or constant. - Total variable cost change Rent is $500 - Total fixed cost is fixed or constant - Unit fixed cost is variable o If 1 student comes then $500 rent/student, 2 students: 250/student, 5 students: $100/student etc. Ex: Lecture hall teaching Cost Estimation Cost estimation is defined as the development of a well-defined relationship between a cost object and its cost drivers, for the purpose of identifying cost behavior and predicting future costs. 2
3 Cost Assignment Cost assignment is the process of measuring the amount of costs consumed by a particular cost object from the costs incurred. There are two stages in which an accounting system accounts for costs: 1. Cost accumulation (traced): collection of cost data in some organized means in an accounting system. Traced 2. Cost assignment (untraced): is a general term that describes the process of assigning (charging) costs incurred to a cost object. The method of assigning costs to cost objects depends on whether the relationship between the costs incurred and the cost objects is direct or indirect. Direct costs are traced to their particular cost objects while the indirect costs are allocated to cost objects. -> best cost driver such as # of students in faculty, man power etc. When something cannot be traced to a specific activity then you use cost drivers. Glue, nails, paint may trace these costs to the product at the sole instruction of managers: True Direct material are ALWAYS variable. Sometimes its not viable economically to trace a direct material to an object so you may treat it as indirect: Such as paint coat on a small table which is very small. 1. Direct costs of a cost object are those costs that can be traced easily to a cost object in an accurate and economically feasible (cost-effective) way. Examples of direct costs in a manufacturing setting include: Direct materials costs the costs of all materials and parts that become an integral part of the finished product and can be easily traced into it. Direct labor costs wages and fringe benefits paid to production line workers involved directly in manufacturing a product. 2. Indirect costs of a cost object are related to the particular cost object but cannot be traced to that cost object in an economically feasible (cost-effective) way. Indirect costs, therefore, should be allocated to the cost objects using an allocation BASE factor. Examples of indirect costs in a manufacturing setting include all production facilities required to transforming raw materials into finished goods such as depreciation of machines, maintenance cost, rent of the factory, and salary of supervisors. Note the following: 1. The classification of costs into direct and indirect are defined with reference to a specific cost object. A particular cost can be classified as direct with respect to a certain cost object and indirect with respect to another cost object. 2. A cost would be considered indirect for one of two reasons: either it is impractical or it is impossible to trace the cost to the cost object. For example, it could be possible to measure the precise amount of nails or the amount of glue used on each table produced at a furniture plant, but it wouldn t be worth the effort. Instead, cost of nails and glue would typically be considered an indirect material and would be included in overhead. 3
4 Raw Materials (R.M.) ***Know terminology very well!!! *** BB + purchase R.M. R.M used Direct materials Purchased (D.M.) indirect materials purchased (I.M.) D.M. E.B. Work in Progress or process (WIP) BB + DM used + Direct Labor (D.L) + Manufacturing overhead (MOH) E.B. cost of goods manufactured (C.O.G.M) DM + DL used = Prime Costs D.L. + MOH = Conversion costs DM + DL + MOH = Total Manufacturing costs (TMC) Conversion costs may be assigned to a product rather than accumulated to a product. -> False Prime costs may be allocated to a product rather -> False Direct costs are not allocated!
5 Finished Goods (F.G.) BB? = Cost of goods sold (COGS) + C.O.G.M From W.I.P Cost of goods available for sale (COGAS) E.B Exa mpl e: A manufacturer of machinery currently produces equipment for a single client. The job is expected to take the entire month of April to complete. The client supplies all required raw material on a no-cost basis. The manufacturer contracts to complete the desired units from this raw material. The total production costs incurred by the manufacturer are correctly identified as: A) Direct Lbor. B) Factory overhead. DL + MOH <- MOH becomes direct in this case since it s their only client
6 C) Direct costs. D) None of the above. 4. <- never none of the above an answer on exams Exactly equal amount of numbers between A, B, C, D, E
7 Cost Classifications Different costs for Different Purposes Different types of cost information are needed for different purposes. There are two basic uses of cost information: 1. Product Costing: Product costing means calculating the cost of production for the purpose of determining the Cost of Goods Sold (CGS) for income determination and cost of Ending Inventory to prepare the balance sheet. 2. Decision Making. Mangers need to make different types of decisions to run the company. Each decision requires different information. 1. Cost Flows in a Manufacturing Company (Product Costing for External users) Inventory valuations and Cost of Goods Sold. In a manufacturing company, raw materials purchases are recorded in a raw materials inventory account. These costs are transferred to a work in process inventory account when the materials are released to the production departments. Other manufacturing costs direct labor and manufacturing overhead are charged to the work in process inventory account as incurred. As work in process is completed, its costs are transferred to the finished goods inventory account. These costs become expenses only when the finished goods are sold. Period expenses are taken directly to the income statement as expenses of the period. Product (Inventoriable) Costs vs. Period Costs. A. Product Costs. Product costs are the costs charged to the units produced as they are incurred. They become part of the cost of goods manufactured and treated as inventory (i.e., asset) until they are sold. At this point, they become cost of goods sold and charged to the income statement at the end of the period. B. Period Costs. Period costs are expensed in the time period in which they are incurred. All selling and administrative costs are typically considered to be period costs. 5
8 MANUFACTURING of a product requires the use of Raw Materials, Labor, and Production Facilities (e.g. Machines, Building, Electricity, etc). Raw Materials (RM) are the tangible items that will be used to make the physical form of the product. RM Could be classified as either Direct Materials (DM) or Indirect Materials (IDM). DM would include most of the raw materials necessary to construct the finished product. IDM would include all others materials used in production. Direct Labor (DL) represents the wages paid to those who actually transform the materials or assemble the product. This would usually include those who operate the machines that transform the product. Indirect labor (IDL) would include all others who work in the factory and don t actually transform the materials or assemble the product. Factory Overhead (FOH) or Manufacturing Overhead (MOH) includes all the costs incurred in the factory except for DM and DL. Every FOH item would be considered an Indirect Cost.
9 COST FLOWS EXAMPLE Ryder Company incurred the following costs last month: Purchases of raw materials... $200, Direct labor 270,000 Manufacturing overhead: Indirect $ 5,000 materials Indirect labor Utilities, factory Property taxes, factory Insurance, factory Equipment rental Depreciation, factory ,000 80,000 36,000 9,000 70, , ,000 Required: Calculate the following: Cost of direct materials used in production last month Cost of goods manufactured during last month Cost of goods sold during last month
10 SOME ISSUES RELATED TO MEASURING THE COST OF LABOR: IDLE TIME Idle time represents the wages of direct labour workers who are idle due to machine breakdowns, material shortages, power failures, and the like. Although the cost of the idle time can be traced to direct labor, it should be treated as indirect labor added to overhead. EXAMPLE: An assembly line worker is idle for 2 hours during the week due to a power failure. If the worker is paid $15 per hour and works a normal 40 hour week, labour cost would be assigned as follows between direct labour and manufacturing overhead: Direct labour cost ($15 X 38 hours)... $570 Manufacturing overhead cost ($15 x 2 hours) Total cost for the week... $600 OVERTIME PREMIUM Overtime premium is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. Any overtime premium paid to factory workers (direct as well as indirect labor) is usually considered to be part of manufacturing overhead. However, if the customer is responsible for causing the overtime, then the overtime premium paid to direct workers will be treated as direct labor. Note that this case has to be explicitly stated, otherwise it should be treated indirect labor. 1. Idle time 2. Bad scheduling 3. A Client requests it (they want their product done today). ***Rodney W is paid $20/hour for straight-time and $40 an hour for overtime. One week he worked 50 hours, which included 40 hours of regular time and 10 hours of overtime. The 10 hours of overtime include: 4 hours of idle time caused by material shortages; 4 hours of overtime due to bad scheduling; and 2 hours caused by a special request from a customer who made a late order. How much is charged as direct labour and indirect labour. TRY AT HOME!!!! EXAMPLE: Assume again that an assembly line worker is paid $15 per hour. The worker is paid time and a half for overtime (time in excess of 40 hours per week). During a given week this employee works 46 hours and has no idle time. Labor cost would be allocated as follows: Direct labor cost ($15 X 46 hours)... $690 Manufacturing overhead cost ($7.50 X 6 hours) Total cost for the week... $735 LABOUR FRINGE BENEFITS Labor fringe benefits are made up of employment related costs paid by the employer. These costs are handled in two different ways by companies: 1. Many firms treat all such costs as indirect labor and add them to manufacturing overhead. 2. Other firms treat the fringe benefits that relate to direct labor as additional direct labor cost and those relate to indirect labor as FOH. 8
11 2. Classifying Costs for Decision Making Understanding Cost Behavior Cost behavior describes the way that the total amount spent on a specific cost reacts to changes in activity levels in terms of production or sales volume. Costs may stay the same or may change proportionately in response to a change in activity. The range of activity over which cost behaviour pattern remains valid is called Relevant Range. Knowing how a cost reacts to a change in the level of activity helps us to classify costs as either variable or fixed cost. This classification help managers to make optimal decisions and perform their planning and control functions. Variable costs A variable cost is a cost that changes (increases and decreases) in total in direct proportion to changes in the related level of activity or volume. Total variable costs for a given situation are equal to the number of units multiplied by the variable cost per unit. Variable costs include things like labor and materials. Some overhead [indirect costs] such as indirect labor, supplies and some utilities are also variable EXAMPLE: A company manufactures microwave ovens. Each oven requires a timing device that costs $30. The per unit and total cost of the timing device at various levels of activity (i.e., number of ovens produced) would be: Cost per Number of Total Variable Timing Ovens Cost Timing Device Produced Devices $30 1 $ , ,000
12
CHAPTER ONE: OVEVIEW OF MANAGERIAL ACCOUNTING
CHAPTER ONE: OVEVIEW OF MANAGERIAL ACCOUNTING The Basic Objectives of Accounting Basic objective of accounting is to provide stakeholders with useful information about a business enterprise in order to
More informationAn Introduction to Cost Terms and Purposes
CHAPTER 2 An Introduction to Cost Terms and Purposes Overview This chapter introduces the basic terminology of cost accounting. Communication among managers and management accountants is greatly facilitated
More informationChapter 2 - Basic Managerial Accounting Concepts
1. It is beneficial to assign indirect costs to cost objects. True 2. Price must be greater than cost in order for the firm to generate revenue. False 3. Accumulating costs is the way that costs are measured
More informationAn Introduction to Cost terms and Purposes. Session 2
An Introduction to Cost terms and Purposes Session 2 Learning Objectives Define and illustrate a cost object Distinguish between direct costs and indirect costs Explain variable costs and fixed costs Interpret
More informationCOST C O S T COST 1/12/2011
Chapter 3 COST CONCEPT AND DESIGN ECONOMICS C O S T Ir. Haery Sihombing/IP Pensyarah Fakulti Kejuruteraan Pembuatan Universiti Teknologi Malaysia Melaka COST Cost is not a simple concept. It is important
More informationCost Accounting. Multiple Choice Questions:
Multiple Choice Questions: 1- The Value Chain a- Involves external companies as well as internal activities. b- Is the sequence of business functions in which customer usefulness is added to products or
More informationChapter 02 Cost Terminology and Cost Behaviors. Lecture Outline. LO.1 Why are costs associated with a cost object? A. Introduction
Solution Manual for Cost Accounting Foundations and Evolutions 8th Edition by Kinney and Raiborn Link full download of Solution Manual: https://digitalcontentmarket.org/download/solution-manual-for-costaccounting-foundations-and-evolutions-8th-edition-by-kinney-and-raiborn/
More informationTest Bank For Cost Accounting A Managerial Emphasis Fifth Canadian 5th Edition By Horngren Foster Datar And Gowing
Test Bank For Cost Accounting A Managerial Emphasis Fifth Canadian 5th Edition By Horngren Foster Datar And Gowing Link full download: https://digitalcontentmarket.org/download/test-bank-for-cost-accounting-amanagerial-emphasis-fifth-canadian-5th-edition-by-horngren-foster-datar-andgowing/
More informationCOMM 294 MIDTERM REVIEW SESSION QUESTIONS BY LINH VO
COMM 294 MIDTERM REVIEW SESSION QUESTIONS BY LINH VO TABLE OF CONTENT I. Introduction II. Cost terms, concepts, classification and Cost Behaviour (Chap. 2, 3) III. Job-order Costing (Chap. 5) --------------BREAK--------------
More informationChapter 2--Cost Terminology and Cost Behaviors
Chapter 2--Cost Terminology and Cost Behaviors TRUE/FALSE 1. A cost object is anything for which management wants to collect or accumulate costs. ANS: T PTS: 1 DIF: Easy OBJ: 2-1 2. A production plant
More informationDEFINITIONS AND CONCEPTS
DEFINITIONS AND CONCEPTS ** CONCEPTS AND DEFINITIONS IN THIS MODULE APPEAR IN VARIOUS CHAPTERS ** Key Terms and Concepts to Know Major Management Activities Planning - formulating long and short-term plans
More informationCOST C O S T COST. Cost is not a simple concept. It is important to distinguish between four different types - fixed,, variable, average and marginal.
Ir. Haery Sihombing/IP Pensyarah Fakulti Kejuruteraan Pembuatan Universiti Teknologi Malaysia Melaka Chapter 3 DIRECT COST Chapter 4 INDIRECT COSTS C O S T COST Cost is not a simple concept. It is important
More informationLecture 2: Flow of resource costs
Lecture 2: Flow of resource costs Cost Object: anything for which a separate measurement of costs is required, e.g. products, services, customers, projects, processes, segments of the value chain, divisions/departments,
More informationREVISION: MANUFACTURING 12 SEPTEMBER 2013
REVISION: MANUFACTURING 12 SEPTEMBER 2013 Lesson Description In this lesson we: Revise ledger accounts and the production cost statement Key Concepts Ledger Accounts for Manufacturing Differences between
More information3. Which is not an inventory account manufacturing companies have: a) Raw Materials b) Manufacturing Overhead c) Work in Process d) Finished Goods
Chapter 1 Question Review 1. Which of the following is not a characteristic of managerial accounting: a) Emphasizes decisions affecting the future b) Mandatory for external reports c) Need not follow GAAP
More informationCOST SHEET. Samir K Mahajan
COST SHEET Samir K Mahajan COMPONENTS OF TOTAL COST Prime cost: It is the aggregate of direct material cost, direct labour cost and direct expenses. Prime cost or Direct cost = Direct materials + Direct
More informationChapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationChapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationManagerial Accounting: Making Decisions and Motivating Performance (Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes
Managerial Accounting: Making Decisions and Motivating Performance (Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes Learning Objective 2-1 1) The cost incurred is: A) actual costs. B)
More informationInventory Cost Accounting Tips and Tricks. Nick Bergamo, Senior Manager Linda Pei, Senior Manager
1 Inventory Cost Accounting Tips and Tricks Nick Bergamo, Senior Manager Linda Pei, Senior Manager 2 Disclaimer The material appearing in this presentation is for informational purposes only and is not
More informationCHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More informationFull file at Chapter 02 - Basic Cost Management Concepts
CHAPTER 2 BASIC COST MANAGEMENT CONCEPTS Learning Objectives 1. Explain what is meant by the word cost. 2. Distinguish among product costs, period costs, and expenses. 3. Describe the role of costs in
More informationChapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows
Chapter 2--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?
More informationACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems
Page 1 ACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems This is an independent effort. Do your own work! The ACE tutors and the SI may not assist you on this sample exam prior
More informationCost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren) Chapter 2 An Introduction to Cost Terms and Purposes
Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren) Chapter 2 An Introduction to Cost Terms and Purposes 2.1 Objective 2.1 1) Which of the following would be considered an actual cost
More informationChapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows
Chapter 3--Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows Student: 1. Which of the following types of organizations is most likely to have a raw materials inventory account?
More informationFull file at
Full file at https://fratstock.eu CHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS QUESTIONS 1. The term cost is used to refer to so many different concepts that an adjective must be attached to identify
More informationCHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More informationFull file at
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More informationFull file at
Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice made to acquire it. True False 2. An expense is an expired cost matched with revenues in a specific
More informationAn Introduction to Cost Terms and Purposes
CHAPTER 2 An Introduction to Cost Terms and Purposes TRANSITION NOTES This chapter has been rewritten to place more emphasis on the role of managerial decisions. Exhibits have been changed so the students
More informationFull file at
Chapter 2 Cost Concepts and Behavior rue/false Questions F 1. he cost of an item is the sacrifice made to acquire it. Answer: rue Difficulty: Simple Learning Objective: 1 F 2. A cost can either be an asset
More informationCOST SHEET. Samir K Mahajan
COST SHEET Samir K Mahajan COMPONENTS OF TOTAL COST Prime cost or Direct cost : It is the aggregate of direct material cost, direct labour cost and direct expenses. i.e. Prime cost or Direct cost = Direct
More informationMANAGERIAL ACCOUNTING. 2 nd topic COST CLASSIFICATION
MANAGERIAL ACCOUNTING 2 nd topic COST CLASSIFICATION Structureofthelecture2 2.1 Definition of cost and related terms 2.2 Types of cost classification 2.3 Identification of cost classification 2.4 Reporting
More informationCost Accounting, 15e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes. Objective 2.1
Cost Accounting, 15e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes Objective 2.1 1) An actual cost is. A) is the cost incurred B) is a predicted or forecasted cost C) is anything
More informationFull file at
CHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS QUESTIONS 1. The term cost is used to refer to so many different concepts that an adjective must be attached to identify which particular type of cost is being
More informationHUM 211: Financial & Managerial Accounting
Chapter 20 HUM 211: Financial & Managerial Accounting Lecture 08: Managerial Accounting (Concepts & Principles) Masud Jahan Department of Science and Humanities Military Institute of Science and Technology
More informationChapter 2 Cost Classification & Cost Behaviour. Ibrahim Sameer (MBA - Specialized in Finance, B.Com Specialized in Accounting & Marketing)
Chapter 2 Cost Classification & Cost Behaviour Ibrahim Sameer (MBA - Specialized in Finance, B.Com Specialized in Accounting & Marketing) Total Cost / Service Costs The total cost of making a product or
More information70% of total manufacturing costs for the period
Midterm Review Class #1.1- COGM; Income Statement, Cost Behaviour On January 30, 2013, the manufacturing facility of Trucks R Us was severely damaged by a fire. As a result, the company s direct materials,
More information1. The cost of an item is the sacrifice of resources made to acquire it. 2. An expense is a cost charged against revenue in an accounting period.
Chapter 02 Cost Concepts and Behavior True / False Questions 1. The cost of an item is the sacrifice of resources made to acquire it. True False 2. An expense is a cost charged against revenue in an accounting
More information6. Refer to the Michael's Manufacturing, Inc. information above. Raw materials used for July is:
Review II NUMBER 1. Which of the following is a characteristic of managerial accounting? a. It is used primarily by external users. b. It often lacks flexibility. c. It is often future-oriented. d. The
More informationCHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS
CHAPTER 2 COST TERMINOLOGY AND COST BEHAVIORS QUESTIONS 1. The term cost is used to refer to so many different concepts that an adjective must be attached to identify which particular type of cost is being
More informationCost Systems. Terms Cost Accounting Process Cost System Job Order Cost System
Terms Cost Accounting Process Cost System Job Order Cost System Cost Systems Job-Order Costing Used for custom or unique items Each job is accounted for separately Measures cost based on completed job
More informationCMS Notes Lecture 1 Management vs. financial accounting Management accounting internal Financial accounting external
CMS Notes Lecture 1 Management vs. financial accounting Management accounting measures and reports financial and non- financial information that assist managers in fulfilling the goals of the organisation.
More informationMBP1133 Managerial Accounting Prepared by Dr Khairul Anuar
MBP1133 Managerial Accounting Prepared by Dr Khairul Anuar L2 Managerial Accounting and Costs Concepts www.notes638.wordpress.com 1 Summary of the Types of Cost Classifications Financial Reporting Predicting
More informationFuture CPA, I hope that you enjoy this free study guide and that it helps you to PASS the CPA Exam.
BEC COST ACCOUNTING Future CPA, I hope that you enjoy this free study guide and that it helps you to PASS the CPA Exam. If you would like the complete study guide, there is a link on the last page, as
More informationAGENDA: JOB-ORDER COSTING
TM 3-1 AGENDA: JOB-ORDER COSTING A. The documents in a job-order costing system. 1. Materials requisition form. 2. Direct labor time ticket. 3. Job cost sheet. B. Applying overhead using a predetermined
More informationCOST OF GOODS MANUFACTURED & SOLD STATEMENT
COST OF GOODS MANUFACTURED & SOLD STATEMENT In order to understand the financial and cost statement of a concern we should clear about the procedure adopted by trading concern and manufacturing concern
More informationAn accounting perspective: Business insight
An accounting perspective: Business insight Engineers for automobile companies in the United States believe that Japanese manufacturers can build cars for considerably less than their US counterparts.
More informationDirect and Indirect Costs
Accounting presentation created by Rex A Schildhouse 2015-01-01 www.schildhouse.com Created by Rex A Schildhouse, www.schildhouse.com Slide 1 There are three costs associated with manufacturing a product.
More informationB. Com (Hons.) III Semester Paper Title: Cost Accounting Paper Code: AS-2620
B. Com (Hons.) III Semester Paper Title: Cost Accounting Paper Code: AS-26 * Prepared by: Nilmani Tripathi, Assistant Professor, Department of Commerce, GGV Answer 1. Short answer question 1. Eight example
More informationSolution Manual For Cost Accounting. Foundations and Evolutions 9th. Edition by Kinney
Solution Manual For Cost Accounting Foundations and Evolutions 9th Edition by Kinney Link download full: https://testbankservice.com/download/solution- manual-for-cost-accounting-foundations-and-evolutions-9th-edition-by-
More informationManagerial Accounting, 2e Braun/Tietz/Harrison Test Item File Chapter 2: Building Blocks of Managerial Accounting
Managerial Accounting, 2e Braun/Tietz/Harrison Test Item File Chapter 2: Building Blocks of Managerial Accounting 2.1-1 Retailers sell their products to other wholesalers. Answer: False LO: 2-1 EOC: E
More informationWhich of the following is correct? Select correct option: Units sold=opening finished goods units + Units produced Closing finished goods units Units
Which of the following is correct? Units sold=opening finished goods units + Units produced Closing finished goods units Units Sold = Units produced + Closing finished goods units - Opening finished goods
More informationBasic Cost Management Concepts. M. En C. Eduardo Bustos as
Basic Cost Management Concepts M. En C. Eduardo Bustos Farías as 1 Objectives 1. Explain what is meant by the word "cost." 2. Distinguish among product costs, period costs,, and expenses. 3. Describe the
More informationCHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More informationChapter 1 Info Systems and Relevant info in Management Decision Making
Chapter 1 Info Systems and Relevant info in Management Decision Making Cost accounting: involves the process of tracking, recording, analyzing and determining the cost of an organization s project, process
More informationChapter Review Solutions
Chapter 2: Manufacturing & Trading Statements Chapter Review Solutions 1. ( a ) Direct Material Cost Inventory 1/7/09 5,000 Purchases 25,000 30,000 Less Inventory 30/6/10 4,000 26,000 ( b ) Direct Material
More informationCOST COST OBJECT. Cost centre. Profit centre. Investment centre
COST The amount of money or property paid for a good or service. Cost is an expense for both personal and business assets. If a cost is for a business expense, it may be tax deductible. A cost may be paid
More informationTYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR
18-11 C 2 Cost TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR Cost Activity Activity Cost Cost behavior refers to how a cost will react to changes in the level of business activity. Total fixed
More informationChapter 17. Objectives PRBA007 TOPIC TWO C. 1of 13. Unit costs for decision-making
17-0 17-1 Chapter 17 Unit costs for decision-making Objectives 17-2 Once you have completed this part of the topic, you should be able to: 1. Explain the importance of unit costs. 2. Identify the costs
More informationFull file at
Chapter 2 Job Order Costing ANSWERS TO QUESTIONS 1. The difference between job order costing and process costing relates to the type of product or service the company provides, and whether that product
More informationCase study Dealing with overheads
Case study Dealing with overheads This is the solution to the case study found at the end of: Chapter 7 Costing (a) Overhead apportionment Basis Total Cutting and turning Assembly and finishing Factory
More informationCOST OF GOODS MANUFACTURES B.COM. PART II
COST OF GOODS MANUFACTURES B.COM. PART II Q#1 Following are the balances appear on the Trial Balance of SAMREEN & Co. for the year ended April 30, 1980. Inventory of Goods in Process April, 01 Rs.109,000
More informationAn Introduction to Cost Terms and Purposes. Dr. Osama Al Meanazel
An Introduction to Cost Terms and Purposes Dr. Osama Al Meanazel Lecture 5 Other Cost Concepts Cost driver a variable that causally affects costs over a given time span Relevant range the band of normal
More informationACCT323, Cost Analysis & Control H Guy Williams, 2005
Costing is a very interesting area because there are many different ways to come up with cost for something. But these principles are generally applicable across the board. Because at any point once you
More informationCHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a
More informationChapter 2 An Introduction to Cost Terms and Purposes
Chapter 2 An Introduction to Cost Terms and Purposes Copyright 2003 Pearson Education Canada Inc. Slide 2-15 Costs and Cost Objects Cost a resource sacrificed or foregone to achieve a specific objective
More informationIntroduction to Cost Accounting. Samir K Mahajan
Introduction to Cost Accounting Samir K Mahajan MEANING OF COST, COSTING AND COS ACCOUNTING Cost is amount of resources given up in exchange for some goods and services. The resources given up are expressed
More informationOverheads/Job and Batch Costing. RST Ltd. has two production departments Machining and Finishing. There are three service
CA R. K. Mehta Overheads/Job and Batch Costing CA Past Years Exam Question Question : 1 Nov, 2006 RST Ltd. has two production departments Machining and Finishing. There are three service departments Human
More informationIntroduction to Cost Accounting. Samir K Mahajan
Introduction to Cost Accounting Samir K Mahajan MEANING OF COST, COSTING AND COS ACCOUNTING Cost is amount of resources given up in exchange for some goods and services. The resources given up are expressed
More informationManagerial Accounting Chapter 5
Managerial Accounting Chapter 5 It s really Economics Except we analyze entries to do the calculations Cost Behavior Analysis The study of how specific costs respond to changes in the level of business
More information2.1 Identify and distinguish between two manufacturing cost classification systems: direct and indirect, prime and conversion.
Chapter 2 An Introduction to Cost Terms and Purposes 2.1 Identify and distinguish between two manufacturing cost classification systems: direct and indirect, prime and conversion. 1) "Cost" is defined
More informationIntroduction to Cost Accounting. Samir K Mahajan
Introduction to Cost Accounting Samir K Mahajan MEANING OF COST, COSTING AND COS ACCOUNTING Cost is amount of resources given up in exchange for some goods and services. The resources given up are money
More informationCOST. Labour. Direct
COMMERCIAL STUDIES STD: X Chapter 10. Fundamental Concepts of Cost Concept of Cost The term cost generally means the amount of expenditure (actual or notional) incurred on, or attributable to, a given
More informationFull file at
Full file at https://fratstock.eu Chapter 2 Job-Order Costing and Modern Manufacturing Practices QUESTIONS 1. Manufacturers need product costing systems in order to measure and record the cost of manufactured
More informationChapter 2--Cost Terminology and Cost Behaviors
Chapter 2--Cost Terminology and Cost Behaviors Student: 1. A cost object is anything for which management wants to collect or accumulate costs. 2. A production plant could be a cost object. 3. A specific
More informationChapter 2 Cost Terms, Concepts, and Classifications
Multiple Choice Questions 16. Indirect labor is a part of: A) Prime cost. B) Conversion cost. C) Period cost. D) Nonmanufacturing cost. Answer: B Level: Medium LO: 1,2 Source: CPA, adapted 17. The cost
More informationManagerial Accounting Prof. Dr. Varadraj Bapat School of Management Indian Institute of Technology, Bombay
Managerial Accounting Prof. Dr. Varadraj Bapat School of Management Indian Institute of Technology, Bombay Module - 9 Lecture - 20 Accounting for Costs Dear students, in our last session we have started
More information- Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose:
Introduction: - Product costing Systems are used to compute the product cost per unit. - Product cost per unit is needed for a variety of purpose: o In financial accounting; Used to value inventory and
More informationCOST AND MANAGEMENT ACCOUNTING
EXECUTIVE PROGRAMME COST AND MANAGEMENT ACCOUNTING SAMPLE TEST PAPER (This test paper is for practice and self study only and not to be sent to the institute) Time allowed: 3 hours Maximum marks : 100
More information8. Name each of the basic inventory-related stock and flow accounts and explain their relationship to one another.
7. Understand the difference between inventoriable vs non inventoriable costs given the type of organization (merchandising vs manufacturing vs service) Inventoriable cost: cost included in the value of
More informationChapter 2--Basic Cost Management Concepts
Chapter 2--Basic Cost Management Concepts Student: 1. The cost management information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy
More informationModule 10 : Product and Process Costing. Lecture 1 : Product and Process Costing. Objectives
Module 10 : Product and Process Costing Lecture 1 : Product and Process Costing Objectives In this lecture you will learn the following Introduction. Product costing. Job costing. Process costing. Cost
More informationChapter 2--Cost Terminology and Cost Behaviors
Cost Accounting Foundations and Evolutions 9th Edition Kinney Test Bank Full Download: http://testbanklive.com/download/cost-accounting-foundations-and-evolutions-9th-edition-kinney-test-bank/ Chapter
More informationCHAPTER 2 BASIC COST MANAGEMENT CONCEPTS
CHAPTER 2 BASIC COST MANAGEMENT CONCEPTS DISCUSSION QUESTIONS 1. An accounting information system is a system consisting of interrelated manual and computer parts, using processes such as collecting, recording,
More informationAkuntansi Biaya. Factory Overhead : Planned, Actual and Applied. Suryadharma Sim, SE, M. Ak. Modul ke: Fakultas Ekonomi dan Bisnis
Modul ke: 12 Fakultas Ekonomi dan Bisnis Akuntansi Biaya Factory Overhead : Planned, Actual and Applied Suryadharma Sim, SE, M. Ak Program Studi S1 Manajemen The nature of Factory Overhead Factory Overhead
More informationChapter 2--Cost Terminology and Cost Behaviors
Test Bank For Cost Accounting Foundations and Evolutions 9th Edition by Kinney and Raiborn Link full download: http://testbankcollection.com/download/test-bank-for-cost-accounting-foundationsand-evolutions-9th-edition-by-kinney/
More informationSolutions Manual for Cost Accounting A Managerial Emphasis 14th edition by Horngren Datar and Rajan
Solutions Manual for Cost Accounting A Managerial Emphasis 14th edition by Horngren Datar and Rajan Link download Solutions Manual for Cost Accounting A Managerial Emphasis 14th edition by Horngren Datar
More informationCost Accounting A Managerial Emphasis Sixth Canadian Edition 6th Edition by Horngren Test Bank
Cost Accounting A Managerial Emphasis Sixth Canadian Edition 6th Edition by Horngren Test Bank Link download full: You can see more Solutions Manual for Cost Accounting A Managerial Emphasis Sixth Canadian
More informationSales salaries. Factory repairs. Advertising Office supplies used $ $
E19-4, Determine the total amount of various types of costs. Drew Company reports the following costs and expenses in May. Factory utilities $11.500 $69.100 Depreciation on factory equipment Depreciation
More informationCOST AND CHAPTER 2 COSTING. LEARNING OBJECTIVES After completing this chapter learners would be able to: Define and classify of Food Cost
CHAPTER 2 COST AND COSTING LEARNING OBJECTIVES After completing this chapter learners would be able to: (i) (ii) (iii) (v) Define and classify of Food Cost Understand Elements of food cost Explain Function
More informationCOMPREHENSIVE EXAMINATION A
COMPREHENSIVE EXAMINATION A (Chapters 1-4) Approximate Problem Topic Points Minutes A - I Multiple Choice... 20 20 A - II Cost of Goods Manufactured and Sold... 20 15 A - III Job Order Cost Accounting...
More information2. Finished goods inventory is ordinarily held for sale by a manufacturing company.
Chapter 02 Basic Cost Management Concepts True / False Questions 1. Inventoriable costs are expensed when incurred. True False 2. Finished goods inventory is ordinarily held for sale by a manufacturing
More information2. Finished goods inventory is ordinarily held for sale by a manufacturing company.
Chapter 02 Basic Cost Management Concepts True / False Questions 1. Inventoriable costs are expensed when incurred. True False 2. Finished goods inventory is ordinarily held for sale by a manufacturing
More information2 Cost Concepts and Behavior
2 Cost Concepts and Behavior Solutions to Review Questions 2-1. Cost is a more general term that refers to a sacrifice of resources and may be either an opportunity cost or an outlay cost. An expense is
More informationWelcome to: FNSACC507A Provide Management Accounting Information
Welcome to: FNSACC507A Provide Management Accounting Information Week 1 Chapter 1 COST CONCEPTS FNSACC507A Provide Management Accounting Information By the end of this lesson, you will be able to 1. Explain
More information