CONTRACTOR COST ACCOUNTING

Size: px
Start display at page:

Download "CONTRACTOR COST ACCOUNTING"

Transcription

1 CONTRACTOR COST ACCOUNTING PURPOSE AND SCOPE This teaching note explains certain key concepts of cost or managerial accounting, describes the types of cost accounting systems, and how the systems are used by government and commercial contractors. DISCUSSION The information supplied by the cost accounting system provides the data necessary for important management decisions particularly those related to product pricing, cost control, inventory valuation, and resource allocation. Generally, the data generated by the cost accounting system is extremely sensitive and is frequently closely held, even within the company. For example, cost accounting reports typically provide detailed proprietary data relating to the costs of manufacturing and selling each product. In the commercial marketplace, customers do not have a legal right to see such cost accounting data. In the defense environment, however, internal cost accounting data of defense contractors is an area of significant concern for the customer (i.e., the military buyer). DoD has much greater interest in and knowledge about the internal cost structure of suppliers than does a commercial customer because DoD negotiates many contracts based on the contractor s cost rather than a free market price mechanism. Realistically, the financial interest of defense contractors is generally best served by charging (consistent with Government regulations) as many costs as possible directly to contracts and structuring indirect cost pools in a way that properly allocates maximum costs to Government contracts. Therefore, it is essential that Government personnel be familiar with the contractor s cost accounting system in order to determine that the component elements of the negotiated price are fair and reasonable. There are three, equally important, cost concepts essential for understanding cost accounting in the defense industry. The concept of allowability, for example, is key within the realm of government contracting. Certain costs, by law or regulation, are unallowable or must be handled in a prescribed way. Interest expense is a prime example and about 50 others are listed in FAR, Part 31. This doesn t mean that a defense contractor can t incur unallowable costs; it simply means that the government will not knowingly pay for them. Another important cost concept is that of traceability. Some costs can be readily traced to the product or service for which they were incurred. The cost of the raw materials that ultimately go into an end item such as a tank, airplane, ship, or subsystem thereof is an example of one such direct cost. We know that other costs must be incurred in providing a product or service, yet the linkage between those costs

2 and the item delivered to the government isn t so clear cut. Vacation pay and employee health plan costs are examples. Such costs are classified as indirect. Since the government is keenly interested in paying a fair and reasonable price for what it buys, it has placed great emphasis on the question of direct versus indirect costs through legislation of cost accounting standards to which corporate management must adhere. Allowability and traceability are essentially cost reimbursement concepts in that they are aimed at determining what the government owes its suppliers. Whether a cost is allowable/unallowable or direct/indirect has little to do with cost incurrence by the contractor. Such classifications merely establish how the government will treat the costs when deciding what is a fair and reasonable price for the goods and services it buys. When we shift our focus from cost reimbursement to cost incurrence, we leave the realm of accounting and enter that of economics. Here we find another important concept--that of cost behavior. It has been observed that the level of some costs remains unchanged, regardless of the level of activity within the business firm. These costs are driven by managerial decision rather than the level or volume of production or sales. They are fixed in the short run and will be incurred whether or not the company manufactures and sells any products. Fixed costs carry very high risks, and as you might surmise, the managers of a firm whose sales are subject to a high degree of uncertainty might well be reluctant to saddle themselves with a heavy burden of fixed cost. Other costs vary proportionally with the level of production and sales. The costs of direct labor and materials are obvious examples. These costs are classified as variable since, while the additional cost incurred to produce and sell one more unit of output remains constant, the total cost incurred will vary with the level of activity within the firm. A variable cost will not be incurred unless there is activity. To understand how a cost accounting system works, you will need to be familiar with the basic vocabulary of cost accounting terms listed below: Cost objective Direct cost A contract, function, organizational subdivision, or other work unit for which cost data are desired and for which provision is made in the cost accounting system to accumulate and measure the cost of jobs, products, processes, capitalized projects, etc. Any cost that is identified specifically with a single cost objective. Direct costs are not limited to items incorporated in the end product as material or labor. Costs identified specifically with a contract are direct costs of that contract. All costs identified specifically with other final cost objectives of the contractor are direct costs of those cost objectives.

3 Direct materials Direct labor Other direct costs Indirect cost General and Admin istrative expense Standard cost Variable cost Fixed cost Includes raw materials, purchased parts, and subcontracted items required to manufacture and assemble completed products. A direct material cost is the cost of material used inmaking a product and is directly associated with a change in the product. Labor that is specifically identified with a particular final cost objective. Manufacturing direct labor includes fabrication, assembly, inspection, and test for constructing the end product. Engineering direct labor includes reliability, quality assurance, test, design, etc., which are readily identified with the end product. Costs for special facility rental, computer, reproduction, travel by direct personnel, consultants, etc. Any cost not directly identified with a single cost objective, but identified with two or more cost objectives. A grouping of indirect costs by a defense contractor is often referred to as an indirect cost pool. Any management, financial, and other broad type of expense incurred by or allocated to a business unit for the general management and administration of the business unit as a whole. A carefully predetermined cost that should be attained. A cost that changes with the production quantity or the performance of services. A cost that, for a given period of time and range of activity called the relevant range, does not change in total but becomes progressively smaller on a per-unit basis as volume increases.

4 Cost Systems There are two general types of cost systems used for accumulating actual costs: job order and process. Job Order Cost Systems Job order (also called job cost or production order) cost systems are used by companies whose products are readily identified by individual unit or production lot, each of which receives varying degrees of attention and skill. This system is used predominately by the defense industry where unique items are procured and where strong requirements exist for the timely monitoring of costs incurred. Other industries that commonly use job order accounting methods include aircraft, construction, furniture, and machinery. Large manufacturing companies using a job order system usually utilize departments for pinpointing the responsibility for cost accumulation and control. A department may contain several cost centers, which are the smallest segments of activity or area of responsibility for which costs are accumulated. For example, a machining department may contain various groups of machines such as lathes, punch presses, and milling machines; each group of machines may be regarded as a separate cost center with its own supervision. The individuals in charge of departments or cost centers should have the authority and responsibility for cost control. Basically, the cost accumulation process under a job order system conforms to the flow of direct materials through the production organizations and the conversion of the materials with labor and overhead into a finished product. Exhibit 1, Summary of Cost Flow, shows the flow of costs through typical cost accounts of a business using a job order system: 1. Costs of direct materials, direct labor, and indirect expenses (such as manufacturing overhead and general and administrative expenses) are accumulated as incurred. 2. As direct materials, direct labor, and indirect expenses are used, the costs are transferred to the Work-in-Process (WIP) inventory. 3. When the products are completed, the costs are transferred to Finished Goods inventory. 4. When the products are sold, the costs are transferred from Finished Goods inventory to Cost of Goods Sold. 5. At the end of the period, the Costs of Goods Sold are transferred into Profit and Loss Summary. 6. Sales are transferred into Profit and Loss Summary and the difference between sales on one side and costs on the other represents profit/loss for the period. Each job usually requires different kinds of materials, plant routings, labor

5 operations, skill levels, and times for completion. An essential feature of the job order accounting system is the attempt to record costs directly to specific jobs. In order to accommodate the prompt charging of materials to jobs and to aid in disclosing inventory shortages, job order systems require the use of perpetual or continuous inventory records rather than periodic inventory records. Although a job order cost system is designed to record the costs to specific units, a unit cost averaging process is required in some production processes. For example, the unit costs for items produced in a production lot could be derived by taking the accumulated costs for the lot and dividing it by the number of units produced. The Job Cost Sheet, as shown in Exhibit 2, is the key record in a job order cost system and is used to control product costs through a comparison of actual and planned costs. This record is maintained for each job and summarizes the direct materials, direct labor, and indirect costs of producing a given job. A file of uncompleted job cost sheets represents the detail of the Work-in-Process inventory. Stores requisitions are normally used to charge job cost sheets for direct materials issued to the production floor from a stockroom. Employee time cards or work tickets indicate the time spent on each individual job and are the source documents for charging job cost sheets for direct labor used. Department managers are usually kept informed of their direct material and direct labor performance by daily/weekly summaries of requisitions for materials and labor charged to their departments. Manufacturing overhead costs such as heating, air conditioning, taxes, depreciation, janitorial services, etc., cannot usually be specifically identified with physical units and cannot be determined exactly until the end of the accounting period. This is because various accounting adjustments and accruals are necessary to assign costs to the proper time period. Since management cannot wait until the end of the year to find out what each job costs, overhead is estimated at the beginning of the year and applied to each job worked on during the year. The basic idea of this approach is to use an average annual estimated overhead cost per unit without changing the annual rate in costing specific jobs from day to day and month to month. Actual manufacturing overhead costs are accumulated weekly or monthly for each department/cost center without regard to how the estimated overhead was applied to specific jobs. Although there may be monthly differences between actual and applied manufacturing overhead amounts, the final year-end amounts should be nearly equal. The difference between actual and applied overhead is recorded to each job as a year- end adjustment to the accounting records. Although job order costing requires considerable accounting documentation, it has several significant benefits: Every job produced bears its proper share of costs. Valuable information is provided to management to aid decisions for planning and control purposes. An accurate basis for future pricing decisions is established.

6 Process Cost Systems Process cost systems are used where identical units of a product are produced continuously and there is no difference in cost between units. The principal product is often a homogenous mass rather than a collection of distinct units. No useful purpose would be served by maintaining job orders for particular amounts of a product as the material passes through several stages of production. For example, in the refining of crude oil, each gallon of gasoline that is produced will be identical. Process costing is most often found in such industries as chemicals, oil, paints, food processing, rubber, steel, mining, and plastics. In process cost accounting, the costs are charged to processing departments, and the cost of a finished unit is determined by dividing the total costs incurred in each process by the number of units processed. When the manufacturing procedure requires a sequence of different processes, the output of Process 1 becomes the direct materials of Process 2; the output of Process 2 becomes the direct materials of Process 3; and so on until the finished product emerges. The product and associated costs flow from process to process or department to department in sequential order. In a factory with several processes, there may be one or more service departments that do not process the materials directly. Examples of service departments are data processing, power plant, and maintenance and repair shops. The costs of service departments are usually distributed monthly on some equitable basis to the processing departments. Standard Costs Standard costs may be used with either the job order or process type of cost accumulation systems and are most applicable in the production of a large quantity of identical or similar items. Standard cost systems use detailed estimates of each element of manufacturing cost entering into the finished product. For each product, specialists determine: the standard quantity of materials to be used the standard price of the materials the standard number of direct labor hours to be used the standard rate of pay for labor the standard manufacturing overhead rate. A wide variety of management skills is needed in setting standards as well as the joint effort of engineering, accounting, industrial relations, and other managerial areas. Time and motion studies of each operation are often made and the work force is trained to use the most efficient methods. Standards are usually tight enough that

7 operating people will consider the achievement of standard performance to be a satisfying accomplishment. Standards are revised on a periodic basis to reflect changes in the pre-determined standards resulting from changes in manufacturing methods, the addition of cost saving machinery, inflation, etc. For more effective control, standard costs may be used for each department or cost center in the factory. As work is done, actual costs incurred are compared with standard costs to reveal variances. Standard cost systems, therefore, enable management to determine how much a product should cost (standard), how much it did cost (actual), and the causes of any difference (variance) between the two. The most important result of a standard cost system is the variance analysis that shows areas of waste and areas of efficiency. Variances are termed favorable when actual costs are less than standard costs and unfavorable when actual costs are greater than standard costs. Management analyzes the significant variances to determine the cause and to take appropriate action. The total variance for an accounting period is usually made up of several variances, some of which may be favorable and some unfavorable. There may be variances from standards in direct materials costs, direct labor costs, and manufacturing overhead costs. Direct material and direct labor variances are divided into two categories: (a) price or rate; and (b) usage or efficiency. Price or rate variances are computed by multiplying differences in price by actual quantities. Usage or efficiency variances remove influences of price changes and are computed by multiplying differences in quantities by a standard price. The determination of standards and variances from standards for manufacturing overhead is more complex than for direct materials and direct labor. A standard manufacturing overhead rate is determined on the basis of the projected manufacturing overhead costs at 100% of normal production capacity, where this level of capacity represents the general expectation of business activity under normal operating conditions. Variances from standard for manufacturing overhead cost result (a) from operating at a level above or below 100% of normal capacity; and (b) from incurring a total amount of manufacturing overhead cost greater or less than the amount budgeted for the level of operations achieved. The first factor results in the volume variance, which is a measure of the penalty of operating at less than 100% of normal productive capacity, or the benefit from operating at a level above 100% of normal productive capacity. The second factor results in the controllable variance, which is the difference between the actual amount of factory overhead incurred and the amount of manufacturing overhead budgeted for the level of production actually achieved during the period. The use of predetermined standards and the analysis of variances from such standards provide management with an excellent means of establishing responsibility and controlling manufacturing overhead costs.

8 Increased Emphasis on Indirect Cost Management Indirect costs typically represent between one third to one-half of the costs of a contract. The increased use of computers and automation of production operations during recent years coupled with a declining business base has had a significant impact upon increasing indirect or overhead cost rates. Therefore, the allocation of indirect costs is an area that merits increased attention of both contractor management and the DoD. Currently, the improvement in the management of overhead costs, which is a complex and difficult task, is one of the primary initiatives of the DCMA. The indirect cost management concepts of causal or beneficial relationship and homogeneity are necessary for a thorough understanding of indirect cost allocation. These concepts are necessary to understand the indirect cost structure of large companies who are producing multiple products and services under numerous types of contracts. Government regulations do not specify any number of indirect cost pools. While some contractors may have only a few indirect cost pools, some may well have over onehundred such pools. The concept of causal/beneficial relationship means that indirect costs must be allocated to cost objectives in reasonable proportion to the beneficial or causal relationship of the pooled costs to the cost objectives. In simple terms, one chooses the method that best links the cost objectives with the indirect costs. This linkage is often referred to as an allocation base. When possible, the indirect costs should be allocated to the direct cost that caused the indirect cost to be incurred. An example of this causal relationship would be where the direct labor for employees working on a contract causes the indirect medical insurance costs for the employees to be incurred. Therefore, the indirect medical insurance costs should be allocated to the direct labor cost. A beneficial relationship occurs when indirect cost was not caused by any particular direct cost but the incurrence of the cost benefits the contract. For example, the accounting personnel performing general and administrative functions provide some benefit to contracts by preparing necessary reports or their work is necessary for the overall operation of the business. A clear example of a cost that does not meet the causal or beneficial relationship test would be bad debts expense. Government contracts do not cause bad debts to occur because the government pays its just debts. The incurrence of bad debts expense does not in any way benefit government contracts. Therefore, there is no causal or beneficial relationship. The concept of homogeneity requires that the contractor s indirect costs must be grouped into logical and homogeneous indirect cost pools. This requirement means that the cost of functions or activities which are to be pooled must have the same or similar beneficial or causal relationship to cost objectives. This concept of homogeneity is achieved if the activities or functions in the pool are the same or similar, if the activities or functions are unlike, but the relationship to benefiting cost objectives are

9 the same or similar, or if the final output of goods and services is the same or similar. An example of an indirect cost pool that would be considered to be homogeneous would be if a contractor accumulates costs relating to the activities of building ownership, maintenance, and utilities into one indirect cost pool, designated as Occupancy Cost, for allocation to contracts. Although the costs of these activities represent unlike costs, each of these activities has the same or a similar relationship to all contract work that is occupying space in the contractor s facility. On the other hand, assume that a contractor includes the indirect costs of machining and assembling activities in a single manufacturing overhead pool. The machining activity may not have the same or similar beneficial or casual relationship to contracts or cost objectives as does the assembling activity. In this case, the contractor s single manufacturing overhead pool is not homogeneous and separate pools would be required. The lack of homogeneity of singular indirect cost pools may occur when a contractor s activities are geographically dispersed. The use of separate indirect cost rates for each geographic location will normally produce more equitable allocations of indirect costs than the use of composite or company-wide rates. Off-site overhead rates should be based on eliminating from the overhead pool those types of indirect costs that do not benefit off-site activities. For example, occupancy costs may be eliminated from off- site pools because the contractor uses government facilities at the off-site location rather than his company owned facilities. From the government s perspective, it is generally contended that the subdividing of indirect cost pools provides more accurate cost information for government contracts. However, the number and type of cost pools should be governed by practical considerations. Some defense contractors have been very concerned about the proliferation of the number of indirect cost pools. While additional cost pools may provide better matching of costs incurred to benefits received to some degree, from the contractor s perspective, it may create a pricing problem due to the sensitivity of smaller pools to changes in volume. For example, if business volume shifts between several products in a contractor s plant with a single plant-wide manufacturing overhead rate, the changes in volume would cancel out and the overhead rate would not significantly change. However, if each product had its own indirect cost pool, then the several rates could vary significantly with business volume changes. In addition, it is more costly from an administrative standpoint to manage a large number of cost pools. It should be recognized that comparing indirect cost rates among different contractors can be very misleading since two similar contractors may have different rates for numerous reasons. For example, accounting systems may be totally different. One contractor may classify production control activities as indirect while another contractor may classify it as direct. One contractor may include purchasing and warehousing costs in a material handling indirect pool while another may have some of these costs in the manufacturing overhead pool and some in the general and administrative expense pool. Contractor s indirect rates may also vary because of the

10 variety in products produced or production methods used. For example, one contractor produces a product using a manual method while another contractor makes the same type of product in a highly automated facility. The automated contractor is likely to have a higher overhead rate because additional depreciation for the automated equipment, an indirect cost, is allocated against a smaller direct labor base. The automated contractor is likely to experience higher overhead rates than his less automated counterpart even though his total product cost may be lower. Facility ownership will also cause a significant difference in contractor s indirect rates. For example, one would expect a contractor operating in a government owned facility to have significantly less indirect expenses.facility ownership results in large indirect expenses for depreciation, property taxes, and maintenance expenses. The method of handling fringe benefits could cause very large differences in indirect rates as some contractors include these expenses in indirect cost pools while others may include them as a part of direct labor. Such differences between contractors make it important to remember that the Government s objective is not to reduce overhead rates but to reduce total costs. Although comparing indirect rates between contractors is misleading and complex, it may be useful to chart the trend of indirect rates of one contractor over time. Even this trend analysis could require adjustment for organizational, accounting system, manufacturing process, and business base changes. The primary reason for significant changes in indirect rates is a large variation in the business base. For example, in a declining business environment there will be less direct costs in the denominator of the indirect rate computation due to a decrease in business volume. Therefore, the rate has to increase. The decrease in volume may the result of decreases in government contracts, subcontracts, or commercial work. It should be recognized that indirect cost pools are made up of literally hundreds of various types of business expense accounts, therefore, there can be any number of reasons for changes in indirect rates. For example, rate increases could be caused by reasons as varied as increases in health care, early retirement incentives, idle facilities and excess capacity costs, increases in state and property taxes, overtime, etc. The most useful analysis would be one that looks at the indirect cost and cost trends in dollars rather than as rate trends.

An accounting perspective: Business insight

An 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 information

Online Course Manual By Craig Pence. Module 12

Online Course Manual By Craig Pence. Module 12 Online Course Manual By Craig Pence Copyright Notice. Each module of the course manual may be viewed online, saved to disk, or printed (each is composed of 10 to 15 printed pages of text) by students enrolled

More information

Chapter 02 Cost Terminology and Cost Behaviors. Lecture Outline. LO.1 Why are costs associated with a cost object? A. Introduction

Chapter 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 information

Part 1 Study Unit 6. Cost Allocation Techniques Jim Clemons, CMA

Part 1 Study Unit 6. Cost Allocation Techniques Jim Clemons, CMA Part 1 Study Unit 6 Cost Allocation Techniques Jim Clemons, CMA Absorption versus Variable Costing You need to be able to answer the following: Under absorption costing, which cost are considered product

More information

COST C O S T COST 1/12/2011

COST 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 information

Cost Behavior. Material Cost: Direct material: 1. seen in the final product 2. economic/visible to trace Indirect Material:

Cost Behavior. Material Cost: Direct material: 1. seen in the final product 2. economic/visible to trace Indirect Material: 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

More information

CHAPTER ONE: OVEVIEW OF MANAGERIAL ACCOUNTING

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 information

AGENDA: JOB-ORDER COSTING

AGENDA: 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 information

Chapter 02 - Cost Concepts and Cost Allocation

Chapter 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 information

Chapter 02 - Cost Concepts and Cost Allocation

Chapter 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 information

CAD/CAM CHAPTER ONE INTRODUCTION. Dr. Ibrahim Naimi

CAD/CAM CHAPTER ONE INTRODUCTION. Dr. Ibrahim Naimi CAD/CAM CHAPTER ONE INTRODUCTION Dr. Ibrahim Naimi Production System Facilities The facilities in the production system are the factory, production machines and tooling, material handling equipment,

More information

COMPREHENSIVE EXAMINATION A

COMPREHENSIVE 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 information

7/8/2017 CAD/CAM. Dr. Ibrahim Al-Naimi. Chapter one. Introduction

7/8/2017 CAD/CAM. Dr. Ibrahim Al-Naimi. Chapter one. Introduction CAD/CAM Dr. Ibrahim Al-Naimi Chapter one Introduction 1 2 3 Production System Facilities The facilities in the production system are the factory, production machines and tooling, material handling equipment,

More information

Chapter 3 Systems Design: Job-Order Costing

Chapter 3 Systems Design: Job-Order Costing Chapter 3 Systems Design: Job-Order Costing Solutions to Questions 3-1 By definition, manufacturing overhead consists of costs that cannot be practically traced to products or jobs. Therefore, if these

More information

Part 1 Study Unit 5. Cost Accumulations Systems Jim Clemons, CMA Ronald Schmidt, CMA, CFM

Part 1 Study Unit 5. Cost Accumulations Systems Jim Clemons, CMA Ronald Schmidt, CMA, CFM Part 1 Study Unit 5 Cost Accumulations Systems Jim Clemons, CMA Ronald Schmidt, CMA, CFM 1 Overview Cost accounting systems record manufacturing activities using a perpetual inventory system, which continuously

More information

Relevant Costs for Decision Making

Relevant Costs for Decision Making Relevant Costs for Decision Making Chapter Thirteen 13-2 Learning Objective 1 Identify relevant and irrelevant costs and benefits in a decision. 13-3 Cost Concepts for Decision Making A relevant cost is

More information

532 Principles of Cost Accounting

532 Principles of Cost Accounting GLOSSARY A Absorption (or full) costing. A method of accounting for manufacturing costs that charges both fixed and variable costs to the product. Account analysis method. See Observation method. Accounting

More information

10-1. Learning Objective. Identify relevant and irrelevant costs and benefits in a decision.

10-1. Learning Objective. Identify relevant and irrelevant costs and benefits in a decision. 10-1 Learning Objective Identify relevant and irrelevant costs and benefits in a decision. 10-2 Relevant Costs and Benefits A relevant cost is a cost that differs between alternatives. A relevant benefit

More information

REVIEW FOR EXAM NO. 1, ACCT-2302 (SAC) (Chapters 14-16)

REVIEW FOR EXAM NO. 1, ACCT-2302 (SAC) (Chapters 14-16) A. Chapter 14 (Managerial Accounting). 1. Purposes and Principles. (Page 632) REVIEW FOR EXAM NO. 1, ACCT-2302 (SAC) (Chapters 14-16) a. Provides economic/financial information (both historical and estimated)

More information

HUM 211: Financial & Managerial Accounting

HUM 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 information

1. Cost accounting involves the measuring, recording, and reporting of: A. product costs. B. future costs. C. manufacturing processes.

1. Cost accounting involves the measuring, recording, and reporting of: A. product costs. B. future costs. C. manufacturing processes. 1. Cost accounting involves the measuring, recording, and reporting of: A. product costs. B. future costs. C. manufacturing processes. D. managerial accounting decisions. 2. In accumulating raw materials

More information

COST COST OBJECT. Cost centre. Profit centre. Investment centre

COST 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 information

Activity-Based Costing. Managerial Accounting, Fourth Edition

Activity-Based Costing. Managerial Accounting, Fourth Edition Study Objectives Study CHAPTER Objectives 4 Activity-Based Costing Managerial Accounting, Fourth Edition Study Objectives 1. Recognize the difference between traditional costing and activity based costing.

More information

17(2) Job Order Costing. chapter OPENING COMMENTS

17(2) Job Order Costing. chapter OPENING COMMENTS ing chapter 17(2) OPENING COMMENTS Chapter 17(2) introduces students to managerial job order cost systems. Students will be exposed to the terminology used to describe costs related to manufacturing. The

More information

CHAPTER 2 BASIC COST MANAGEMENT CONCEPTS

CHAPTER 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 information

Incremental Analysis. LO 1: Analysis

Incremental Analysis. LO 1: Analysis Incremental Analysis LO 1: Analysis Terms Incremental analysis Relevant cost Opportunity cost Sunk cost Analysis: Incremental analysis uses financial data that changes among alternatives to help decision

More information

Full file at

Full 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 information

Fill-in-the-Blank Equations. Exercises

Fill-in-the-Blank Equations. Exercises Chapter 15 (1) Introduction to Managerial Accounting Study Guide Solutions 1. Merchandise available for sale 2. Cost of merchandise sold Fill-in-the-Blank Equations 3. Cost of goods manufactured during

More information

An Introduction to Cost Terms and Purposes. Dr. Osama Al Meanazel

An 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 information

MANAGERIAL ACCOUNTING. 2 nd topic COST CLASSIFICATION

MANAGERIAL 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 information

Activity Based Costing

Activity Based Costing Activity Based Costing 1 Existing Single Indirect- Cost Pool System Cole Corporation manufactures two types of cell phones a standard type (S) and one complex type with additional functions (C). To cost

More information

Activity Based Costing

Activity Based Costing Activity Based Costing Existing Single Indirect- Cost Pool System Cole Corporation manufactures two types of cell phones a standard type (S) and one complex type with additional functions (C). To cost

More information

ACCT* 2230 Practice Midterm

ACCT* 2230 Practice Midterm ACCT* 2230 Practice Midterm Short Answer Questions 1. (4 marks) During the month of May, Bennett Manufacturing Company purchases $43,000 of raw materials. The manufacturing overhead totals $27,000 and

More information

Cost Accounting. Multiple Choice Questions:

Cost 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 information

1. Which one of the following is assigned to goods that were either purchased or manufactured for resales?

1. Which one of the following is assigned to goods that were either purchased or manufactured for resales? 1. Which one of the following is assigned to goods that were either purchased or manufactured for resales? a. Relevant cost b. Period cost c. Product cost d. Opportunity cost 2. Which one of the following

More information

COST 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.

COST 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 information

An Introduction to Cost terms and Purposes. Session 2

An 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 information

17(2) Job Order Costing. chapter OPENING COMMENTS STUDENT FAQS

17(2) Job Order Costing. chapter OPENING COMMENTS STUDENT FAQS chapter 17(2) Job Order Costing OPENING COMMENTS Chapter 17(2) introduces students to managerial job order cost systems. Students will be exposed to the terminology used to describe costs related to manufacturing.

More information

A Brief Introduction to Cost Accounting

A Brief Introduction to Cost Accounting Harvard Business School 9-192-068 Rev. May 1, 1993 A Brief Introduction to Cost Accounting Organizations and managers are almost always interested in and concerned about costs. Control of past, present,

More information

Student ID: Exam: RR - THE COSTING OF PRODUCTS. Use the following information to answer this question.

Student ID: Exam: RR - THE COSTING OF PRODUCTS. Use the following information to answer this question. Student ID: 21822007 Exam: 061681RR - THE COSTING OF PRODUCTS When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If

More information

Full file at Chapter 02 - Basic Cost Management Concepts

Full 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 information

CHAPTER 2. Job Order Costing 1, 2, 3, 4 5, 6, 7, 8 1, 2, 3, 4

CHAPTER 2. Job Order Costing 1, 2, 3, 4 5, 6, 7, 8 1, 2, 3, 4 CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Explain the characteristics and purposes of cost accounting.

More information

The Examiner's Answers Specimen Paper. Performance Management

The Examiner's Answers Specimen Paper. Performance Management The Examiner's Answers Specimen Paper P2 - SECTION A Answer to Question One The Value Chain is the concept that there is a sequence of business factors by which value is added to an organisation s products

More information

CHAPTER 2. Job Order Costing. Brief A B Study Objectives Questions Exercises Do It! Exercises Problems Problems

CHAPTER 2. Job Order Costing. Brief A B Study Objectives Questions Exercises Do It! Exercises Problems Problems CHAPTER 2 Job Order Costing ASSIGNMENT CLASSIFICATION TABLE Brief A B Study Objectives Questions Exercises Do It! Exercises Problems Problems 1. Explain the characteristics 1, 2, 3, 4 and purposes of cost

More information

TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR

TYPES 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 information

CLB 029 Wrap Rate Projections

CLB 029 Wrap Rate Projections CLB 029 Wrap Rate Projections Lesson Defense Acquisition University Table of Contents Wrap Rate Projections... 3 Introduction... 3 Wrap Rate Projection Methods... 4 Wrap Rate Projections Applied... 6 Summary...

More information

Chapter 2 - Basic Managerial Accounting Concepts

Chapter 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 information

An Introduction to Cost Terms and Purposes

An 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 information

Full file at

Full file at Chapter 02 Job Order Costing and Analysis True / False Questions 1. A manufacturing company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Goods

More information

Understanding Manufacturing Execution Systems (MES)

Understanding Manufacturing Execution Systems (MES) Understanding Manufacturing Execution Systems (MES) What is a Manufacturing Execution System (MES)? AMR Research, a Boston-based industry and market analysis firm, defines a Manufacturing Executing System

More information

Lesson 1: Introduction to Production, Planning, and Control (PPC) Systems

Lesson 1: Introduction to Production, Planning, and Control (PPC) Systems 1. Production, Planning and Control (PPC). This module covers: An introduction to Production, Planning and Control. Guidelines on Sales and Operations Planning (S&OP) and Aggregate Planning. Definition

More information

Problem Exercise 3-12

Problem Exercise 3-12 Exercise 3-12 1. The overhead applied to Ms. Miyami s account would be computed as follows: 2002 2001 Estimated overhead cost (a)... $144,000 $144,000 Estimated professional staff hours (b)... 2,250 2,400

More information

ACCT323, Cost Analysis & Control H Guy Williams, 2005

ACCT323, 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 information

Which 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? 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 information

Managerial 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 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 information

Chapter 17 Job Order Costing Study Guide Solutions Fill-in-the-Blank Equations. Exercises. 1. Estimated activity base. 2. Underapplied. 3.

Chapter 17 Job Order Costing Study Guide Solutions Fill-in-the-Blank Equations. Exercises. 1. Estimated activity base. 2. Underapplied. 3. Chapter 17 Job Order Costing Study Guide Solutions Fill-in-the-Blank Equations 1. Estimated activity base 2. Underapplied 3. Overapplied Exercises 1. An automobile manufacturer produces various lines of

More information

Part 1 Study Unit 4. Cost Management Concepts Patricia Burnett, CMA Ronald Schmidt, CMA, CFM

Part 1 Study Unit 4. Cost Management Concepts Patricia Burnett, CMA Ronald Schmidt, CMA, CFM Part 1 Study Unit 4 Cost Management Concepts Patricia Burnett, CMA Ronald Schmidt, CMA, CFM 1 Remember most common reasons for missing questions! 1. Misreading the requirement (stem) Read the question

More information

19 Process: Cost systems

19 Process: Cost systems 19 Process: Cost systems 19.1 Learning objectives After studying this chapter, you should be able to: Describe the types of operations that require a process cost system. Distinguish between process and

More information

Cost 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 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 information

Full file at

Full 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 information

ACG 2071 Managerial Accounting Spring 2018 Exam #4 Sample Review Problems

ACG 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 information

Lfl CY) The. DoD Contractor. Risk Assessment Guide ~DTICO ,-CTE. 89 OC OBTt

Lfl CY) The. DoD Contractor. Risk Assessment Guide ~DTICO ,-CTE. 89 OC OBTt Lfl CY) The DoD Contractor Risk Assessment Guide ~DTICO,-CTE 14 89 OC OBTt 9881 1 DOD CONTRACTOR RISK ASSESSMENT GUIDE AND PROGRAM TABLE OF CONTENTS, OVERVIEW.............. *...... PROGRAM RESPONSIBILITIES..-

More information

CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements

CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements CHAPTER 20 JOB ORDER COST ACCOUNTING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 K 8. 2 K 15. 2 K 22.

More information

Defense Finance and Accounting Service

Defense Finance and Accounting Service Defense Finance and Accounting Service DFAS 7900.4 M Financial Requirements Manual Volume 6, Managerial Cost Accounting August 2015 Strategy, Policy and Requirements ZP SUBJECT: Description of Requirement

More information

Managerial Accounting 10th Edition by Crosson and Needles Solutions Manual

Managerial Accounting 10th Edition by Crosson and Needles Solutions Manual Managerial Accounting 10th Edition by Crosson and Needles Solutions Manual Discussion Questions DQ1. DQ2. DQ3. The accounting concept of cost measurement focuses on determining the amount of the cost.

More information

Composed & Solved Hafiz Salman Majeed Vu Askari Team

Composed & Solved Hafiz Salman Majeed Vu Askari Team MGT402 Current Online Quiz#3.Nearly 300 MCQ s Solved. Question # 1 of 15 ( Start time: 03:53:53 AM ) Total Marks: 1 A chemical process has normal wastage of 5% of input. In a period, 3,500 Kg of material

More information

CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES

CHAPTER 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 information

ANIL SHARMA S CLASSES

ANIL SHARMA S CLASSES ANIL SHARMA S CLASSES {Marks: 100} (COSTING PAPER-FULL) {Time: 3 Hours} ----------------------------------------------------------------------------------------------------- Q-1: What is meant by cost

More information

VOLUME 6 - Managerial Cost Accounting

VOLUME 6 - Managerial Cost Accounting Defense Finance and Accounting Service DFAS 7900.4 M Financial Management Systems Requirements Manual Volume 6, Managerial Cost Accounting September 2013 Strategy, Policy and Requirements SUBJECT: Description

More information

DEFINITIONS AND CONCEPTS

DEFINITIONS 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 information

Chapter 2 Cost Terms, Concepts, and Classifications

Chapter 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 information

CHAPTER 1 INTRODUCTION

CHAPTER 1 INTRODUCTION CHAPTER 1 INTRODUCTION Cost is a major factor in most decisions regarding construction, and cost estimates are prepared throughout the planning, design, and construction phases of a construction project,

More information

DCAA Audit and Compliance Strategies

DCAA Audit and Compliance Strategies DCAA Audit and Compliance Strategies Presented By: C. P. Krishnan Newport Beach (CA) Dallas (TX) Washington (D.C) New Delhi (India) www.sba.gov Who is DCAA? The Defense Contract Audit Agency, operates

More information

ACTIVITY BASED COSTING

ACTIVITY BASED COSTING CHAPTER 5 ACTIVITY BASED COSTING LEARNING OUTCOMES r Discuss problem of traditional costing system. r Discuss usefulness of Activity Based Costing(ABC). r Discuss Cost Allocation under ABC. r Discuss Different

More information

Sri Lanka Accounting Standard LKAS 2. Inventories

Sri Lanka Accounting Standard LKAS 2. Inventories Sri Lanka Accounting Standard LKAS 2 Inventories CONTENTS paragraphs SRI LANKA ACCOUNTING STANDARD LKAS 2 INVENTORIES OBJECTIVE 1 SCOPE 2 5 DEFINITIONS 6 8 MEASUREMENT OF INVENTORIES 9 33 Cost of inventories

More information

Subbu Ramakrishnan. Manufacturing Finance with SAP. ERP Financials. Bonn Boston

Subbu Ramakrishnan. Manufacturing Finance with SAP. ERP Financials. Bonn Boston Subbu Ramakrishnan Manufacturing Finance with SAP ERP Financials Bonn Boston Contents at a Glance 1 Overview of Manufacturing Scenarios Supported by SAP... 25 2 Overview of Finance Activities in a Make-to-Stock

More information

6. Refer to the Michael's Manufacturing, Inc. information above. Raw materials used for July is:

6. 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 information

CHAPTER 2 THEORITICAL FOUNDATION Definition of Cost As stated by Matz and Usry (1976:41), cost must be justified on relevant

CHAPTER 2 THEORITICAL FOUNDATION Definition of Cost As stated by Matz and Usry (1976:41), cost must be justified on relevant CHAPTER 2 THEORITICAL FOUNDATION 2.1. Definition of Cost As stated by Matz and Usry (1976:41), cost must be justified on relevant facts, competently observed and considerably measured to facilitate management

More information

Job Manager for Job Shops

Job Manager for Job Shops Job Manager for Job Shops What makes Job Shops unique? First, most orders are for a unique item or service. No two Jobs are alike. The Job is a one of a kind job, not a mass production type job. Mass Production

More information

DECISION MAKING. Key Terms and Concepts to Know

DECISION MAKING. Key Terms and Concepts to Know DECISION MAKING Key Terms and Concepts to Know Relevance: Relevant costs and benefits are those that differ among alternatives Total approach vs. differential approach and why relevant costs must be isolated.

More information

Full file at

Full file at Chapter 02--Job Order Costing Student: 1. Cost accounting systems are used to supply cost data information on costs incurred by a manufacturing process or department. 2. A manufacturer may employ a job

More information

2 Cost Concepts and Behavior

2 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 information

1. 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.

1. 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 information

Mona Loa Malaysian Manufacturing cost per bag... $6.00 $5.00 Add markup at 30% Selling price per bag... $7.80 $6.50

Mona Loa Malaysian Manufacturing cost per bag... $6.00 $5.00 Add markup at 30% Selling price per bag... $7.80 $6.50 Case 8-24 1. a. The predetermined overhead rate would be computed as follows: Expected manufacturing overhead cost $3,000,000 = Estimated direct labour-hours 50,000 DLHs =$60 per DLH b. The unit product

More information

COST AND MANAGEMENT ACCOUNTING

COST 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 information

Multiple Choice Questions

Multiple Choice Questions Multiple Choice Questions 1. A cost not relevant to deciding whether to purchase a new machine is: a) The cost of the new machine b) Lower maintenance costs for the new machine c) The cost of the old machine

More information

COST SHEET. Samir K Mahajan

COST 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 information

DEPARTMENT OF INDUSTRIAL ENGINEERING INDR 291 SUMMER PRACTICE REPORT MANUFACTURING FACILITIES. <Your Name Here>

DEPARTMENT OF INDUSTRIAL ENGINEERING INDR 291 SUMMER PRACTICE REPORT MANUFACTURING FACILITIES. <Your Name Here> KOÇ UNIVERSITY College of Engineering DEPARTMENT OF INDUSTRIAL ENGINEERING INDR 291 SUMMER PRACTICE REPORT MANUFACTURING FACILITIES Internship Company and Department:

More information

CHAPTER 16 Solutions COSTING SYSTEMS: JOB ORDER COSTING

CHAPTER 16 Solutions COSTING SYSTEMS: JOB ORDER COSTING Managerial Accounting 10th Edition Crosson Solutions Manual Full Download: http://testbanklive.com/download/managerial-accounting-10th-edition-crosson-solutions-manual/ CHAPTER 16 Solutions COSTING SYSTEMS:

More information

1. F; I 2. V ; D 3. V ; D 4. F; I 5. F; I 6. F; I 7. V ; D 8. F; I 9. F; I 10. V ; D 11. F; I 12. F; I 13. F; I 14. F; I

1. F; I 2. V ; D 3. V ; D 4. F; I 5. F; I 6. F; I 7. V ; D 8. F; I 9. F; I 10. V ; D 11. F; I 12. F; I 13. F; I 14. F; I SOLUTIONS TO EERCISES EERCISE 2-1 (15 minutes) 1. F; I 2. V ; D 3. V ; D 4. F; I 5. F; I 6. F; I 7. V ; D 8. F; I 9. F; I 10. V ; D 11. F; I 12. F; I 13. F; I 14. F; I EERCISE 2-2 (15 minutes) 1. Product

More information

10 hour 6 hour. 5 hour 3 hour

10 hour 6 hour. 5 hour 3 hour Absorption and Marginal Costing HKDSE (2017, 6) (Cost-Volume-profit analysis) Nice Company commenced business on 1 January 2016. It produces a single product, M1. The income statement for the year ended

More information

Identifying Relevant Costs. Identifying Relevant Costs. Identifying Relevant Costs. A relevant cost is a cost that differs between alternatives.

Identifying Relevant Costs. Identifying Relevant Costs. Identifying Relevant Costs. A relevant cost is a cost that differs between alternatives. Identifying Relevant Costs Relevant tcosts for Decision Making Cynthia, a Boston student, is considering visiting her friend in New York. She can drive or take the train. By car, it is 230 miles to her

More information

ACCT Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS

ACCT Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS PROCESS OPERATIONS ACCT 102 - Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS In Chapter 15, we studied the job order cost accounting system used when a company manufactures products

More information

Chapter 2--Job Order Costing

Chapter 2--Job Order Costing Chapter 2--Job Order Costing Student: 1. Cost accounting systems are used to supply cost data information on costs incurred by a manufacturing process or department. 2. A manufacturer may employ a job

More information

Test 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 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 information

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS FINANCIAL STATEMENTS Key Topics to Know Cost of good sold statement is prepared from the finished goods inventory account. Cost of goods sold statement has the same format as in financial accounting. Cost

More information

JSF WORKFORCE ISSUES WORKFORCE ISSUES LABOR. Chapter Four

JSF WORKFORCE ISSUES WORKFORCE ISSUES LABOR. Chapter Four Chapter Four JSF WORKFORCE ISSUES WORKFORCE ISSUES An important economic factor in the decision to split FACO operations among different sites is the availability and cost of workers with the requisite

More information

MULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR

MULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR STUDENT IDENTIFICATION NO MULTIMEDIA COLLEGE JALAN GURNEY KIRI 54100 KUALA LUMPUR SECOND, FOURTH SEMESTER FINAL EXAMINATION, 2014/2015 SESSION FIN2033 INTRODUCTION TO MANAGERIAL ACCOUNTING DMGW-E-F-2/13,

More information