• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

Card Range To Study

through

image

Play button

image

Play button

image

Progress

1/48

Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

48 Cards in this Set

  • Front
  • Back

What is cost accounting

involves the measuring, recording and reporting of product cost
Cost accounting system
consists of accounts for various manufacturing cost.
Important features is the use of perpetual inventory system

Provides immidiate, up to date info on teh cost of a product
Types of cost accounting system
1. Job order costing
2. Processing cost
Objective of both Job order and process costing system
to provide:
1. product cost
2. cost control
3. intentory valuation
4. Financial statement presenation
Job order costing system
Costs are assigned to each job or to each batch

Each job/batch has its own destinguishing features

Objective is to compute the cost per job

used for uniqu product
Manufecturing cost
activities and process taht converts raw material into finished goods
1. Direct Material
2. Direct Labor
3. Manufacturing overhead
Indirect Matrial
Cannot be physically traced to end product
1. dont become part of the finished good
2. they can't be traced becaseu their association wiht finished goods is too small
Predetermined Variable OH rate
Is based on relationship between estimated annual overhead cost and expected annual operating activity.
Predetermined Variable OH rate
Estimated annual overhead cost / expected operating activity
Fixed Overhead rate
Estimate fixed cost / normal capacity
Manufacturing overhead
MO> assigned = underapplied
MO < assigned = overapplied
Over or underapplied Manufecturing overhead
if immaterial - write off to cogs

if material - then charged to WIP, Finished godos and COGS
fixed overhead over/under applied treatment
always chage to cogs
Service department costs are allocated based on
1. Service provided
2. Service available
3. Benefit received
4. Equity
Cost allocated stages
1. Allocate support department cost to producing department

2. Assignmnet of the allocated cost to individual product
Producing departments' overhead
1. Overhead directly associated with producing department
2. Overhead allocated to producing department from support departments
Steps to allocating support department's cost to producing departments
1. Departmentalize the firm
2. classify each dept as support vs production
3. Trace overhead cost to each dept
4. allocate support dept cost to producing
5. allocate off to individual product through predeterminded OH rate
Sequential method of allocating cost
1. Support dept of highest cost is allocated to smaller support departments
2. Small support dept's cost to producing dept
3. Nothing gets allocated to the support dept with most cost
Process cost accounting
focuses on teh process involved in mass producing productas that are identical
Difference between Job Cost vs process cost
1. Number of wqork in process accounts used
2. Documents used to track cost
3. the point at which costs are totalled (period of time)
4. unitl cost computation
Similaries of job order and process costing system
1. Manufecturing cost elements are same
2. Accumulation for cost types
3. Flow of cost
Process costing flow (PECUA)
1. Physical flow analysis
2. Calculate equivelent units
3. Determine cost to allocate
4. Compute Unit cost
5. allocate cost to EWIP, Goods completed (valuation of inventory)
Prime cost
DM + DL
Coversion cost
DL + Overhead
Physical flow of unit
Units to be accounted for:
Beg Unit + Started into production

Units accounted for:

Transferred out + End. unit
Compute Equivelent unit
Material:
Transfered out (% X unit)
+ Ending COGS (% X unit)

Conversion Cost (CC)
Transfered out (% X unit)
+ Ending COGS (% X unit)
Computer production cost
( Beg DM + DM added)/ DM Equivelent units

CC: (Beg CC + CC added)/ CC equivelent unit
Product cost
Manufecturing cost (DM+ DL + OH)
OH = Indirect material, indirect labor, other indirect cost
Period cost
Non-manufecturing cost
selling expense
Admin expense
ABC (activity based costing)
An approach for allocating overhead cost to multiple cost pools then is assigns the activity cost pools to product by means of cost drivers
Benefits of ABC
1. ABC leads to more cost pools
2. ABC leads to enhanced control overhead costs
3. ABC leads to better mgmt decision
Limitations of ABC
1. expensive
2. arbitary allocation continues
When to use ABC
1. Product lines differ greatly in volume and manufecturing complexity
2. product lines are numeours, divers, adn require different degress of support cost
3. overhead cost constitues significant portion of total cost
4. manufecturing process changed significantly
5. production managers ignoring data
Types of activity level
Unit level
batch level
Production level
Facility Level
Joint product
two products procuded together up to a split off point. Can't be produced by themselves
Valuation methods of joing cost
1. Physical unit
2. Weighted ave
3. sales value at split off point
4. Net realizable value
5. Constant gross margin %
Net realizable value
Market price - futher processing cost
= Hypothetical price X # of unit = Hypothetical value

then apply joint cost %
When to use Net realizable value
use only if sales value @ split off point is not available
Sell or further process
Futher process only if incremental reveneu is > than incremental cost.

Joint cost should be ignored
By-product treatement for Financial reporting
Revenue is immaterial
Recoreded a other income or recudction to COGS
Any further cost to by-product is recoreded as reduction to other income or increse of COGS
Recored as ordinary sales
Constant Growth Margin
(Joint cost + Futher processing cost ) / Final revenue = Gross margin/final revnenue = GM %

Final value - Margin $= COGS - Seperable cost = joint cost to product
Cost estimation approaches (4)
Industrial engineering
Conference method
account analysis
Quantitative methods
4 types of qunatetative methods
1. Scattergrah
2. High low
3. Regression
4. correlation analysis
High low method
Chage in cost between high and low point / change in activity between high and low point

Give VC per unit
Regression analysis
Y = a + bx
Y = estimated total cost
a = fixed cost
b = slope, VC
X quantity
R Square
Coefficient of determination

the closer it is to 1, the more causal the relationship
Reason why OH will be overapplied
1. overhead cost were overestimated
2. Actual capacity was greate than noral capacity
3. Actual overhead costs were less than expected
Why would overhead be underapplied?
1. overhead costs were underestimated
2. Actual activity was less than normal capacity
3. Actual overhead was higher than expected