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15 Cards in this Set
- Front
- Back
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Differences Between CMA & FA |
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Similarities Between CMA & FA |
* Both require record keeping * Both are being carried out for decision making *Both are carried out to enhance performance enhancement |
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What are costs? |
Cost may be defined as the giving up of resources for a particular purpose. It is frequently measured by monetary units that must be used to pay for goods and services. |
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Cost Accounting Processes |
Cost Accumulation Cost Allocation |
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Cost Accumulation |
Cost accumulation is the collecting or grouping of cost by means of some natural classification. For example, * selling and administration costs ( rent, electricity) * sales and distribution ( carriage and freight) * research and development costs * manufacturing costs |
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Cost Allocation |
Cost allocation is the direct tracing and reassigning of past one or more objective or unit. For example, costs are directly allocated to * a department * a product * a customer |
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Functions of Management Accounting |
It helps managers to investigate or concentrate on the areas that deviate from the plan on ignore areas are presumed to be running smoothly . This is known as management by exception Carried out to formalize Plans by expressing them the form of budgets It is carried out to formalize control in the form of performance reports. These are used to judge decisions on the productivity of organizational units that his Department sections and managers. It provides feedback through the reports by comparing actual results with previously planned or forecasted objectives those highlighting variances that is deviations or differences from the plan. |
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Period Costs |
Period costs are not included in production costs neither are they included in cost of goods sold this is because they have nothing to do with the cost of producing goods. Instead they are charged as expenses in the profit and loss account |
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Production Costs |
Production costs can either be direct (directly allocated) or indirect (overheads). Both direct and indirect costs can be divided into three groups Material Labour Expenses |
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Prime Cost |
Prime Cost = Direct material + Direct labour + Direct Expenses |
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Product Cost |
Production Cost = Total Direct Cost + Total Indirect Cost |
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Conversion Cost |
Conversion Cost = Direct Labour + Direct Expense + Indirect Cost |
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Schedule of Cost of Goods Manufactured For the period ending.... |
RAW MATERIALS Opening stock add: Purchases Add: Carriage Inwards Less: Purchases Returns = : Net Purchases ( added to opening stock) = : COST OF RAW MATERIAL AVAILABLE Less: Closing Stock = : COST OF RAW MATERIAL USED + Direct Labour + Direct Expenses = Prime Cost ADD: OVERHEADS * Factory power *Factory water * Supervisor's salary = Total Overheads ( added to prime cost) = Manufacturing Cost + Opening WIP - Closing WIP = COST OF FINISHED GOODS PRODUCED |
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Schedule of Cost of Goods Sold |
FINISHED GOODS Opening stock Add: cost of finished goods produced = cost of goods available for sale Less : closing stock = Cost of goods sold |
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Balance Sheet Extract |
Current Assets STOCK raw material WIP Finished goods = total stock Debtors Prepaid expenses Accrued revenues Bank Cash |
