Cost Accounting

7 Key excerpts on "Cost Accounting"

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  eBook - PDF

  Accounting

  Reporting, Analysis and Decision Making

  • Shirley Carlon, Rosina McAlpine, Chrisann Lee, Lorena Mitrione, Ngaire Kirk, Lily Wong(Authors)
  • 2021(Publication Date)
  • Wiley

    (Publisher)

  Cost Accounting An area of accounting that involves the measuring, recording and reporting of product or service costs. 816 Accounting: Reporting, analysis and decision making Cost Accounting system Manufacturing cost accounts that are fully integrated into the general ledger of an entity. cost driver Any factor or activity that has a direct cause–effect relationship with the resources consumed. In ABC, cost drivers are used to assign activity cost pools to products or services. equivalent units of production A measure of the work done during the period, expressed in fully completed units. facility-level activities Activities required to support or sustain an entire production process and not dependent on number of products, batches or units produced. job cost sheet A form used to record the costs chargeable to a job and to determine the total and unit cost of the completed job. job order cost system A Cost Accounting system in which costs are assigned to each job or batch. just-in-time (JIT) processing system A processing system dedicated to having the right amount of materials, products or parts arrive as they are needed, thereby reducing the amount of inventory. materials requisition slip A document authorising the issue of raw materials from the storeroom to production. non-value-added activity An activity that adds cost to, or increases the time spent on, a product or service without increasing its market value. overapplied manufacturing overhead A situation in which overhead assigned to work in process is greater than the overhead incurred. predetermined overhead application rate or budgeted overhead rate A rate based on therelationship between estimated annual overhead costs and expected annual operating activity, expressed in terms of a common activity base. process cost system A system of accounting used by entities that manufacture a large volume of uniform or relatively homogeneous products through a series of continuous processes or operations.

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  Cost Accounting

  Stage 2

  • Mark Lee Inman(Author)
  • 2014(Publication Date)
  • Butterworth-Heinemann

    (Publisher)

  I Cost Accounting systems Introduction In the reading of this book, we have explored the elements of cost, cost collection and absorption, traditional Cost Accounting methods, Cost Accounting for decision making and control. It is now timely to draw it all together. This is what separates the capable accountant from the incapable, the former is essentially the one who can master the tech-niques, but having done so, can relate and employ the techniques at the right time to particular situations. Figure 11.1 attempts to portray this visually. Traditionally, the view of Cost Accounting has begun at the top of Figure 11.1, i.e. cost collection and recording. Much of what is still required on a fiscal and statutory basis still requires that approach. However, in approaching Cost Accounting and cost information within a working environment, what is now fundamental is to consider the essential question of what is actually required. This approach implies a need to consider what needs to be controlled and monitored, as well as what the organization is attempting to achieve. So straightaway we move into an environment of relating what is ostensibly elementary techniques to the managerial requirements of planning and control. Objectives of a Cost Accounting system While Armand Layne lists the explicit features of Cost Accounting as 'planning, control and profitability', and doubtless the latter is really profitability identification, and all three are associated with the management function; Pravin P. Shah has gone one stage further by listing: 1 Why? A system must be designed to meet some predetermined objective or purpose, such as cost control or inventory valuation. (See Figure 11.1.) 1

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  Financial Management of Libraries and Information Centers

  • Robert H. Burger(Author)
  • 2016(Publication Date)
  • Libraries Unlimited

    (Publisher)

  Section V Cost Accounting in Libraries The next four chapters deal with various aspects of cost account- ing in libraries. Chapter 20 is a general introduction to Cost Accounting and the common terms used. Chapter 21 illustrates the role of Cost Accounting in the measurement and evaluation of services in libraries. Chapter 22 focuses on a widely used approach to Cost Accounting called activity-based costing. And chapter 23 provides some examples of cost estimation, break- even analysis, life-cycle costing, differential costing, leasing, and outsourcing. 20 Cost Accounting: General Aspects, Types of Costs, and Calculations Context What This Chapter Covers This chapter focuses on Cost Accounting, which is the financial analysis of past, current, and future projects, operations, and processes. Why This Material Is Important This topic is directly related to financial decision making. One of the main responsibilities of a financial manager is to ensure that the financial resources at his or her disposal are used in the most efficient and effec- tive manner. Cost Accounting consists of several techniques that enable the financial manager to meet those responsibilities. What You Should Learn from This Chapter At the end of this chapter, you should be able to understand the basic elements of Cost Accounting and how they relate to the everyday manage- ment of a library. Introduction Cost (managerial) accounting is the financial analysis of past, cur- rent, and future projects, operations, and processes. It is closely tied to the whole area of measurement and evaluation and used in conjunction with it. Cost Accounting differs from financial accounting in that financial account- ing is only concerned with reporting what happened in the past or what might happen in the future. Another way of thinking about it is that the results of financial accounting are reported in financial statements. The presentation of this information and the way it is measured is guided by

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  What Every Engineer Should Know about Accounting and Finance

  • Norman Henteleff, Jae K. Shim, Shim(Authors)
  • 1994(Publication Date)
  • CRC Press

    (Publisher)

  COST CONCEPTS, COST BEHAVIOR, AND Cost Accounting In financial accounting, the term cost is defined as a measurement, in mone-tary terms, of the amount of resources used for some purpose. In managerial accounting, the term cost is used in many different ways. That is, there are dif-ferent types of costs used for different purposes. Some costs are useful and required for inventory valuation and income determination. Some costs are use-ful for planning, budgeting, and cost control. Still others are useful for making short-term and long-term decisions. Engineers and engineering managers must have a general understanding of cost accumulation, analysis, and reporting because they must be familiar with how costs associated with their responsibility units are determined. A basic knowledge of different types of costs is needed for cost control and selling price determination. The objectives of the chapter are: To identify and give examples of each of the basic cost elements involved in the manufacture of the product. To explain and illustrate various cost concepts. To explain the difference between the financial statements of a manufacturer and those of a merchandising firm. To distinguish between variable, fixed, and mixed costs and explain the dif-ference in their behavior. To discuss how mixed costs are separated and how a cost-volume formula is used for flexible budgeting. To understand two primary cost accumulation systems—job order costing and process costing. 67 5 68 Chapter 5 COST CLASSIFICATION Costs can be classified into various categories, according to: 1. Their management function a. Manufacturing costs b. Nonmanufacturing (operating) costs 2. Their ease of traceability a. Direct costs b. Indirect costs 3. Their timing of charges against sales revenue a. Product costs b. Period costs 4. Their behavior in accordance with changes in activity a. Variable costs b. Fixed costs c. Mixed (semivariable) costs 5.

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  Cost Accounting

  • Mark Lee Inman(Author)
  • 2014(Publication Date)
  • Butterworth-Heinemann

    (Publisher)

  Introduction In the reading of this book, we have explored the elements of cost, cost collection and absorption, traditional Cost Accounting methods, Cost Accounting for decision making and control. It is now timely to draw it all together. This is what separates the capable accountant from the incapable, the former is essentially the one who can master the tech-niques, but having done so, can relate and employ the techniques at the right time to particular situations. Figure 11.1 attempts to portray this visually. Traditionally, the view of Cost Accounting has begun at the top of Figure 11.1, i.e. cost collection and recording. Much of what is still required on a fiscal and statutory basis still requires that approach. However, in approaching Cost Accounting and cost information within a working environment, what is now fundamental is to consider the essential question of what is actually required. This approach implies a need to consider what needs to be controlled and monitored, as well as what the organization is attempting to achieve. So straightaway we move into an environment of relating what is ostensibly elementary techniques to the managerial requirements of planning and control. Objectives of a Cost Accounting system While Armand Layne lists the explicit features of Cost Accounting as 'planning, control and profitability', and doubtless the latter is really profitability identification, and all three are associated with the management function; Pravin P. Shah has gone one stage further by listing: 1 Why? A system must be designed to meet some predetermined objective or purpose, such as cost control or inventory valuation. (See Figure 11.1.) Cost Accounting systems 1 1

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  Management and Cost Accounting

  Tools and Concepts in a Central European Context

  • Andreas Taschner, Michel Charifzadeh(Authors)
  • 2020(Publication Date)
  • Wiley-VCH

    (Publisher)
• When designing a Cost Accounting system, companies typically follow a general structure. In a minimum set-up, costs are recorded first according to cost types, that is, the type of resources consumed (e.g. manpower, material, and capital). Secondly, costs are categorized according to their organizational origin, that is, the entity or department where the costs have been incurred. These organizational units are called cost centers. Finally, costs must be measured for the ultimate cost units, that is, the products and services the company sells to customers. In a more advanced set-up, Cost Accounting systems can also cope with recording cost data for additional cost objects, such as customers, projects, or individual activities.
• When recording cost types, costs are categorized as either direct cost or indirect cost. Indirect costs cannot be traced to cost objects but have to be allocated according to certain rules. There are four basic principles for allocating indirect costs: the cause-and-effect principle, the proportionality principle, the average principle and the ability-to-bear principle. Whenever possible, you should base cost allocation on the cause-and-effect or the proportionality principle. Those are the only ones that are based on a verifiable, economic rationale.
• With respect to the time dimension, accounting systems should include retrospective as well as prospective data, such as forecasts and budgets. In order to structure time, in business practice, accounting systems work in periods. These are recurring accounting cycles, with the calendar month being the most preferred time period.
• When designing Cost Accounting systems, companies strive to meet the following principles: relevance, accuracy, completeness, consistency, objectiveness, timeliness, flexibility, and cost effectiveness.

GLOSSARY

• Ability-to-bear principle