week 10- cost accounting

week 10- cost accounting - Chapter 14- Cost Accounting...

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Chapter 14- Cost Accounting Systems COST ACCOUNTING SYSTEMS involves measuring, recording and reporting costs of products or services i.e. total cost per unit cost Product cost accounting system: - Includes m a nufacturing cost accounts in g en eral ledg er - Used to value inventory (balance sh e et) a nd cost of goods sold (inventory) Non-manufacturing entities Cost accounting was designed to determine produce costs for manufacturing firms Important for other entities: merchandising, service, agricultural, mining Profit and non-profit entities need information concerning product costs Overhead application Establishing costing systems for direct materials and direct labour is easy Overhead costs are accumulate and then assigned as resources are used (difficult) Relationship between resources used and products/services not always clear Cost driver: any factor or activity that has a direct cause-effect relationship with resources consumed A single (often) pre-determined overhead rate is used as a cost driver across a factory e.g. direct labour hours, direct machine hours Activity based costing system provides a refinement of the allocation process Job order costing and process costing (2 systems to allocate overhead) Job order costing system = costs assigned to each individual job (distinguished from) *printing, legal services, travel, patient healthcare (heterogeneous) - Costs are measured according to the job (or batch) not to set time periods Process cost system = serious of connected manufacturing processes or departments produce a large volume of homogenous products *building materials, dairy products, appliances, oil - Costs assigned according to set periods of time JOB ORDER COSTING 1. Job cost flows 1
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Chapter 14- Cost Accounting Systems 2. Job cost sheets 3. Determining overhead rates 4. Accounting procedures 5. Reporting job cost data 6. Under or over-applied manufacturing overhead 7. Non-manufacturing entities Job cost flows Flow: direct materials, direct labour and manufacturing overhead Reflects physical flow of materials Flow of costs has 2 steps: 1) Accumulating costs to complete the work 2) Assigning costs to the work done 2
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Chapter 14- Cost Accounting Systems Uses perpetual inventory system Job Cost Sheet Record the costs changeable to a specific job and determine the total and unit cost of completed job Separate job sheet for each job The Work in Process Inventory account is the control account for several jobs Costs are posted daily from supporting documentation
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This note was uploaded on 06/10/2011 for the course ACCT 1002 taught by Professor Angela during the Three '10 term at University of Sydney.

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week 10- cost accounting - Chapter 14- Cost Accounting...

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