Overhead Mfg. Overhead Work-in- Process Work-in- Process Finished Goods Finished Goods Cost-of Goods Sold Cost-of Goods Sold Cost of Goods Sold Cost of Goods Sold Nonmanufacturing Expenses Nonmanufacturing Expenses Sales - = Gross Margin - Net Income = Income Statement Sold P r o d u c t C o s t s Period Costs Goal: Accurately costed products Timeliness is critical
Variance Analysis: General Description Actual Quantity of Input at Actual Price AQ x AP Actual Quantity of Input at Standard Price AQ x SP Standard Quantity of Input at Standard Price SQ x SP Price Variance AQ x (AP - SP) Usage Variance SP x (AQ - SQ) Budget Variance (AQ x AP) - (SQ x SP)
Mgmt. Acct. Cost Accumulation
Cost Accounting Systems Product Costs Job-Order Costing Process Costing Total/Unit Cost
Process Costing . . . • Homogeneous products continuously produced. • Costs accumulated by process (time). • Unit cost = total cost for period divided by number of units produced.
Cost Flows in a Manufacturing Firm Cost Flows in a Manufacturing Firm Direct Materials Direct Materials Direct Labor Direct Labor Mfg. Overhead Mfg. Overhead Work-in- Process Work-in- Process Finished Goods Finished Goods Cost-of Goods Sold Cost-of Goods Sold
Process Costing System DM DL MOH Process B Process A Finished Goods Cost of Goods Sold Process C
Job-Order Costing . . . • Wide variety of distinct products. • Costs accumulated by job. • Unit cost = total cost of job divided by number of units produced.
Job-Order Costing DM DL MOH Job 100 Job 101 Job 102 Finished Goods Cost of Goods Sold Cost of Goods Sold Work in Process Finished Goods
Mgmt. Acct. Cost Assignment
Assigning Manufacturing Costs Functional Based Costing Activity Based Costing
Mgmt. Acct. Good! Cost Behavior!
Cost Behavior • Variable Costs • Fixed Costs • Mixed Costs
Variable Costs • Total costs that vary in direct proportion to changes in the level of activity within the relevant range.
$ Volume (Activity Base) Total Variable Costs
$ Volume (Activity Base) Per Unit Variable Cost
But different between ranges of activity $ Volume (Activity Base) Step Costs are constant within a range of activity Step Variable Costs
- Winter '20