Take Home Question Chapter 3
Rusty Redlow has always independently managed his personal investment portfolio. After a 25year career as a chemical engineer with a large chemical company, Rusty retired and on January
1, 2014, opened an investment advisory b
ACCRUALS CONCEPT IN FINANCE AND ACCOUNTING
Accruals concept is the concept that attempt to correctly match all the accounting expenses (cost) to the
income (revenues) to the year at which it occurs at that accounting period, thus referred to as accrued
Why is Standard Costing Used?
A standard is a preestablished
benchmark for desirable performance.
A standard cost system is one in which a
company sets cost standards and then
uses them to evaluate actual performance.
A variance is the
And Variance Analysis
Standard costing is a technique which is used in
many industries, where production is of repetitive
Standard costing is developed due to the
shortcomings of historical costing.
USERS OF ACCOUNTING INFORMATION
Lenders have no use for the Income statement and the Balance sheet with information relating to past
transactions or events for making decisions unless they are accurate.
The Balance sheet is a statement at one point in tim
Cost volume Profit Analysis
Cost volume Profit Analysis is a logical
extension of marginal costing
C.V.P. analysis examines the relationship of
cost & profit to the volume of business to
Overhead cost variance can be
defined as the difference between
the Standard cost allowed for the
actual output achieved and the
actual overhead cost incurred.
Overhead :- According to terminology of cost
Accountancy (ICWA London) Overhead is
Take Home Question 2
John Plomly has operated Cedar Star Restorations for several years in Kitchener, Ontario, a business that was started by his father in 1981. The company restores residential buildings with wood
exteriors, including log cabins built wi
Financial planner salary (Rusty Redlow)
Assistant salary (extra quarter-end help)
Bloomberg monthly data feed
Depreciation (office equipment)
Car road side assist., Mtce and Ga
Cost terms & purposes
Monetary measure of resources given up to
attain an objective (such as acquiring a good
or service) Barfield, Raiborn, Kinney
At the time of acquisition, the cost incurred is
The Accounting Cycle
Fiscal year Vs Calendar year
1st day of a month and en
Chartered Institute Of Management
Accountants ( CIMA London )
Costing is the technique and process of
Cost accounting measures and reports information
relating to the cost of acquiring and
COST VOLUME PROFIT ANALYSIS
CVP analysis shows the relationship between costs (both variable and
fixed), volume (the number of units produced and sold), and profit or loss.
CVP is a useful management tool; it allows managers to understand and
Cost and management
Provides management with costs for products, inventories,
operations or functions and compares actual to
It also provides a variety of data for many day-to-day decision
as well as es
Overhead Rates and Overhead
Assigned Overhead = POHR Standard Activity
Overhead from the
flexible budget for
Standards are benchmarks or norms
for measuring performance. Two types
of standards are commonly used.
specify how much of an
input should be used to
make a product or
freed to concentrate
freed to concentrate
gain experience in
1. a. $400,0000.794(Exhibit1322)=$317,600.
2. a. $5,0004.355(Exhibit1323)=$21,775.
Identifying Relevant Costs
A relevant cost is a cost that differs between alternatives.
An avoidable cost can be eliminated (in whole or in part) by
choosing one alternative over another. Avoidable costs
are relevant costs. Unav
Typical Capital Budgeting
Capital budgeting tends to fall into two broad
categories . . .
Screening decisions. Does a proposed
project meet some present standard of
Preference decisions. Selec
THE BUSINESS SCHOOL
ACCT 441: COST ACCOUNTING II
COST ACCOUNTING I OR ACCT 341
8th Canadian Edition
Garrison, Chesley, Carroll, Webb