Management Accounting For Costs And Control

Management Accounting For Costs And Control
ACC512
Management Accounting for Costs & Control
Assessment Item 1
Midhun Ramachandran
Student ID: 11594000
Class: Wednesday 9am–12pm
Lecture – Dhanushka Wijayakantha
Answer 1– Management accounting
The three elements that drive or influence management accounting work are:
Compliance– It refers to the need to fulfil both external regulations as well as reporting requirements. Accounting personnel's need to furnish proper
recognition of expenses and revenues, and estimate assets and liabilities. Management accountants sketch and operate cost accounting system that
determines inventories by affix costs to product.
Control– It refers to entire procedure of planning and control. Management accountants create thorough spending ... Show more content on
Helpwriting.net ...
Answer 3 – Cost concepts
The statement "Cost accumulation to determine the cost of goods sold is an example of the control function of management accounting work" is false.
cost accumulation suggests the route in which expenses are gathered and identified with specific client, group, employments, request, groups, division
and strategy where as a control in management accounting work is identified with the complete method of planning and control of the organization
organizing in evaluating the people performance with respects achieving the end objective furthermore in the outlining and working of framework in
accomplishing organizational goals. (2016)
Answer 4– Manufacturing statement and income statement
Normal view:
Formula view:

Answer 5– Cost concepts
I disagree with the statement. Perpetual inventory or continues inventory system describes the method of trading stock where the information on
inventory stock and the availability of stock in continues manner. It is made available through bar coding system and lately radio frequency
identification (RFID) that allows the computer system to quickly read the inventory information. But this system can be vulnerable sometimes due to
overstatement (phantom inventory) or understatement (missing of inventory).("Perpetual Inventory Definition | Investopedia", 2003). It occurs due to
... Get more on HelpWriting.net ...

Economic Cost versus Accounting Cost
CHAPTER
The Cost of
Production
7.1 Measuring Cost: Which Costs
Matter?
7
Economic Cost versus Accounting Cost
в—Џ accounting cost equipment. CHAPTER OUTLINE
7.1
Measuring Cost: Which Costs
Matter?
7.2
Costs in the Short Run
7.3
Costs in the Long Run
7.4
Long–Run versus Short–Run Cost

Curves
7.5
Production with Two Outputs–
Economies of Scope
7.6
Dynamic Changes in Costs–The
Learning Curve
7.7
Estimating and Predicting Cost
в—Џ economic cost
Actual expenses plus depreciation charges for capital
Cost to a firm of utilizing economic resources in production.
Opportunity Cost
в—Џ opportunity cost Cost associated with opportunities forgone when a firm's resources are not put to ... Show more content on Helpwriting.net ...
Of course a prospective sunk cost is different and, as we mentioned earlier, would certainly affect the firm's decisions looking forward.
How do we know which costs are fixed and which are variable?
Over a very short time horizon–say, a few months–most costs are fixed.
Over such a short period, a firm is usually obligated to pay for contracted shipments of materials.
Over a very long time horizon–say, ten years–nearly all costs are variable.
Workers and managers can be laid off (or employment can be reduced by attrition), and much of the machinery can be sold off or not replaced as it
becomes obsolete and is scrapped.
Copyright © 2013 Pearson Education, Inc. Microeconomics Pindyck/Rubinfeld, 8e.
6 of 55

Copyright © 2013 Pearson Education, Inc. Microeconomics Pindyck/Rubinfeld, 8e.
AMORTIZING SUNK COSTS
MARGINAL COST (MC)
в—Џ amortization Policy of treating a one–time expenditure as an annual cost spread out over some number of years.
в—Џ marginal cost (MC) extra unit of output.
Amortizing large capital expenditures and treating them as ongoing fixed costs can simplify the economic analysis of a firm's operation. As we will
see, for example, treating capital expenditures this way can make it easier to understand the tradeoff that a firm faces in its use of labor versus capital.
7 of 55
Because fixed cost does not change as the firm's level of output changes, marginal cost is equal to the increase in variable

A Cost Accounting System Analysis
A cost accounting system is a framework used by firms to estimate the cost of their products for profitability analysis, inventory valuation and cost
control. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting
provides the detailed cost information that management needs to control current operations and plan for the future.
Costing is essential for every organization, as every manufacturing and other department has to be assigned accurate budget for proper operation
(Hansen, Mowen and Guan, 2006). The costing system provides information that is useful to managers for minimizing wastage and allocating
resources to different departments.
The traditional ... Show more content on Helpwriting.net ...
Most organizations in the business arena today are quite complex, large and have many departments. It cannot be the basis of the costing system in
these organizations as it can only be efficient when there are low indirect costs compared to direct costs.
On the other hand, Activity–based costing (ABC) attempts to accurately trace indirect costs to products by allocating indirect costs to activities and
then to products based on their usage of the activities. In order to counter the flaws of the Traditional Costing System, most organizations have
adopted the ABC method. ABC is an effective way to allocate the indirect costs and it leads to more accuracy because it relies upon a greater number
of activity and resource cost drivers rather than only focusing on volume based cost drivers. Also in contrast to the traditional costing system, ABC is
optimal when indirect costs are higher as it utilizes several indirect cost pools and divides the production function into many activity areas. The activity
based approach provides a precise breakdown of indirect costs and eliminates the allocation of irrelevant costs to a product therefore providing a more
exact reflection of product and customer profitability. Thus, unlike traditional costing, ABC gives equal importance to other factors such as business
competition, accuracy, customer satisfaction, product development etc. It's emphasis on product efficiency helps the company establish a

Cost Accounting Project
[Type the document title]
[Type the document subtitle]
[Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document
here. The abstract is typically a short summary of the contents of the document.]
compaq
[Type the company name]
[Pick the date]
Contents
Concept of Cost Accounting..............................................................................03
Introduction..................................................................................................03
Traditional costing v/s activity based costing...........................................................04
Need for an Activity Based Costing.....................................................................06
Stages in Activity Based Costing.........................................................................08
Cost Drivers.................................................................................................09
Classification of ... Show more content on Helpwriting.net ...
With the help of case studies of Siemens Electric Motor Works, John Deere Component Works, and Schrader Bellows, Cooper (1989) demonstrated that
the 'management objectives' and 'diversity of product mix' determine the extent of the complexity in the design of activity–based cost management
systems. The competitive environment in which the firm is operating, drives the need for activity–based costing.
A well–designed integrated cost management system will help the management of the company to identify opportunities for continuous improvement
and point out unused capacity or capacity constraints, if any, and will facilitate the introduction of activity–based budgeting in the organization. The
activity–based budgeting mindset makes all cost variable and attempts to match resource supply with resource demand.
Activity based costing Activity Based Costing (ABC) is a two–stage product costing method that assigns costs first to activities and then to the

products based on each product 's use of activities. , ABC systems first accumulate overhead costs for each organizational activity, and then assign the
costs of the activities to the products, services, or customers (cost objects) causing that activity. Activity analysis is the processes of identifying
appropriate output measures of activities and resources (cost drivers) and their effects on the costs of making a product or providing a service.
In this way an

Cost Accounting
Multiple Choice Questions
16.Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity–based costing are those where
overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they
produce. A)low, little B)low, considerable C)high, little D)high, considerable
17.Would factory security and assembly activities be best classified at an appliance manufacturing plant as unit–level, batch–level, product–level, or
organization–sustaining?
| |Security |Assembly |
|A) |Product |Unit | ... Show more content on Helpwriting.net ...
39.Refining a cost system includes: A)classifying as many costs as indirect costs as is feasible B)creating as many cost pools as possible C)identifying
the activities involved in a process D)seeking a lesser level of detail
42.ABC systems create: A)one large cost pool B)homogenous activity–related cost pools C)activity–cost pools with a broad focus D)activity–cost pools
containing many direct costs
44.ABC systems: A)highlight the different levels of activities B)limit cost drivers to units of output C)allocate costs based on the overall level of
activity D)generally undercost complex products
45.A single indirect–cost rate may distort product costs because: A)there is an assumption that all support activities affect all products B)it recognizes
specific activities that are required to produce a product C)costs are not consistently recorded D)it fails to measure the correct amount of total costs
46.Traditional cost systems distort product costs because: A)they do not know how to identify the appropriate units B)competitive pricing is ignored
C)they emphasize financial accounting requirements D)they apply average support costs to each unit of

Cost Accounting Essay
Introduction
Cost accounting is used by most companies whether manufacturing or service to keep track of their daily activities. It is essential in understanding the
costs of running any enterprise. In other words they aid in determining the costs of inputs and outputs used in production. It involves analyzing and
evaluating different approaches in order to determine the most suitable method that management can use suitably and one that can aid in future planning.
Cost accounting is therefore an essential tool in decision making. Decisions made may involve pricing levels, future investment, production levels and
coming up with a good competitive strategy. Different industries use differentcost accounting method depending on the type of services provided or
product manufactured. ... Show more content on Helpwriting.net ...
Another disadvantage of standard costing is that organizations which use it in most cases usually react to matters instead of finding a proactive
approach of mitigating the errors. Inefficient processes are allowed to run and then cost comparison is done between actual and normal cost.
Management may then try to eliminate the variances. This method works on the assumption that factors such as technology remain constant which is
not logical especially in this dynamic world where prices of commodities keep on changing. This leads to organizations revising their standard costing
instead of taking corrective actions.
Standard costing cannot be used in companies that produce heterogeneous products since it works only where the components and processes are the
same and repeat themselves and this result in production of identical goods and services. This does not take into account customer preferences since
customers need diverse types of goods. This makes it difficult to be applied in many accounting

Role of Cost Accounting and Ethical Consideration
RUNNING HEADER: Role of Cost Accounting and Ethical Consideration
Role of Cost Accounting and Ethical Consideration
Introduction Cost accounting is used to help management understand how much it cost to run a business. Understanding the role of cost accounting is
important when one is trying to put together a team of managers to help run the company. The CEO of a merchandising organization needs to hire a
CFO to run the accounting system, but the CEO has little understanding of cost accounting. The CEO will hire a consultant to help her understand the
role of cost accounting, the role of ethics in cost accounting, and compare and contrast the absorption and variable costing.
Role of Cost Accounting Cost accounting is the area ... Show more content on Helpwriting.net ...
Ethical analysis needs to be instutionalized as an integral part of phases in decision making process.
Compare and Contrast Absorption and Variable Cost
It is important for the CEO is the manufacturing organization to understand the different between absorption cost and variable cost. One different
between the two are the way accounting treats fixed manufacturing overhead. Absorption cost is all the manufacturing overhead costs applied to the
manufactured goods (Hilton, 2003). Variable cost is applied to work in process as product cost, and fixed overhead costs are expensed as period
cost. Other different is the timing of when fixed overhead becomes an expense. Variable fixed cost is expense immediately, and absorption fixed cost
is inventoried until the goods are sold. Fixed cost is expense in both accounting system. Both systems have advantages and it will be up to
management to decide which works best for their organization. Below is a list of each system advantages:
"Advantages of Absorption costing Fixed MOH is treated as the same as other product costs, e.g. DM, DL Consistent with long–run pricing decisions
that must cover full cost External reporting and income tax law require AC
Advantages of Variable

The Cost Accounting Center Of Excellence
Several years ago, the company set out to create a "Cost Accounting Center of Excellence". The initial development of the project was at the request of
the Chief Financial Officer the executive sponsor. The main goals set for the team concentrated on harmonizing the ways of working for all
manufacturing facilities in The United States, centralize the execution of the cost accounting function, and reduce administrative costs associated with
performing the cost accounting function. The team structure included a Steering Committee comprised of the Chief Accountant, Director of Business
Excellence, and a Business Group Controller (i.e. Stakeholder). The Steering Committee provided the oversight and guidance of the core team
responsible for executing the vision set forth in the project charter. This structured design represented a formal group. A formal group is, by definition,
formed by a manager to assist the organization to accomplish its goals [Kinicki & Fugate, p.227]. Due to the technical nature of the subject matter, the
Steering Committee delegated significant latitude and a high level of autonomy to the core team in performing the tasks assigned. As a result, the team
proceeded, in several respects, as a self–managed team given administrative oversight for the domain tasks [Kinicki & Fugate, p.240]. The core team
consisted of cost accountants, technical accountants, IT specialists, and manufacturing personnel. This cross–functional team used the complementary
skills to

Evaluation And Calculation Of Cost Accounting
Executive summary: This assignment deals with the evaluation and calculation of cost accounting. In this assignment, we will discuss about the
different types of costs that is related with the company, different methods of cost evaluation, appropriate techniques of cost accounting, preparation of
routine cost report, to Use performance indicators to identify potential improvements, improvements to reduce costs, enhance value and quality, the
purpose and nature of the budgeting process in business, appropriate budgeting methods for organization, Preparation of budgets according to the
chosen budgeting method, Preparation of cash budget, Calculation of variances, identify possible causes and recommend corrective action etc.
Table of contents
Introduction..........................................................................................3
1.1 Different types of cost based on the following company information...............3
1.2 Use different costing methods applied in your chosen production/Manufacturing
company..............................................................................................3
1.3 Calculate costs using appropriate techniques–FIFO, LIFO, AVCO from the given company data................................................................................4
1.4 Analyze cost data using appropriate techniques from your chosen company data....................................................................................................5
2.1 Prepare and Analyze routine cost reports for your company.........................6
2.2 Use performance indicators to identify potential improvements of your company
Operation.............................................................................................6

Cost and Management Accounting
UNIVERSITY OF OTAGO EXAMINATIONS 2011 ACCOUNTANCY AND FINANCE ACCT 222 Cost and Management Accounting Semester
2, 2011 (TIME ALLOWED: 3 HOURS) This examination paper comprises 6 pages Candidates should answer questions as follows: All questions
should be answered. Show all major workings for your numerical calculations. The examination will be marked out of 100 marks. Question 1: 60
marks Question 2: 11 marks Question 3: 14 marks Question 4: 15 marks The following material is provided: Nil Use of calculators: Only calculators
on the University of Otago list of approved calculators are permitted. (Subject to inspection by the examiners) Candidates are permitted copies of: One
A4 (or smaller) sheet of paper that is... Show more content on Helpwriting.net ...
We used up about one–fifth of it last year. Dyer's figure of $178,360 for materials probably includes about $51,000 for GHL. But it'll be tricky stuff
to handle if we don't use it up. We bought it for $1,275 a ton, and you couldn't buy it today for less than $1,450 a ton. But if you sold it, you'd only get
around $1,200 a ton, but then there would be all the handling expenses–probably about $100 a ton." Walsh thought that Dyer ought to be present during
this discussion. He called her in and put Duffy's points to her. "I don't much like all the conjecture," Dyer said. "I think my figures are pretty
conclusive. Besides, if we are going to have all this talk about 'what will happen if,' don't forget the problem of space we're faced with. We're
paying $21,840 a year in rent for warehouse space a couple of miles away. If we closed Duffy's department, we'd have all the storage space we need
without renting." "That's a good point," said Walsh, "but I'm a bit worried about the workers if we close the department. I don't think we can find
room for any of them elsewhere in the firm. I could see whether Packages can take any of them. But some of them are getting on. There are Walters
and Hines, for example. They've been with us since they left school 40 years ago. I'd feel bound to give them a small pension – $4,000 a year each,
say." Duffy showed some relief at this. "But I still don't like Dyer's figures," he said.

Differences Of Cost Accounting And The Advantage Of...
Differences of Cost Accounting and the Advantage of Activity Based Accounting
Cost and management accounting is an integral element in preparation of an entity's financial reports. Cost accounting consists of various branches,
including; job and process costing, absorption costing, traditional costing and activity based costing. An efficient costing system allows managers and
other users of financial reports to make decisions to better the company, in reducing and streamlining costs, to improve overall profits. The way in
which managers achieve this can be a rigorous and time consuming task, however, if a costing system can be perfected, productivity and general cost
reduction can be achieved and an overall more efficient operation of the business will ensue. This essay will critically discuss factors in which a
business consider in deciding on a costing system to implement and operate when establishing a costing system. In this article I will describe the
different methods of costing, explain why I believe activity based costing is the most efficient method, and provide a real world example to support my
claim.
A costing system, by definition:"Costing system is that system in which we calculate different costs with different methods and also monitor cost for
reducing wastage and misuse of resources."(SVtuition.org, 2014) A costing system is made up of different elements which best suits a company's
operations. They have many elements that can be meshed into one

Cost Accounting
Transfer Pricing Q
1 of 8
Des Moines Valley Company
Des Moines Valley Company has two divisions, Computer Services and Management Advisory Services. In addition to their external customers, each
division performs work for the other division. The external fees earned by each division in 19x1 were $200,000 for Computer Services and $350,000
for Management Advisory Services. Computer Services worked 3,000 hours for Management Advisory Services, who, in turn, worked 1,200 hours for
Computer Services. The total costs of external services performed by Computer Services were $110,000, and $240,000 by Management Advisory
Services.
Required:
a Determine the operating income for each division and for the company as a whole if the ... Show more content on Helpwriting.net ...
Compute the operating income for the Olive Oil Division using a transfer price of $2.14. What transfer price(s) do you recommend? Compute the
operating income for the Olive Oil Division using your recommendation.
Transfer Pricing Q
4 of 8
Better Food Company a Answer
Sales: External (1,200,000 x $4) Internal (800,000 x $4) Cost of goods sold: Variable (2,000,000 x $1.74) Fixed (2,000,000 x $0.40) Operating income
Sales: External (1,200,000 x $4) Internal (800,000 x $2.14) Cost of goods sold: Variable (2,000,000 x $1.74) Fixed (2,000,000 x $0.40) Operating
income

$4,800,000 $3,200,000 $3,480,000 $800,000
$8,000,000
$4,280,000 $3,720,000
b
$4,800,000 $1,712,000 $3,480,000 $800,000
$6,512,000
$4,280,000 $2,232,000
c
Due to current demand in excess of the capacity, the Olive Oil Division should not be penalized by having to sell inside. All sales equivalent to the
current external
demand of 1,400,000 should be at the market price. Current external demand Current internal demand Total demand Capacity Excess demand
Internal demand Noncompetitive internal demand Sales: External (1,200,000 x $4) Internal (200,000 x $4) Internal (600,000 x $2.14) Cost of goods
sold: Variable (2,000,000 x $1.74) Fixed (2,000,000 x $0.40) Operating income 1,400,000 800,000 2,200,000 2,000,000 200,000 800,000 600,000
$4,800,000 $800,000 $1,284,000 $3,480,000 $800,000
$6,884,000

Advantages And Disadvantages Of Cost Accounting
Historical cost can be defined as the original cost of an asset during transaction and recorded in an organization's accounting record. Generally Accepted
Accounting Principles stated that assets and liabilities must be recorded in balance sheet with original cost which is the purchasing cost during that
time. The historical cost accounting often used in the condition where prices are constant or change slowly and yet, it does not affect the purchasing
power of an item. There is no doubt on balance sheet amount because of the historical cost represented how many amount has been paid or received
during the actual transactions. The advantages and disadvantages of historical cost accounting are discussed as below:
One of the advantages of historical ... Show more content on Helpwriting.net ...
Net realizable value is an exist value, an estimate of the amount an asset could be sold for in its present condition minus disposal costs. Current cost is
an input or entry value, an estimate of the amount that would have to be paid currently to acquire the future economic benefits of an asset in the
normal course of business (Hoggett & Edwards, 1996, p. 669). The advantages and disadvantages current value accounting are discussed as below:
One of the advantages of current value accounting is relevant for making decisions. This is because the market value of the current value accounting
represents the current cost of economic transactions. Therefore, the information that provide are more appropriate and more useful because it always
update to the latest information in market. It is better to use the latest information to make decisions rather than using previous information for
measurement.
On the other hand, current value accounting provides an efficiency measurement. This is because the profit of the good or services will be separated
and recorded as the business's asset before it sold. The separation of business gain and business asset must be done to make sure the accuracy of
calculation for a

Difference Between Financial Accounting And Cost Accounting
(iv)Financial Accounting versus Cost Accounting
To understand the concept of cost accounting to the core, it is important to recognise initially as to what makes cost accounting different from financial
accounting.
The major differences between financial accounting and cost accounting are as follows:
Basis of DistinctionFinancial AccountingCost Accounting
ObjectiveThe objective of financial accounting is to provide information about the overall financial position and performance of the business
organisation.The objective of cost accounting is to ascertain cost of any particular product or service or activity. Cost accounting aims at cost
controlling and provides information in decision–making process.
UsabilityIt is used for determining overall profit/loss of any organisation. ... Show more content on Helpwriting.net ...
Outsiders usually do not have any access to cost records.
Type of information recordedFinancial accounts record only monetary information.Cost accounts record both financial and non–financial information.
Analysis of profitIn financial accounting, profit is disclosed for the whole business.In cost accounting, profitability is shown for every process, product
or operation for revealing the areas of profitability.
Table 1.1.1: fFinancial aAccounting versus Ccost Accounting
Despite the above differences, both financial and cost accounting work in agreement and provide the desired data to the organisations. Determination
of value of stock and cost of goods sold is done in cost accounting. This value of stock and cost of goods sold is used for determining the gross profit,
which is a part of financial accounts. In addition, a financial accountant receives a lot of data from a cost accountant for the preparation of financial
reports. Thus, despite of the differences, both cost accounting and financial accounting facilitate each other in meeting the overall goal of the
organisation.
(v)General Principles
1. Cause–Effect

Annotated Bibliography Of Cost Accounting In Apa
Annotated Bibliography in APA Format
Brittany Stewart
Finance and Accounting for Decision Making
Lamar Cunningham
Herzing University Annotated Bibliography in APA Format
Kess, M. (1995). Cost accounting and cost analysis at the united states mint. The Government Accountants Journal, 44(2), 56. Retrieved from http:/
/prx–herzing.lirn.net/login?url=http://search.proquest.com.prx–herzing.lirn.net/docview/222366904?accountid=167104 This article discusses cost
accounting and cost analysis and their vital role to the Mint agency where the nation's coins are produced. The Mint was established by Congress in
1792 with approximately 200 employees. The Mint agency is responsible producing all circulating coins, protect the nation's precious metal reserves of
gold and silver, and manufacture commemorative coins to the public such as the Presidential or American Eagle coins. The cost accounting system at
the Mint is just one of the three types of major accounting system is used for general and bullion accounting. The cost accounting systems is subsidiary
to general accounting and it is decentralized to each production facility. According to the author, cost accounting is an integral part of the overall
accounting system (Kess, 1995). The Mint generally used the full cost or absorption method. This method assigns all manufacturing costs to the cost of
goods manufactured (Kess, 1995). The author provides in–depth information on manufacturing cost categories such as labor,

Cost Accounting
Chapter 1
Basic Cost Concepts
Learning Objectives
To understand the meaning of different costing terms to understand different costing methods
To have a basic idea of different costing techniques
To understand the meaning of cost sheet
In order to determine and take a dispassionate view about what lies beneath the surface of accounting figures, a financial analyst has to make use of
different management accounting techniques. Cost techniques have a precedence over the other techniques since accounting treatment of cost is often
both complex and financially significant. For example, if a firm proposes to increase its output by 10%, is it reasonable to expect total cost to increase
by less than 10%, exactly 10% or ... Show more content on Helpwriting.net ...
are also given due consideration by management before deciding upon the price but the cost plays a dominating role.
Determining and Controlling Efficiency
Cost accounting involves a study of various operations used in manufacturing a product or providing a service. The study facilitates measuring the
efficiency of an organization as a whole or department–wise as well as devising means of increasing efficiency.
Cost accounting also uses a number of methods, e.g., budgetary control, standard costing etc. for controlling costs. Each item viz. materials, labour and
expenses is budgeted at the commencement of a period and actual expenses incurred are compared with budget. This greatly increases the operating
efficiency of an enterprise.
Facilitating Preparation of Financial and Other Statements
The third objective of cost accounting is to produce statements whenever is required by management. The financial statements are prepared under
financial accounting generally once a year or half–year and are spaced too far with respect to time to meet the needs of management. In order to
operate a business at a high level of efficiency, it is essential for management to have a frequent review of production, sales and operating results. Cost

accounting provides daily, weekly or monthly volumes of units produced and accumulated costs with appropriate analysis. A developed cost accounting
system provides immediate information regarding stock of raw

Cost Accounting And Lean Management
Cost accounting is a process of recording, classifying, analyzing, summarizing allocating and evaluating various alternative courses of action and
control of costs. Cost accounting involves the techniques for:
Determining the costs of products, processes, projects, etc. in order to report the correct amounts on the financial statements, and
Assisting management in making decisions and in the planning and control of an organization.
While cost accounting is often used within a company to aid in decision–making, financial accounting is what the outside investor community typically
sees. Financial accounting is a different representation of costs and financial performance that includes a company's assets and liabilities. Cost
accounting can ... Show more content on Helpwriting.net ...
It is a continuous effort to improve products, services, or processes, which require "incremental" improvement over time in order to increase the quality
and efficiency of the process.
Lean management looks for different ways to eliminate factors that waste time, effort or money. This is achieved by analyzing a business process and
then revising it or cropping out any steps that do not create value for consumers. Lean Management philosophy is based on the idea that organizations
should set their strategies according to what the consumers really value, systematically eliminating waste both within the firm and along the process of
supply chain. Many companies when implementing the Lean Management ideology complains that traditional Management Accounting Systems are
unable to support their projects. At best, they are perceived as bureaucratic tasks, and at worst, they are considered a key constraint to both the
acceptance and success of lean projects implemented in their organizations. The failure of these traditional Management Accounting tools and
techniques has led to management consultancies in coming up with and developing a few range of Lean Accounting

1.7 Advantages And Limitations Of Cost Accounting
7._________cost tend to vary directly with volume of output.
8._________cost is prepared before accepting an order for submitting price quotation.
9._________cost refers to the cost incurred in promoting sales and advertisement.
10.The Production cost originates with the process of supplying material labor and services and finishes with ________ of the finished product.
1.7 Limitations of Cost Accounting
пЃ¶Cost Accounting is based on estimates and so it is not reliable.
пЃ¶It is expensive because analysis, allocation and absorption of overheads require considerable amount of additional work.
пЃ¶Modern methods of cost accounting are not applicable to every type of industries.
пЃ¶Cost Accounting system has failed to produce desired results in many concerns.
пЃ¶The results shown by cost ... Show more content on Helpwriting.net ...
Besides this there are certain advantages of cost accounting to the management i.e. it helps in price fixation, in revealing profitable and unprofitable
activities, idle capacity, in controlling cost and also helps in inventory control.
(b) Benefits to the Employees: Cost accounting introduces wage scheme, bonus to the efficient & sincere employees which in turn increasing
productivity, profitability and lowering cost.
(c) Benefits to Creditors: The better management of finance through cost accounting leads to timely debt servicing by company in the form of
repayment of loan and payment of interest. To stay and grow in competition and for judging soundness of present and perspective borrower and cost
reports give better picture of efficiency profit prospectus and capacity.
(d) Benefits to the Government: Cost accounting enables the Govt. to prepare plans for economic development of the country, to make policies
regarding taxation, excise duty, export, price, ceiling, granting subsidy

Cost Of Cost Management Accounting Essay
TASK 1
Name– Sonia Sharma
Student ID– 20150076
Unit– 26367
COST MANAGEMENT ACCOUNTING
ANSWER 1.1
a)DIRECT COSTS:– A direct cost is defined as the price that can be directly applied to production of goods. The direct cost classifies direct material,
direct labour and manufacturing overheads. The direct cost is related to labour, raw material and expenses related to the production of goods. Direct
cost is simply as the cost that is applied directly to the product. For example– wages of full time and part time staff.
b)INDIRECT COSTS:– Indirect cost can be defined as the cost which cannot be directly applied to the product. In simple words any cost apart from
direct material, direct labour and manufacturing overheads is considered as indirect cost. For example– insurance of company building, wages of
cleaners working in the company premises etc.
c)FIXED COSTS:– Afixed cost is referred to a cost which doesn't changes with circumstances. If there is a fixed cost of any product or service one has
to pay the cost. For example, the rent of the house is fixed that has to be paid every week, no changes are acceptable. For example– salary of full time
staff.
d)VARIABLE COSTS:– A variable cost is a changing cost. In case of any changes the cost of the product changes. For example, the cost paid to a
casual worker may vary. More hours done by the worker will pay him well

Cost Management Techniques And Accounting Principles
"Cost management techniques and accounting principles used in the 1950s and 1960s have not changed dramatically in their ability to help in
managing the development and innovation in productivity and business philosophy." (Northrup, 2004, p. 2) Ideally businesses running today use the
same methodology which was used in the past 60 years however, management procedures over the past century has changed. If we were to look in the
past, we would understand that most manufacturing industries began to slow down until the mid 1970's. After then, the manufacturing businesses
created new processes and procedures to build products and maintain/ increase productivity. However, the problem we do not typically understand is
how to track these... Show more content on Helpwriting.net ...
3) These standard costs were allocated for manufacturing overhead for determining the companies' revenue and profit margins based off the final
product and sales. These allocated cost were then measured by accounting, with primary focus on the utilization capacity of the manufacturing plant.
The conventional quantities, for example labor utilization, selling price variance, production proficiencies, amongst other manufacturing identities
procedures. These types of processes lead to a factory that produces large amounts of scrap, poor quality products, increased shipping costs, customer
dissatisfaction, shortages, etc. These issues are common in factories however, can be avoided if Lean processes can be applied. Ideally this would
incorporate understanding the necessary resources and unnecessary procedures.
A typical problem within most factories includes the overhead which tend to be redundant if not paid close attention to. Another would be the
absorption variance which indicates a significant amount of products with little to no customer demand. There is a study which explained in 2008
General Motors and Chrysler Corporation were impacted severely by the "overhead absorption" thought process. However, the manufacturing plant
continued to build cars based of the "economic" demand quantities, ultimately spending large amounts of cash. This resulted in supplying hundred of
thousands of

Cost Accounting
Sub Micron Devices Inc.
Management Accounting–II
Amit Bhatia(12P068)
Deependra Kumar(12P078)
Nitish Gupta(12P088)
Ravinder Gahlout(12P098)
Srinivasan Ramesh(12P108)
Vipul Garg(12P118)
Amit Bhatia(12P068)
Deependra Kumar(12P078)
Nitish Gupta(12P088)
Ravinder Gahlout(12P098)
Srinivasan Ramesh(12P108)
Vipul Garg(12P118)
Submitted By:
2012
Table of Contents Introduction3 ASIC Division– Cost Pools4 Cost accounting system at ASIC:5 Internal and external customer:6 Situation at ASIC
division (as on March 1996)7 Western Digital Proposal7 Capacity Analysis8 Diferential Manufacturing Cost Budget10
Introduction
Sub Micron Devices started its operations in mind 1980s. The company was located in Phoenix, Arizona, and had 400 ... Show more content on
Helpwriting.net ...
b) It helps in the elimination of non–value adding activities. c) It helps in the planning and budgeting of each department separately.

The company uses another very good cost based measure which is the calculation of fixed and variable costs separately. Generally, the companies
follow a simple approach of calculating unit cost for each activity, and then multiplying it by the total number of units to be produced to calculate the
total cost of production. But, there are minor loopholes in this approach, which if left unnoticed, may emerge out as non–existent costs, which spoil the
whole estimation. For e.g. if a company does outsourcing for one of the stages of production, then it does not have to incur fixed costs for that stage.
But, it may go unnoticed by the companies which uses combined fixed and variable cost system.
Sub Micron Devices operates in semi–conductor industry wherein overhead costs are generally greater than direct material and direct labour costs.
These overhead costs are calculated by assigning separate cost drivers to Fabrication and Assembly stages. The cost drivers are:
a. Fabrication – Number of moves b. Assembly – Direct labour costs
A move is defined as,"Any significant alteration done to a raw silicon wafer." The Fabrication process consists of breaking a raw

Management: Cost Accounting and North Country Auto
Case Analysis Questions Patten Corporation I find this a very rich case that makes for a great introduction to my course. To get the most out of it,
you need to spend some time thinking about what the company does. Read the case carefully. 1. What does Patten Corporation do? What does it
buy? What goods or services does it sell? How does Patten make money? 2. Is Patten profitable or unprofitable? If it is profitable, what does the
company do that makes it profitable? If profitable, is it likely to remain profitable? If not profitable, why not? If not profitable, will it ever become
profitable? Why or why not? Is it cash flow positive or cash flow negative? If cash positive, why? Is it likely to remain cash... Show more content on
Helpwriting.net ...
North Country Auto, Inc. This tiny little business has all of the complexities of the largest corporations. You can learn a lot from studying this
simple firm. 1. How do you think car retailers like North Country Auto make money? If you ran North Country Auto, what would you focus on?
What would be critical success factors? 2. The case describes a typical car transaction: North Country sold a new 1989 Volkswagen Jetta for $14,150.
To pay for this, the buyer paid $2,000 cash, traded in an old 1984 Jetta for a trade–in allowance of $4,800, and arranged financing (through a bank) for
the balance of $7,350. North Country paid VW $11,420 for the 1989 Jetta (including the sales commission paid to the NorthCountry salesperson who
sold the car). a. Assume the 1984 Jetta was sold – without any repairs or improvements – to a buyer for $5,200. That buyer paid for the car by paying
$3,500 cash, and trading in a 1980 VW Jetta for a trade–in allowance of $1,700. North Country then sold the 1980 Jetta at auction for $1,500. How
much money did North Country Auto make on each of the 1989 Jetta, the 1984 Jetta and the 1980 Jetta? b. The case states that the "guidebook"
value of the 1984 Jetta was $3,500 at wholesale. In other words, if the 1984 Jetta were sold at auction, North Country Auto could reasonably expect
to receive $3,500 for it. But, the dealership sold it at retail for $5,200. How should the profit on the 1984 Jetta be

Cost Accounting
Peanuts and Cost Accounting
A problem faced by a Restaurateur (Joe) as revealed by his Accountant–Efficiency Expert (Eff. Ex.)
EFF. EX. Joe, you said you put in these peanuts because some people ask for them, but do you realize what this rack of peanuts is costing you?
JOE It ain 't gonna cost. 'Sgonna be a profit. Sure, I hadda pay $25 for a fancy rack to holda bags, but the peanuts cost 6 cents and I sell 'em for 10
cents. Figger I sell 50 bags a week to start. It 'll take 12 ВЅ weeks to cover the cost of the rack. After that, I gotta clear profit of 4 cents a bag. The more
I sell, the more I make.
EFF. EX. That is an antiquated and completely unrealistic approach, Joe. Fortunately, modern accounting procedures permit a... Show more content on
Helpwriting.net ...
Decrease the square foot value of your counter. For example, if you can cut your expenses 50%, that will reduce the amount allocated to peanuts from
$1,563 down to $781.50 per year, reducing the cost to 35 cents per bag.
JOE (Slowly) That 's better.
EFF. EX. Much, much better. However, even then you would lose 26 cents per bag if you charge only 10 cents. Therefore, you must also raise your
selling price. If you want a net profit of 4 cents per bag, you would have to charge 40 cents.
JOE (Flabbergasted) You mean after I cut operatingcosts 50%, I still gotta charge 40 cents for a 10 cent bag of peanuts? Nobody 's that nuts about
nuts. Who 'd buy 'em?
EFF. EX. That 's a secondary consideration. The point is at 40 cents, you 'd be selling at a price based upon a true and proper evaluation of your then
reduced costs.
JOE (Eagerly) Look! I got a better idea. Why don 't I just throw the nuts out –– put 'em in a trash can?
EFF. EX. Can you afford it?
JOE Sure. All I got is about 50 bags of peanuts –– cost about three bucks –– so I lose $25 on the rack, but I 'm outa this nutsy business and no more
grief.
EFF. EX. (Shaking head) Joe, it isn 't quite that simple. You are in the peanut business! The minute you throw those peanuts out, you are adding $1,563
of annual overhead to the rest of your operation. Joe, be realistic –– can you afford to do that?
JOE (Completely crushed) It 'sa unbelievable! Last week, I was gonna make money. Now, I 'm in a trouble––

244142550 Principles Of Cost Accounting
Principles of Cost Accounting Vanderbeck 16th Edition Test Bank
Click here to download the test bank INSTANTLY!!!
http://www.solutionsmanualtestbank.com/products/2013/04/29/principles–of–costaccounting–vanderbeck–16th–edition–test–bank
***THIS IS NOT THE ACTUAL TEXTBOOK. YOU ARE PURCHASING the Test Bank in e
–version of the following textbook***
Name: Principles of Cost Accounting
Author: Vanderbeck
Edition: 16th
ISBN–10: 1133187862
Type: Test Bank
– The test bank is what most professors use an a reference when making exams for their students, which means there's a very high chance that you will
see a very ... Show more content on Helpwriting.net ...
There was no beginning or ending work in process. 5,000 units were completed and transferred out. The cost per unit is:
A. $8.60
B. $5.20
C. $18.40
D. $4.60
10. Which of the following is not included in departmental product costs?
A. Costs identifiable with the department.
B. Costs added by prior production departments carried to the department.
C. Cost of sales and administrative departments that have been allocated to the production department.
D. Costs of factory service departments that have been allocated to the production department.

11. The primary task of process costing is to allocate total cost between:
A. units finished during the period and units still in process at the end of the period.
B. materials and conversion costs.
C. units in process at the beginning of the period and units started during the period.
D. units started during the period and units finished during the period.
12. Using the average cost method of process costing, the computation of manufacturing cost per equivalent unit considers:
A. Current costs only.
B. Current costs plus cost of beginning work in process inventory.
C. Current costs plus cost of ending work in process inventory.
D. Current costs less cost of beginning work in process inventory.
The number of whole units that

Cost Accounting and the Lean Production Philosophy
Cost accounting and the lean production philosophy
By
Tyrone Williams
AIU Online
September1, 2012
Abstract As Dr. Stephanie White prepares to cope with the a steep reduction in the budgetary allocation to the Uptown Clinic she must carefully
determine which areas to cut while striving to maintain current levels of service. This essay will offer advice Dr. White on preparing for budget cuts.
It will also discuss the lean production philosophy and how this compares with typical production. This essay will also describe the differences between
managerial accounting and cost accounting.
There are many strategies that Dr. White could employed to adequately mitigate the negative impact of reduced budgetary allocations to... Show more
content on Helpwriting.net ...
This philosophy is now generally accepted as the ideal business model of the 21st century and replaces the mass production philosophy of the previous
century. On the website www.1000advices.com Mr. Vadim Kotelnikov, Inventor of inspirational Business e
–Coaching states that the lean production
philosophy "is about doing more with less: less time, inventory, space, labor, and money. "Lean manufacturing", a shorthand for a commitment to
eliminating waste, simplifying procedures and speeding up production (www.1000advices.com).
At its very core, this philosophy employs a systematic approach to the elimination of waste in seven key areas. These areas could be summarized as
eliminating overproduction and producing only what customers' need; eliminating unnecessary delay, down or idle time; streamlining inventory
processes to eliminate unnecessary purchasing and storing of raw materials; prevent over–processing by removing any unnecessary steps in processes
or procedures; streamlining the motion/movement of people and equipment; eliminating transportation delays and unnecessary material handling and
reducing defective products and the cost to repair/replace them (www.1000advices.com).
As is obvious by now, there are clear differences between typical production process and the lean production model. Suited for the mass production

strategy of the last century, the manufacturing cycle of the typical production process primarily engages in cost accounting whether periodic or

Seligram Case Cost Accounting
Was the existing system adequate in the past? Why or why not? Why is it no longer adequate? The existing system was adequate in the past due to
heavy reliance on direct labor hours. The ETO served as a central cost center, and transferred the costs to other divisions at direct costs plus allocated
burden. Being in the late 1970s and early 1980s, technology testing of components required fewer cycles, and less complicated structures. Hence, such
testing on products could be carried out by direct labor. The products included Integrated circuits, capacitor resistors, transistors and similar components.
The testing center would handle about 500 components per month, and close to 3,000 per year. In addition, the main components tested were... Show
more content on Helpwriting.net ...
The manager selected five products to evaluate the different impact on the bottom line. Looking at exhibit six from the case we have: DL & Mhr
requirements actual for 1 lot| | | Machine Hrs| | Product| DL $| Main room| Mech Room| Total| ICA| $ 917.00| 8.5| 10| 18.5| ICB| $ 2,051.00| 14| 26| 40|
Capacitor| $ 1,094.00| 3| 4.5| 7.5| Amplifier| $ 525.00| 4| 1| 5| Diode| $ 519.00| 7| 5| 12| Total| 5,106| 36.5| 46.5| 83|
Therefore, given the effective burden rate of 145% ($4,713,982.00/3,260,015.00) we can calculate the cost of the product in table 1: Table 1:Costs of
Existing System| Product| DL $| Burden (@ 145%)| Effective Burden| Total Costs| ICA| $ 917.00 | $ 1,329.65 | $ 1,330 | $ 2,247 | ICB| $ 2,051.00 | $
2,973.95 | $ 2,974 | $ 5,025 | Capacitor| $ 1,094.00 | $ 1,586.30 | $ 1,586 | $ 2,680 | Amplifier| $ 525.00 | $ 761.25 | $ 761 | $ 1,286 | Diode|

Cost Accounting Practices
SOAL LATIHAN CHAPTER 18
ASISTENSI COST ACCOUNTING
UNIVERSITAS BAKRIE
1. 18–16
The following data, in physical units, describe a grinding process for January :
WIP, beginning19,000
Started during current period150,000
To account for169,000
Spoiled units12,000
Good units completed and transferred out132,000
WIP,ending25,000
Accounted for169,000
Inspection occurs at the 100% completion stage. Normal spoilage is 5 % of the good units passing inspection.
1. Compute the normal and abnormal spoilage in units.
2. Assume that the equivalent–unit cost of a spoiled unit is $10.Compute the amount of potential savings if all spoilage were eliminated, assuming that
all other costs would be ... Show more content on Helpwriting.net ...
Physical Units
Work in process, December 31, 2009a4400
Work in process, September 1, 2010b5000
Started in September 2010?
Good units completed & transferred out during September 201037000
Normal Spoilage 2000
Abnormal Spoilage 500
Work in process, September 30, 2010c6500
a Degree of completion: direct material 100%; coversion cost 60% b Degree of completion: direct material 100%; coversion cost 50% c Degree of

completion: direct material 100%; coversion cost 40%
Hitunglah equivalent unit untuk direct material dan conversion costs. 9. 18–20 10. The Texas Tanning Company produces leather from animal hides.
Relevant information for the Tanning Department is provided in Exhibit 5–12. The materials, (raw hides) are added at the beginning of the process
where they are hung on racks and dipped in a tanning solution. The inspection point is at the end of the process when the hides are removed from the
solution. Spoilage up to five percent of the good completed units (leather hides) is considered normal. Any spoilage above this level is considered
abnormal. For convenience, all spoilage is assumed to come from the units started during the period and have a disposal value of $2 per unit.
11. 18–23 12. In the Atyra Furniture, 7 chair parts out of a job lot of 63 chair parts are spoiled. Costs assigned prior to the inspection point are $700 per
part. Spoiled goods are

The historical cost accounting convention.
INTRODUCTION
Realised–profit, matching–based, historical cost accruals accounting (HCA) has for over fifty years been repeatedly challenged as being an inadequate
basis for the measurement of "income" which reports increments in the value of businesses. Such challenges continue unabated and are made by both
accounting standards regulators and by academic commentators. Despite its obvious deficiencies for measuring valuation based income, and subject to
concept of prudence, internationally HCA remains the dominant basis for reporting and share prices appear to be influenced by reported earnings.
This paper will go through few criticisms of our standard accounting model, look at possible alternatives and finally will provide a detailed ... Show
more content on Helpwriting.net ...
Opportunity costs are commonly used in economics and do not have much relevance here, however accounting bodies and academic commentators
have forwarded new methods of accounting using the current asset value, as opposed to the conventional acquisition cost.
Replacement costs could be used as a possible alternative to historical cost method. In crude terms Replacement costs (RC) may be defined as the
estimated amount that would have to be paid in order to replace the asset as the date of valuation (Page 46,Lewis & Pendrill, 2000). An advantage
of replacement cost is that it focuses on the services the asset will provide rather than the precise physical asset. It therefore excludes speculative
gains that might be made from selling a building to a purchaser who will redevelop it for an alternative use; equally it allows valuations to reflect the
use that the current owner can make of an asset, even if a purchaser would not be able to employ the asset as profitably.
However there is an immediate flaw noted in its definition, where the costs have to be estimated. Estimation has to be carried out after reviewing the
asset, the market, and if an identical asset is still being traded in the market. Further difficulties inherent in the estimation are noted when the asset in
the market is either not identical or obsolete. In these cases usually the replacement costs are much higher.

Fixed Cost Accounting
2–Why do manager put such a great amount of emphasis on controlling fixed cost in their organizations?
Fixed costs are constant and have an impact towards profits despite the number of items sold. Reducing the fixed cost amounts is a sustainable way to
make more profits and increase operating leverage (Edmonds & Tsay & Olds). Suggested by Reiss, outsourcing is a way of turning fixed costs into
variable costs. Variable costs have a dependence ofcost based on production or sale of the product (Reiss, 2010).
One example of this fixed vs. variable costs transition would be telesales, instead of hiring 45 people to work inbound and outbound phone calls
one could pay a service to answer the phones at a cost per minute. Using a phone service and experiencing high call volumes, the cost would a variable
cost as a reflection of sales. Having 45 salaried telesales employees and only ... Show more content on Helpwriting.net ...
(2010, November 2). Outsourcing Turns Fixed Costs Into Variable Costs. Retrieved August 9, 2015.
Edmonds, T., Tsay, B., & Olds, P. (2011). Fundamental Managerial Accounting Concepts (6th ed.). New York, NY: McGraw
–Hill/Irwin.
3–What is meant by the statement, my company has good operating leverage? How does good operating leverage magnify earnings results with modest
revenue increase?
With a small change in revenues, one will see a larger change in profits with positive operating leverage. Operating leverage is often referred to as the
ratio of fixed costs compared to revenues (Edmonds & Tsay & Olds).
A company with high operating leverage as an example could be a business with expensive machines. In the medical lab environment, a fixed cost of
buying a machine for medical testing one would presume to be high. For the lab, it would be significant to have the lab testing machines running
twenty–four hours a day seven days a week. A percentage change in revenues would negatively impact a medical testing organization due to the
machine cost stay constant (Berman,

Cost Accounting
COST ACCOUNTING
Select the one best answer for each:
1. Which one of the following would not be classified as manufacturing overhead? a.Indirect labor b.Direct materials c.Insurance on factory building
d.Indirect materials
2.Prime costs of a company are $3,000,000, manufacturing overhead is $1,500,000 and direct labor is $750,000. What is the amount of direct
materials? a.$1,500,000. b.$750,000. c.$2,250,000. d.Cannot be determined from the information provided.
3. An important feature of a job order cost system is that each job a.must be similar to previous jobs completed. b.has its own distinguishing
characteristics. ... Show more content on Helpwriting.net ...
14. If costs are not responsive to changes in activity level, then these costs can be best described as a.mixed. b.flexible. c.variable. d.fixed
15. If actual direct material costs are greater than standard direct materials costs, it means that a.actual costs were calculated incorrectly. b.the actual
unit price of direct materials was greater than the standard unit price of direct materials. c.the actual unit price of raw materials or the actual quantities
of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. d.the purchasing agent or the production
foreman is inefficient.
16. The per–unit standards for direct labor are 2 direct labor hours at $12 per hour. If in producing 1,200 units, the actual direct labor cost was
$25,600 for 2,000 direct labor hours worked, the total direct labor variance is a.$960 unfavorable. b.$3,200 favorable. c.$2,000 unfavorable. d.$3,200
unfavorable.
17. Adler Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000
when 10,000 units were produced and sold. The company has a one–time opportunity to sell an additional 3,000 units at $70 each in a foreign market
which would not affect its present sales. If the company has sufficient capacity to produce the additional

Methods / Techniques of Cost Accounting
Ex–MBA 2011–2014 ( Batch – Weekend )
Semester – 2
Subject: Managerial Accounting
–––––––––––––––––––––––––––––––––––––––––––––––––
Title : Methods / techniques of cost accounting
Submitted by : Vishwajeet Gaikwad – 2011G04 Submitted to : Prof. Sameer Deshmukh
INDEX
SR NO| TITLE| PAGE NO| 1| INTRODUCTION| 3| 2| METHODS OF COST ACCOUNTING| 4| 3| TECHNIQUES OF COST ACCOUNTING| 8| 4|
USEFULNESS| 10| | | | | | | 5 ... Show more content on Helpwriting.net ...
The system is used generally in cases where government happens to be the party to give contract.
D. Batch Costing
This method is employed where orders or jobs are arranged in different batches after taking into account the convenience of producing articles. The
unit of cost is a batch or a group of identical products instead of a single job order or contract. This method
is particularly suitable for general engineering factories which produce components in convenient economic batches and pharmaceutical industries.
E. Process Costing
If a product passes through different stages, each distinct and well defined, it is desired to know the cost of production at each stage. In order to
ascertain the same, process costing is employed under which a separate account is opened for each process.
This system of costing is suitable for the extractive industries, e.g., chemical manufacture, paints, foods, explosives, soap making etc.
F. Operation Costing
Operation costing is a further refinement of process costing. The system is employed in the industries of the following types: a. The industry in which
mass or repetitive production is carried out b. The industry in which articles or components have to be stocked in semi–finished stage to facilitate the

execution of special orders, or for the convenience of issue for later operations
The procedure of costing is broadly the same as process costing except that in this case, cost unit is an

Cost Accounting Terminologies, Purpose of Cost...
Part 1– Conceptual Framework
Cost Accounting
Cost accounting, as a tool of management, provides management with detailed records of the costs relating to products, operations or functions. Cost
accounting refers to the process of determining and accumulating the cost of some particular product or activity. It also covers classification, analysis
and interpretation of costs. The cost so determined and accumulated may be the estimated future costs for planning purposes, or actual (historical) costs
for evaluating performance. The Institute of Cost and Management Accountant (ICMA), London, definedcost accounting as "the process of accounting
for cost from the point at which expenditure incurred or committed to the establishment of its ... Show more content on Helpwriting.net ...
a) Performance measurement: This measurement can be done by comparing current costs with those who were expected – or standard costs budgeted
cost – to the degree of knowing which of them have been controlled. Deviations of expected with the current – variances – can be identified, evaluated
and discussed by managers.
b) Cost of goods and services: In manufacturing companies, the costs of goods must be measured to determine the cost of items transferred from work
in process inventory to finished products. To meet the demands for information, a cost system should measure all the costs of manufacturing process
and allocate a portion of those costs to each unit of output. The cost to obtain, maintain and manage the manufacturing plant or building should be
added to the cost of material and productive work that requires each unit. The first are called indirect costs and the two last are called direct costs.
c) Profit analysis. Information in costs is essential to analyze the profits obtained from a product or product line. The information on the cost of a
product enables managers to assess the contribution margin – the difference between

Cost Accounting : Cost Audit Essay
MEANING OF COST AUDIT
Cost audit is basically the analysis of cost accounts and also checking on the efficiency of cost accounts and to ensure that these accounts are matching
the predetermined cost accounting plans. It also determines the accuracy of the cost accounts. They also ensure that the accounts conform to the
principles, plans, procedures and objectives. It shows the deviation in plans. It is also known as efficiency audit as it checks the efficiency of working
of predetermined plans. It consists of the sum total of expenditure and revenue and determines the true work efficiency of a plan. It is used to assess
the operational efficiency and resource management of an organisation. It is essentially the verification of the cost accounts so as to ascertain the
variations in the efficiency of the organisation.
DEFINITION OF COST AUDIT
The concept of cost audit has been elaborated by ICWA as 'an audit of efficiency of minute details of expenditure, while the work is in progress and not
a post mortem examination. Financial audit is a 'fait accompli', cost audit is mainly a preventive measure, a guide for management policy and decision
in addition, to being a barometer of performance'. (ref. yourrticlelibrary.com)
Cost Audit may be defined as "the verification of cost records and accounts and a check on the adherence to the prescribed cost accounting procedures
and the continuing relevance of such procedures."(Ref. A Textbook of Financial Cost and Management

Purpose of Cost Accounting
CH01_Bragg_36794 3/13/01 9:40
M Page 9
PART I
Purpose of Cost Accounting
9
CH01_Bragg_36794 3/13/01 9:40
M Page 10
CH01_Bragg_36794 3/13/01 9:40
M Page 11
CHAPTER 1
Role of Cost Accounting
When properly implemented, the cost accounting function can have a pervasive influence in the modern corporation. Unfortunately, it is not always
properly implemented because management often is not completely aware of all the uses to which the cost accounting function can be put. This
chapter describes the main categories of activities in which this function can become involved, and can be used as a guide by the controller in creating
a well–rounded niche for the cost accountant.

EXTERNAL REPORTING
The key task for ... Show more content on Helpwriting.net ...
Business unit–level reports. These reports must include a much larger quantity of information, for the recipient (the plant manager) needs to know
about the operation of each department, as well as a host of operational issues such as the cost of quality, inventory turnover, machine utilization,
profitability, and cash flow projections. This tends to be the most voluminous of all reporting packages, as well as the one that includes the greatest mix
of financial and operational information. Function–level reports. These reports can be issued to individual departments or at lower levels, for example,
to the supervisors of individual machines. Such reports are custom–designed for each recipient, with some requiring more financial data (e.g., for the
sales manager who wants to know about customer bad
12
CH01_Bragg_36794 3/13/01 9:40
M Page 13
SCOREKEEPING
debts or orders booked) and others including almost entirely operational information (e.g., for the warehouse manager who is interested in inventory
turnover, kiting percentages, and receiving accuracy).
Project–specific reports. A project report is slanted more toward just thosecosts being incurred for a specific purpose and so tends to be heavy on
direct costs and light on most other allocations. This report usually compares incurred costs against budgeted costs expected to have

The Meaning of Cost Accounting
Meaning of Cost Accounting
Previously, cost accounting was considered to be a technique for the ascertainment of costs of products or services on the basis of historical data. In
time, due to the competitive nature of the market, it was realized that ascertaining of cost is not as important as controlling costs. Cost accounting
started to be considered more as a technique for cost control as compared to cost ascertainment. Due to the technological developments in all fields, cost
reduction has also come within the ambit of cost accounting. Cost accounting is, thus, concerned with recording, classifying and summarizing costs for
determination of costs of products or services, planning, controlling and reducing such costs and furnishing of ... Show more content on Helpwriting.net
...
Thus, an increase in discretionary variable costs is due to the authorization of management whereas an increase in engineered variable costs is due to
the volume of output or sales.
Direct and Indirect Costs
The expenses incurred on material and labor which are economically and easily traceable for a product, service or job is considered as direct costs.
In the process of manufacturing of production of articles, materials are purchased, laborers are employed and the wages are paid to them. Certain
other expenses are also incurred directly. All of these take an active and direct part in the manufacture of a particular commodity and hence are called
direct costs.
The expenses incurred on those items which are not directly chargeable to production are known as indirect costs. For example, salaries of timekeepers,
storekeepers and foremen. Also certain expenses incurred for running the administration are the indirect costs. All of these cannot be conveniently
allocated to production and hence are called indirect costs.
Relevant and Irrelevant Costs
Relevant costs are those which change by managerial decision. Irrelevant costs are those which do not get affected by the decision. For example, if a
manufacturer is planning to close down an unprofitable retail sales shop, this will affect the wages payable to the workers of a shop. This is relevant
in this connection since they will

In The World Of Accounting, Cost Accounting Serves As...
In the world of accounting, cost accounting serves as managers go to system for cost information. As previously mentioned, cost accounting is a
specialized subset of accounting that collects, determines, classifies, and interpret the cost of products or services. In addition, the concepts of cost
accounting are to account for the incurrence and control of cost and measure the operating efficiency of a company on a periodical basis. "Cost
accounting, as defined here, deals with the rest when, and if, such measurement helps management drive the organization to work better and cost less."
(Geiger, 1995, pg. ).
Hence, cost accounting provides management with substantial, compelling, and relevant data that they can use to make firm and ... Show more content
on Helpwriting.net ...
The primary methods of cost accounting include activity–based costing (ABC), performance measures method, and the standard accounting method and
each method involves different processes, measurement capabilities, cost benefits, and potential costing issues, companies experience.
Activity–based costing (ABC) Method
While analyzing how companies within the service industry utilize activity–based cost (ABC), Onat, Anitsal, & Anitsal, (2014), stated that
"Activity–based costing (ABC) focuses on the idea that activities create costs, while products use activities to gain value added." (pg. 150). In general,
this means that the theory behind activity–based costing (ABC) method is that merchandises or services consume activities and activities consume
resources. When used, activity based costing first recognizes key activities that create overhead costs. Secondly, the activities that have similar cost
drivers are then categorized into cost pools, and finally allocates the total overhead costs for products and services by computing absorption rate of
each cost pool, respectively. Some issues associated with activity–based costing (ABC) is that it is expensive to implement and data can easily be
misrepresented. One of the critical issue company encounter while utilizing the activity–based costing method is that it is difficult to separate some
overhead costs the CEO of the company

Describe the Difference in Managerial Accounting vs. Cost...
Describe how managerial accounting is different from cost accounting. Cost accounting is the process of tracking, recording and analyzing costs
associated with a company's product or project. Internal managers are the ones who normally use cost accounting information. Direct Costs, Indirect
Costs and Overhead/Absorbed Costs are usually what are measured in Cost Accounting. This information is then used by managers when decisions are
made dealing with company costs and how to improve the profit. (Wild & Shaw) Management accounting provides the other managers information on
the business decisions that allow them to keep their management and control functions equipped. Management accounting is used within an
organization and is ... Show more content on Helpwriting.net ...
The financial bonuses should be tied to how much the team saves this year. Often companies tend to cut individuals who do not have top priority
tasks. Keeping the ones who are important understand and will help you save a lot of money. Dr. White has to prepare to implement cost reductions
in her organization; she must be open, honest and be sincere with all the staff about reducing the cost and how this will affect the organization. She
should reduce the headcount in proportion in the difference within the work load. If the community center generally treats more cases that the
outpatient sections then the cuts could be made from outpatient. Service contracts are easy to work with as long as the current provider or new
provider is reasonable. Normally travel, consultation and professional budgets are cut. What is the hardest has to cut people that work closely with a
manager, it is important for the manager to budget responsibly. The employee should be notified immediately of such actions so they are prepared
and can have time to look for something new. Sometimes this is not the case, as for a friend of mine who showed up to work one day and they
informed her they had to let her go. Usually an outgoing employee should be provided with a departure package, lump sum payment or package with
benefits to help them with the sudden change.
With the first budget below, it has been reduced $94,000. There has been an

Cost Accounting
Accounting is the collection and aggregation of information for decision makers including managers, investors, regulators, lenders, and the public.
Accounting systems affect behavior and management and have affects across departments, organizations, and even countries. This paper will give the
reader an understanding about cost accounting. This paper will discuss: Why is cost accounting so important to the success of the firm; what are the
various methods of cost accounting and how are they used; how does an operating budget work to discipline a firm's management; what are the
elements of a budget; how are budgets constructed; what is variance analysis and how it is used. Cost accounting can be described as the process of
accumulating, ... Show more content on Helpwriting.net ...
"The budget provides the manager with basic information about the unit's operations, supplies raw material to make better sense out of those
operations, and helps to avoid operations that are using up money too fast "(Iaconetti, 1986, p. 22)".
Expenditure, in any budget, is shown in three categories: labor, materials, and services (sometimes called overhead and indirect cost). Within each
element of the budget the items will be: fixed costs which are expenses that stay the same regardless of the amount of activity in the project or
variable costs which are expenses that increase with the level of activity in the project. Labor costs consist of the wages, salaries and honoraria paid to
individuals directly involved in implementing the project. Labor costs are calculated by multiplying the personnel time needed in the project by the
unit cost of the resource.
The unit costs for personnel are usually in hours or days. Cost of materials includes the costs of supplies, equipment and tools actually used during
the activity. Service costs are all the costs of the project other than labor and materials. These are costs that cannot be assigned as costs directly to
activity within the project. For capital items, depreciation is a way of allocating part of the cost of the item to a particular project." Depreciation is
used in projects to allocate a

Management Accounting For Costs And Control

Recommended

Recommended

More Related Content

Similar to Management Accounting For Costs And Control

Similar to Management Accounting For Costs And Control (13)

More from Katrina Green

More from Katrina Green (20)

Recently uploaded

Recently uploaded (20)

Management Accounting For Costs And Control