Manufacturing accounts
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The document discusses preparing manufacturing accounts to calculate the unit cost of items produced. It provides: 1) A manufacturing account calculates the cost of producing completed goods by tracking raw material costs, direct wages, factory overheads and work-in-progress. 2) Key areas of the manufacturing process like raw material consumption, prime costs, factory overheads and cost of goods manufactured are calculated. 3) The complete manufacturing account format should show these key areas and the unit cost of production is calculated by dividing total cost of goods manufactured by the number of units sold.
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Manufacturing accounts
The document discusses manufacturing accounting concepts including production cost, factory overhead expenses, manufacturing account, trading account, and profit and loss account. It provides definitions and examples of direct materials, direct labor, direct expenses, and factory overhead/indirect costs. It also explains how to calculate and account for provision for unrealized profit when finished goods inventory is valued at transfer price rather than cost. Manufacturing, trading, and profit and loss accounts are presented in a standard format.
Lecture notes 1 manufacturing+accounts 2014
This document defines and explains the components of a manufacturing account. A manufacturing account is prepared internally and divides costs into various types: direct materials, direct labor, direct expenses, indirect manufacturing costs, administration expenses, selling/distribution expenses, and financial charges. Direct costs can be traced to specific products while indirect costs cannot. The manufacturing account shows prime cost and production cost. It is then combined with other financial statements to form the income statement, which includes gross profit and deducts other expenses to arrive at net profit. An example manufacturing account and activity is provided to demonstrate the concepts.
Process costing
Process costing is used when production is continuous and outputs are homogeneous. Costs are accumulated over multiple processes and time periods, then divided by total units to calculate average unit costs. Key differences from job costing include homogeneous outputs, sequential cost flows between processes, and inventory accumulating between processes. Costs are calculated periodically rather than by individual jobs.
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Manufacturing accounts by inqilab patel
In order to ascertain the cost of producing the goods a manufacturing account is prepared. This account is also normally prepared at the end of the accounting period. Both direct and indirect expenses associated with the manufacturing process debited to the manufacturing account. The balance of this account representing cost of the goods produced is then transferred to the trading account.
Manufacturing account ppt @ mba finance
This document outlines the accounting treatment for manufacturing costs, including direct materials, direct labor, factory overhead, and work-in-progress. It discusses how manufacturing costs are used to determine the production cost of goods completed, which can then be transferred to the trading account either at production cost or a transfer price that includes a markup for profit. The manufacturing, trading, and profit and loss accounts are presented to illustrate how costs and revenues flow through each statement.
Manufacturing account
This document discusses manufacturing accounting concepts including types of inventory, production costs, prime costs, overhead costs, and key financial statements. It defines raw materials, work in progress, and finished goods inventory. Direct costs include direct materials, direct labor, and direct expenses. Indirect costs are grouped as overhead. The manufacturing account calculates production cost and transfers goods to finished goods inventory. The income statement and balance sheet are also discussed.
Process Costing
Process costing is a type of costing system used for uniform or homogeneous products where the total manufacturing costs are averaged over all units produced. It involves tracing direct costs and allocating indirect costs through multiple stages of production. The key steps of process costing include determining the physical flow of units, calculating equivalent units, computing equivalent unit costs, summarizing total costs, and assigning costs to completed units and work in process inventory. An example is provided of applying process costing to a chocolate manufacturing process.
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Manufacturing accounts
The document discusses manufacturing accounting concepts including production cost, factory overhead expenses, manufacturing account, trading account, and profit and loss account. It provides definitions and examples of direct materials, direct labor, direct expenses, and factory overhead/indirect costs. It also explains how to calculate and account for provision for unrealized profit when finished goods inventory is valued at transfer price rather than cost. Manufacturing, trading, and profit and loss accounts are presented in a standard format.
Lecture notes 1 manufacturing+accounts 2014
This document defines and explains the components of a manufacturing account. A manufacturing account is prepared internally and divides costs into various types: direct materials, direct labor, direct expenses, indirect manufacturing costs, administration expenses, selling/distribution expenses, and financial charges. Direct costs can be traced to specific products while indirect costs cannot. The manufacturing account shows prime cost and production cost. It is then combined with other financial statements to form the income statement, which includes gross profit and deducts other expenses to arrive at net profit. An example manufacturing account and activity is provided to demonstrate the concepts.
Process costing
Process costing is used when production is continuous and outputs are homogeneous. Costs are accumulated over multiple processes and time periods, then divided by total units to calculate average unit costs. Key differences from job costing include homogeneous outputs, sequential cost flows between processes, and inventory accumulating between processes. Costs are calculated periodically rather than by individual jobs.
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Manufacturing accounts by inqilab patel
In order to ascertain the cost of producing the goods a manufacturing account is prepared. This account is also normally prepared at the end of the accounting period. Both direct and indirect expenses associated with the manufacturing process debited to the manufacturing account. The balance of this account representing cost of the goods produced is then transferred to the trading account.
Manufacturing account ppt @ mba finance
This document outlines the accounting treatment for manufacturing costs, including direct materials, direct labor, factory overhead, and work-in-progress. It discusses how manufacturing costs are used to determine the production cost of goods completed, which can then be transferred to the trading account either at production cost or a transfer price that includes a markup for profit. The manufacturing, trading, and profit and loss accounts are presented to illustrate how costs and revenues flow through each statement.
Manufacturing account
This document discusses manufacturing accounting concepts including types of inventory, production costs, prime costs, overhead costs, and key financial statements. It defines raw materials, work in progress, and finished goods inventory. Direct costs include direct materials, direct labor, and direct expenses. Indirect costs are grouped as overhead. The manufacturing account calculates production cost and transfers goods to finished goods inventory. The income statement and balance sheet are also discussed.
Process Costing
Process costing is a type of costing system used for uniform or homogeneous products where the total manufacturing costs are averaged over all units produced. It involves tracing direct costs and allocating indirect costs through multiple stages of production. The key steps of process costing include determining the physical flow of units, calculating equivalent units, computing equivalent unit costs, summarizing total costs, and assigning costs to completed units and work in process inventory. An example is provided of applying process costing to a chocolate manufacturing process.
Job costing and batch costing
This document discusses job costing and batch costing. Job costing involves compiling costs for specific quantities of goods or services produced according to a customer's order. Costs are accumulated separately for each job. Batch costing is used when a company produces goods in batches for stock. The cost per unit is determined by dividing the total batch cost by the number of units in the batch. The document outlines the key features, objectives, advantages, and disadvantages of job costing as well as providing examples of job cost sheets and how to calculate economic batch size.
Cost Of Goods Sold Formula
The document outlines the calculation of cost of goods sold (COGS) by detailing opening and closing inventory amounts for materials and finished goods, purchases and returns, direct materials consumed, cost of goods manufactured, prime costs including direct materials and labor, conversion costs including labor and factory overhead, total manufacturing costs, and the final calculation of COGS by adding opening finished goods inventory and subtracting closing finished goods inventory from the cost of goods manufactured.
THE ACCOUNTING CYCLE IN BRIEF
What is the accounting cycle?
The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries.
Cycle and steps seem to be a carryover from the days of manual bookkeeping and accounting when transactions were first written into journals. In a separate step the amounts in the journal were posted to accounts. At the end of each month, the remaining steps had to take place in order to get the monthly, manually-prepared financial statements.
Today, most companies use accounting software that processes many of these steps simultaneously. The speed and accuracy of the software reduces the accountant's need for a worksheet containing the unadjusted trial balance, adjusting entries, and the adjusted trial balance. The accountant can enter the adjusting entries into the software and can obtain the complete financial statements by simply selecting the reports from a menu. After reviewing the financial statements, the accountant can make additional adjustments and almost immediately obtain the revised reports. The software will also prepare, record, and post the closing entries.
Ias# 2 inventories
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This document discusses Accounting Standard AS-2 regarding the valuation of inventories. It outlines the objectives of accounting standards and AS-2, which are to standardize the computation of inventory costs and the valuation of closing stock. The standard applies to inventories held for sale, in production, or as materials/supplies. Inventories must be valued at the lower of cost or net realizable value. Cost includes purchase costs, conversion costs, and other costs to bring inventory to its present condition/location. Net realizable value is estimated selling price less completion/selling costs. Common costing methods like FIFO, LIFO, and weighted average are also described.
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Absorption is the process of allocating overhead costs to cost centers or production departments based on units produced. There are several methods for absorbing overheads including: 1) the production unit method, 2) percentage of direct material cost method, 3) percentage of direct labour cost method, 4) percentage of prime cost method, 5) labour hour method, and 6) machine hour rate method. The machine hour rate method has advantages of being scientific, measuring actual working time and idle time, and allowing comparison of costs and efficiency between machines, but it also has disadvantages of additional work, cost, and not being suitable for labour intensive industries or when machine hours cannot be calculated.
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Ppt on Cost accounting and its classifications
Cost accounting involves classifying costs according to their nature, function, variability, and controllability. There are several types of costs:
- Direct costs like materials and labor that are clearly traceable to production. Indirect costs like utilities that are not directly traceable.
- Fixed costs that do not vary with production like rent. Variable costs that vary with production like materials. Semi-variable costs that vary but not proportionately.
- Controllable costs a manager can influence like direct labor. Uncontrollable costs outside a manager's control like depreciation.
- Normal costs incurred during regular operations. Abnormal costs from unexpected events like fires.
Inventory(ias 2)
This document summarizes International Accounting Standard 2 (IAS 2) which provides guidance on accounting for inventories. The key points are:
1) IAS 2 defines inventory as assets held for sale, in production, or in the form of materials used in production. It establishes cost as the default basis for valuing inventories.
2) Cost is determined using purchase costs, conversion costs, and other costs to bring inventory to its present condition and location. Net realizable value provides the floor for the valuation of inventory.
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Process costing
Process costing is a method used by manufacturing industries to calculate the cost of production at each stage of converting raw materials into finished goods. It involves allocating total manufacturing costs to products based on normal production levels. Process costing is used in industries like chemicals, textiles, steel, and sugar that involve sequential production processes with continuous flow of goods. The method determines an average cost per equivalent unit and helps control costs, calculate inventory values, and assign product prices at each stage of multiple processes.
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This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
Chapter 2 Systems Design: Job-Order Costing
1) The document discusses job-order costing and process costing systems. It explains that job-order costing is used when individual products are unique and tracked separately, while process costing is used when large quantities of a standard product are produced.
2) Job-order costing involves tracking direct material, direct labor, and allocated manufacturing overhead costs for each individual job. Documents used include job cost sheets, materials requisition forms, time tickets, and predetermined overhead rates.
3) Predetermined overhead rates are estimated before production and allow overhead to be allocated to jobs based on an allocation base like direct labor hours. This allows job costs to be estimated before actual overhead amounts are known for the period.
Marginal and absorption costing
Marginal costing is an alternative to absorption costing. Under marginal costing, only variable costs are charged as cost of sales and contribution is calculated. Fixed costs are treated as period costs. Contribution is the difference between sales revenue and variable costs, and it goes towards recovering fixed costs and generating profit. The key principles of marginal costing are that fixed costs do not change with volume, so increasing or decreasing sales only impacts profits by the amount of the variable cost per unit. Inventory is valued at marginal/variable cost under marginal costing.
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The document outlines the calculation of cost of goods sold (COGS) by detailing opening and closing inventory amounts for materials and finished goods, purchases and returns, direct materials consumed, cost of goods manufactured, prime costs including direct materials and labor, conversion costs including labor and factory overhead, total manufacturing costs, and the final calculation of COGS by adding opening finished goods inventory and subtracting closing finished goods inventory from the cost of goods manufactured.
THE ACCOUNTING CYCLE IN BRIEF
What is the accounting cycle?
The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries.
Cycle and steps seem to be a carryover from the days of manual bookkeeping and accounting when transactions were first written into journals. In a separate step the amounts in the journal were posted to accounts. At the end of each month, the remaining steps had to take place in order to get the monthly, manually-prepared financial statements.
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Ias# 2 inventories
This document provides an overview of accounting standards for inventories according to IAS 2. It defines inventories as assets held for sale, in production, or as supplies. The objectives of IAS 2 are to prescribe accounting treatments for inventories. Inventories must be measured at the lower of cost or net realizable value, using methods like FIFO, LIFO, or weighted average. The document outlines costs that are included in inventory valuation and disclosure requirements.
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This document discusses Accounting Standard AS-2 regarding the valuation of inventories. It outlines the objectives of accounting standards and AS-2, which are to standardize the computation of inventory costs and the valuation of closing stock. The standard applies to inventories held for sale, in production, or as materials/supplies. Inventories must be valued at the lower of cost or net realizable value. Cost includes purchase costs, conversion costs, and other costs to bring inventory to its present condition/location. Net realizable value is estimated selling price less completion/selling costs. Common costing methods like FIFO, LIFO, and weighted average are also described.
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This presentation slide is about the concept of "Absorption Costing" in Management Accounting and Control.
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TOPIC Process costing , meaning,features application ,procedure,process losses and equivalent production
Absorption Of Overheads-B.V.Raghunandan
Absorption is the process of allocating overhead costs to cost centers or production departments based on units produced. There are several methods for absorbing overheads including: 1) the production unit method, 2) percentage of direct material cost method, 3) percentage of direct labour cost method, 4) percentage of prime cost method, 5) labour hour method, and 6) machine hour rate method. The machine hour rate method has advantages of being scientific, measuring actual working time and idle time, and allowing comparison of costs and efficiency between machines, but it also has disadvantages of additional work, cost, and not being suitable for labour intensive industries or when machine hours cannot be calculated.
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This document provides an overview of managerial accounting concepts including:
1) The four functions of management - planning, organizing, directing/motivating, and controlling. It describes each function in 1-2 sentences.
2) The differences between financial and managerial accounting, including users, time focus, precision vs timeliness, and other factors.
3) The three categories of manufacturing costs - direct materials, direct labor, and manufacturing overhead - and provides examples of each.
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- Inventories must be measured at the lower of cost and net realizable value. Cost includes costs of purchase, costs of conversion, and other costs to bring inventories to their present location and condition. Net realizable value is the estimated selling price less costs to complete and sell.
- When inventories are sold, their carrying amount must be recognized as an expense. Write-downs to net realizable value and inventory losses must also be recognized as expenses.
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01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
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Ppt on Cost accounting and its classifications
Cost accounting involves classifying costs according to their nature, function, variability, and controllability. There are several types of costs:
- Direct costs like materials and labor that are clearly traceable to production. Indirect costs like utilities that are not directly traceable.
- Fixed costs that do not vary with production like rent. Variable costs that vary with production like materials. Semi-variable costs that vary but not proportionately.
- Controllable costs a manager can influence like direct labor. Uncontrollable costs outside a manager's control like depreciation.
- Normal costs incurred during regular operations. Abnormal costs from unexpected events like fires.
Inventory(ias 2)
This document summarizes International Accounting Standard 2 (IAS 2) which provides guidance on accounting for inventories. The key points are:
1) IAS 2 defines inventory as assets held for sale, in production, or in the form of materials used in production. It establishes cost as the default basis for valuing inventories.
2) Cost is determined using purchase costs, conversion costs, and other costs to bring inventory to its present condition and location. Net realizable value provides the floor for the valuation of inventory.
3) IAS 2 allows different cost flow assumptions - FIFO, LIFO, weighted average - and requires specific disclosures about inventory amounts, costs, and accounting policies.
Overview of cost & Management Accounting
This document provides an overview of cost and management accounting. It defines cost accounting as a system for recording costs and producing cost information for products. It also discusses why organizations need costing systems to provide actual unit costs, actual department costs, and forecast costs for planning, decision making, and cost control. The document then covers key terms in cost accounting such as cost, cost units, cost centers, cost objects, and classifications of costs by nature, function, behavior, and changes in activity or volume.
Process costing
Process costing is a method used by manufacturing industries to calculate the cost of production at each stage of converting raw materials into finished goods. It involves allocating total manufacturing costs to products based on normal production levels. Process costing is used in industries like chemicals, textiles, steel, and sugar that involve sequential production processes with continuous flow of goods. The method determines an average cost per equivalent unit and helps control costs, calculate inventory values, and assign product prices at each stage of multiple processes.
Product costing system
This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
Chapter 2 Systems Design: Job-Order Costing
1) The document discusses job-order costing and process costing systems. It explains that job-order costing is used when individual products are unique and tracked separately, while process costing is used when large quantities of a standard product are produced.
2) Job-order costing involves tracking direct material, direct labor, and allocated manufacturing overhead costs for each individual job. Documents used include job cost sheets, materials requisition forms, time tickets, and predetermined overhead rates.
3) Predetermined overhead rates are estimated before production and allow overhead to be allocated to jobs based on an allocation base like direct labor hours. This allows job costs to be estimated before actual overhead amounts are known for the period.
Marginal and absorption costing
Marginal costing is an alternative to absorption costing. Under marginal costing, only variable costs are charged as cost of sales and contribution is calculated. Fixed costs are treated as period costs. Contribution is the difference between sales revenue and variable costs, and it goes towards recovering fixed costs and generating profit. The key principles of marginal costing are that fixed costs do not change with volume, so increasing or decreasing sales only impacts profits by the amount of the variable cost per unit. Inventory is valued at marginal/variable cost under marginal costing.
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Estructura de un artículo académico y búsqueda del objetivo general
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Preparation of trading, profit and loss of a manufacturer
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Similar to Manufacturing accounts
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This document provides an overview of managerial accounting. It discusses the differences between managerial and financial accounting, managerial cost concepts including direct materials, direct labor, and manufacturing overhead, and job order cost accounting. Job order cost accounting involves accumulating manufacturing costs, assigning costs to work in process and finished goods, and recognizing cost of goods sold. Costs flow through the job cost sheet which tracks costs by job.
Unit Costing.pptx
This document provides information about unit costing and cost sheets. It defines key costing terms like unit cost, prime cost, factory cost, office cost, selling and distribution cost, and total cost. It explains the objectives and components of a cost sheet, including a sample proforma cost sheet. Examples are provided to demonstrate how to calculate costs from raw material consumption, work in progress, finished goods, and to prepare a full cost sheet. The treatment of scrap and various cost control techniques are also summarized.
CA Ch.4-Job Costing-part 1-Nureni.pdf
This document discusses job costing, which is a costing system where the cost object is a distinct unit or job. It may use different amounts of resources than other jobs. The document outlines the key concepts of job costing, including actual and normal costing approaches, tracking costs through journal entries, and adjusting for over- or under-applied manufacturing overhead at year-end using different methods. It provides examples to illustrate job costing calculations and journal entries.
Cost acc 03
Unit or output costing is used when standard products are produced through a common process and units are similar. A cost sheet is prepared to show the detailed cost of total output for a period. It assembles estimated costs for a cost center and helps management fix selling prices, submit tenders, and formulate production policies by providing cost per unit. A cost sheet calculates prime cost as direct materials + direct labor + direct expenses, then adds factory overheads for works cost, office expenses for cost of production, and selling/distribution costs for total cost.
Module 1 lesson 2 cost classifications according to purpose
Cost classifications are used for four main purposes: preparing external financial statements, predicting cost behavior, assigning costs to cost objects, and making decisions. For financial statements, costs are classified as either product costs (recognized as assets until goods are sold) or period costs (expensed in the period incurred). Direct costs can be traced to specific cost objects, while indirect costs cannot. Variable costs change with activity level, while fixed costs remain constant. Only differential costs that differ between alternatives are relevant for decision making.
PART IIncome StatementFor the year ended December 31, 2009Part.pdf
PART I
Income Statement
For the year ended December 31, 2009
Particulars
Amount $
Sales Revenue
54000
Less: Purchases of merchandise
(27000)
Add: Opening Stock
15000
Less: Closing Stock
(10250)
Gross Profit
31750
Less:Operating Expenses
(Other Indirect cost, Expenses and losses)
Rent for shop
4000
Sales Commission
2300
Utilities for shop
2450
Net Profit
23000
Part 2
For the year ended December 31, 2010
Particulars
Amount
Amount
Opening Stock of Raw Material
Add: Purchase of Raw materials
Add: Purchase Expenses
Less: Closing stock of Raw Materials
Raw Materials Consumed
Direct Wages (Labour)
Direct Charges
13500
31000
0
9275
35,225
18300
0
Prime cost (1)
53,525
Add :- Factory Over Heads:
Rent on Manufacturing Plant
Plant Janitorial Service
Utilities of plant
9000
1250
4600
Works cost Incurred
14850
Add: Opening Stock of WIP
Less: Closing Stock of WIP
0
720
Works cost (2)
67655
Add:- Administration Over Heads:-
0
Cost of Production (3)
67655
Add: Opening stock of Finished Goods
Less: Closing stock of Finished Goods
0
5700
Cost of Goods Sold
61955
PART 2 (b) Income Statement
For the year ended December 31, 2010
Particulars
Amount
Amount
105000
Less: Cost of Goods Sold As per Above
(61955)
Gross profit
43045
Less : Selling and Distribution OH
Customer service hotline Exp
1000
Delivery Exp
1500
Sales Salaries
5000
7500
Net Profit
35545
PART 2 (c)
The Major differencein income statement of Best friends Manufacturing and hannah\'s pets is in
Calculation of cost of goods sold
Cost of goods sold of Best friends Manufacturing includes
(i) Manufacturing cost
(ii) administration expenses and
(iii) Opening and Closing Stock of Raw material,WIP and FG
BUT
Cost of goods sold of hannah\'s pets includes only administration expenses and Finished goods
Stock
The method for reporting earnings is the same for merchandisers and manufacturers. Each type
of company has sales and the total of these sales is the earnings figure. This figure does not
reflect cost-of-goods expenses.
Cost of Goods for Merchandisers
Merchandisers buy goods and resell them. The cost of those goods must be subtracted from the
earnings figure. The method for calculating this figure is to add inventory on hand at the
beginning of the accounting period to inventory purchased during the accounting period.
Subtract the inventory on hand at the end of the period, and subtract any freight charges. This is
the cost-of-goods figure for a merchandiser. The merchandiser\'s income statement will show
gross revenues minus this cost-of-goods number.
Cost of Goods for Manufacturers
Manufacturers break the cost of goods into categories. Raw materials expenses make up the first
category of manufacturing expenses. This cost covers any components, parts or materials
required to make the company’s product. The manufacturer must also inventory goods-in-
progress. These are partially manufactured products that could not be finished before the end of
the accounting period. In addition, manufacturers must count fi.
Manufacturing account1-130307085801-phpapp01
The document discusses the calculation and treatment of production costs, including direct materials, direct labor, direct expenses, and factory overhead expenses. It also covers the manufacturing account, trading account, and profit and loss account. The manufacturing account shows the production cost and includes direct costs plus factory overhead. The trading account shows gross profit or loss from sales and the cost of goods sold, using the production cost from the manufacturing account. The profit and loss account includes gross profit from trading plus other income and expenses to determine net profit or loss.
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Job costing power point show
This document discusses job costing, including its definition, purpose, characteristics, applicability, differences from process costing, basic terminology, the seven steps of job costing, related journal entries, and an example problem involving actual, normal, and variance costing for a job. Job costing involves collecting and assigning costs to identifiable jobs or orders, and is used when production involves made-to-order or custom goods of short duration. It helps with planning, cost control, and decision making.
Unit 9 costing methods
This document discusses different costing methods used in management accounting including job costing, process costing, batch costing, contract costing, and service costing. It provides examples and explanations of key concepts in job costing like job cost sheets, predetermined overhead rates, and manufacturing overhead. Process costing is explained as a method used for mass production of nearly identical units where costs are accumulated and assigned to units produced. Batch costing is defined as identifying and assigning costs to a set amount of similar goods produced in a batch. Contract costing applies especially to long-term construction projects performed over multiple periods. Finally, service costing calculates the full costs of services an entity provides using direct and indirect costs.
Acct 505 week 4 midterm new 2016
ACCT 505 Week 4 Midterm – New 2016
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FINANCIAL STATEMENT OF MANUFACTURING FIRMS ODAC 2.pptx
This document discusses financial statements for manufacturing firms. It defines manufacturing and merchandising firms, and explains the key elements of manufacturing costs including prime costs, overhead costs, and inventory accounts. It then provides an example statement of manufacturing costs, statement of profit or loss, and statement of financial position for a manufacturing firm. The document is intended to teach readers how to prepare the key financial statements used by manufacturing businesses.
Cost and Management Accounting I Chapter 3 (2)(2)-1 (1).pptx
This document discusses cost allocation, which is the process of assigning indirect costs to cost objects like products or services using an allocation base. It provides definitions for key terms like cost object, cost pool, and cost driver. It also outlines the steps in the cost allocation process, including planning, application, recording, and reconciliation. Finally, it compares traditional cost allocation using a single overhead rate to activity-based costing, which uses multiple cost pools and drivers.
Sales and production budget
The document discusses sales and production budgets. It states that the sales budget is the first budget prepared as part of the master budget and is based on sales forecasts. The sales budget shows expected sales revenue. The production budget shows the production levels needed to meet the sales budget and end-of-period inventory goals. It is derived from the sales budget and planned finished goods inventory. The production budget then informs other budgets and is a key part of the budgeting process.
UNIT IV COST ACCOUNTING
Cost Accounts - Classification of manufacturing costs - Accounting for manufacturing costs. Cost Accounting Systems: Job order costing - Process costing- Activity Based Costing- Costing and the value chain- Target costing- Marginal costing including decision making- Budgetary Control & Variance Analysis - Standard cost system.
cost accounting chapter 6, fundamentals of product and service design
This document discusses job-order costing systems used by manufacturing firms that produce unique products in small batches. It explains the key aspects of setting up a job-order costing system including cost accumulation, measurement, and assignment. Costs like direct materials, direct labor, and applied overhead are traced to individual jobs and accumulated on job cost sheets. The chapter compares using a single overhead rate versus multiple rates and how they impact cost assignment.
Process costing
This document discusses principles and examples of process costing. Some key points covered include:
- Production is classified by processes and each process account tracks direct materials, labor, expenses and overheads. Cost per unit is calculated at the end of each process.
- Normal loss is credited to the process account at scrap value while abnormal loss is credited at full cost.
- Examples show setting up process accounts to track costs of different products as they move through multiple processes, and calculating unit costs and profits.
- Process loss and wastage distinguishes between normal and abnormal loss.
- Joint products and by-products examples show allocating joint costs between products.
Unit or output costing i
Unit or output costing is used to determine the cost per unit of standard, identical products produced through a common process. A cost sheet or statement of cost can be used to calculate total cost, unit cost, and costs at different stages of production. Key elements of cost include prime cost (direct materials, labor, expenses), works/factory cost (prime cost plus factory overheads), cost of production (works cost plus office/administrative costs), and total cost (cost of production plus selling/distribution costs). Comparative cost sheets analyze costs across multiple time periods or products. Cost sheets provide management information to control expenses, determine selling prices, and evaluate production efficiency.
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Module 1 lesson 2 cost classifications according to purpose
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Petty cash introduction
This document discusses petty cash, including:
- Petty cash refers to small, regular business expenses like stationery, cleaning supplies, and refreshments that are paid in cash.
- Petty cash payments are recorded in a petty cash book to track spending.
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Preparation of balance sheet of partners
The balance sheet of a partnership is similar to that of a sole proprietorship, except that the capital accounts and current accounts of each partner are listed separately. Current accounts with credit balances are listed as liabilities, while debit balances are listed as assets. The capital section can either show detailed capital account balances for each partner, with current account information in those accounts, or provide a summarized view of final capital and current account balances.
Current account of partners
The document discusses how to prepare current accounts for partners in a partnership. It explains that each partner has a separate current account to track their capital balance and share of profits or losses. The current account shows credits for the partner's profits, salary, interest on capital, and share of residual profits. Debits include drawings and interest on drawings. At the end of each period, the current account is balanced, with a debit balance meaning the partner owes money to the company and a credit balance meaning the company owes money to the partner.
Appropriation account for partnership
The document discusses how to prepare an appropriation account for a partnership. The appropriation account is an additional section in the partnership's profit and loss account that shows the distribution of profit or loss to each partner. It appropriates items like interest on capital invested, partners' salaries, interest charged on withdrawals (drawings), and the residual share of profit or loss to each partner according to the partnership agreement.
Methods to share profit or loss among partners
This document discusses various methods for sharing profits and losses among partners in a partnership. It outlines that the partnership agreement should state the basis for sharing net income or net loss, and provides examples such as using fixed ratios based on capital contributions, salaries, or interest paid on partners' capital. The objective is to equitably reflect partners' investments and contributions to the partnership. In the absence of an agreement, applicable partnership acts specify equal profit/loss sharing and restrictions on salaries or interest payments.
Journal entries for recording capital of partnerships
This document discusses journal and ledger entries for recording capital contributions in a partnership. It explains that each partner may contribute different amounts of cash or non-cash capital, which are recorded through journal entries that debit cash/assets and credit each partner's capital account. Partnerships can use either fixed capital/current accounts or fluctuating capital accounts to track each partner's balance over time as profits, drawings, and interest are allocated.
Partnership features
A partnership is a business organization owned by two or more persons called partners who come together voluntarily to combine their skills, experience, and resources to make a profit. The key features of a partnership are that it has voluntary association between partners, mutual agency where each partner can act on behalf of the business and bind the other partners, unlimited liability where each partner is personally responsible for the partnership's debts, limited life as it can end when a partner withdraws or dies, and co-ownership of property where assets are jointly owned and distributed based on capital accounts if the partnership dissolves.
Basic costing principles
Cost-based pricing and absorption cost pricing are two common strategies. Cost-based pricing involves adding up all variable costs and overhead to determine the minimum price, while absorption cost pricing accounts for both fixed and variable costs. For cost-based pricing, the formula is price equals cost plus a markup percentage of cost. Absorption cost pricing derives long-term prices to pay for all expenses by including a proportion of fixed costs and overhead in the price, along with variable costs and a markup. Understanding costs is crucial for setting appropriate prices under different strategies.
Methods of stock valuation
Methods of inventory valuation include first in first out (FIFO), last in first out (LIFO), and weighted average cost (AVCO). FIFO assumes the earliest goods purchased are sold first and values ending inventory at the latest prices. LIFO assumes the latest goods purchased are sold first and values ending inventory at older prices. AVCO makes no assumptions about inventory movement and values goods based on the weighted average unit cost. The method used affects ending inventory valuation and calculated profits.
Methods of raising capital for llc and co operatives
LLCs and cooperatives can raise capital through several methods including issuing shares to private investors for LLCs and members for cooperatives, securing debt through loans or debentures, and retaining annual earnings. Shares may be preferred shares that provide priority on dividends and bankruptcy, or ordinary shares that offer voting rights. Cooperatives also generate capital through member purchases, annual fees, and interest on loans to members. Both types of organizations can tap into reserves set aside from prior earnings.
Final accounts of llc and cooperatives
The document discusses the final accounts that limited liability companies (LLCs) and cooperatives must prepare at the end of each financial period. Both entities prepare an income and expenditure account, appropriation account, cash flow statement, and balance sheet. Cooperatives also prepare a receipts and payments account and trading account. The document provides details on the purpose and components of each final account.
Appropriation of profits
The document discusses the appropriation of profits process for a limited liability company. It explains that net profits are transferred to an appropriation account rather than share capital accounts. The appropriation account is used to allocate profits between dividends, reserves, and retained earnings. It contains key items like the profit/loss for the year, retained profits brought forward, proposed dividends, transfers to reserves, and retained profits carried forward. The document also distinguishes between capital reserves, which are not used for dividends, and revenue reserves, which can be used for dividends. An example appropriation account is provided.
Recording of shares and debentures
The document discusses recording the issue of shares and debentures by companies. It explains that shares are issued to raise a company's capital, and can be ordinary shares or preference shares, each with different features. When shares are issued, the company debits cash and credits share capital accounts. If shares are issued above par value, share premium is also credited. Debentures are long-term loans to a company that pay a fixed rate of interest and are repaid on a specific date. To record debenture issuance, the company debits cash and credits the debentures account.
Non profit organisations
Non-profit organizations exist to benefit their members rather than generate profits. They aim to provide facilities and services for members to use, and are formed for educational, religious, charitable, or social welfare purposes. Non-profits are governed by elected boards of directors and obtain funding through contributions, dues, programs, fundraising, grants, and investments rather than being owned by businesses seeking profits.
Cooperatives
Co-operatives are organizations formed for the benefit of their members and local communities. They provide goods and services to members who are also customers, with profit-making not the main goal. Members buy shares and elect a board of management to govern activities. Co-operatives follow principles of open membership, democratic control, limited returns on shares and patronage refunds based on customer use. They also provide education and cooperate with other co-operatives.
Features of limited liability companies
Limited liability companies have several key features:
1) Their capital is divided into shares or stocks that are sold to raise money from public or private investors.
2) Shareholders are only responsible for the amount they invested and not other debts of the company.
3) They have the words "Ltd", "Plc", or "LLC" after their names. Private limited companies have few shareholders and restricted share sales, while public companies freely trade shares on stock exchanges.
Internal and external users of financial information
This document discusses the internal and external users of accounting information. External users such as creditors, stockholders, vendors, and government agencies rely on accounting information to make important financial decisions but have limited access to it. Internal users directly involved in running the business use the information to improve performance and profitability. The needs of internal users include employees, purchasing managers, and production managers who use it to monitor costs and ensure quality.
Elements of cost
The document discusses the elements needed to calculate the cost of production for Snickers bars using a manufacturing account. It identifies the key costs as raw materials, labor, and operating the factory. Raw materials are a direct cost, while direct costs also include direct wages and expenses. Indirect costs include indirect materials, wages, and expenses that are linked to manufacturing but not specific units. The goal is to understand the direct and indirect costs incurred in producing Snickers bars.
Books of oe recording transactions
This document discusses the source documents used to record transactions in books of original entry, including purchase invoices, sales invoices, credit notes, cash receipts, bank statements, and petty cash vouchers. It provides templates for the purchases journal, sales journal, returns inwards journal, returns outwards journal, cash book, and petty cash book. The purpose of books of original entry is to record business transactions in chronological order from source documents before posting to the general ledger.
Cash discounts
Settlement cash discounts provide a percentage discount to customers or suppliers for paying their accounts early. These discounts are recorded in discount allowed and discount received columns in a three column cash book. Discount allowed is given to customers and credited to their accounts, with the total recorded as an expense. Discount received is from suppliers and debited to their accounts, with the total recorded as revenue.
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Manufacturing accounts
- 2. Prepare manufacturing account • Preparation of manufacturing accounts • Calculate unit cost of items produced
- 3. Prepare manufacturing account • A manufacturing account is prepared to calculate the cost of producing completed goods. • After the preparation of the manufacturing account, a calculation can be done to calculate the unit cost of items produced
- 4. Prepare manufacturing account • Calculation of the key areas of the manufacturing process is done in an account • Costs incurred are essential in a manufacturing company to determine profit • Therefore rather than looking for the total cost of production alone, the cost of the keys areas are also important
- 5. $ Purchases of raw materials Xxx Carriage inwards of raw materials Xxx Less purchases returns of raw materials (Xxx) Net purchases Xxx Format used to calculate the key areas: Net purchases
- 6. Opening stock of raw materials $xxx Net purchases xxx Raw materials available for use xxx Less closing stock of raw materials ( xxx) Cost of raw materials used xxx Format used to calculate the Key areas: Cost of raw material consumed
- 7. $ Cost of raw materials used Xxx Direct wages Xxx Direct expenses Xxx Prime cost XXX Format used to calculate the Key areas: Prime cost
- 8. Format used to calculate the Key areas: Cost of goods manufactured Prime cost xxx Factory overheads: (list them down) Xxx Total factory overhead Xxx Add work in progress or process (opening) xxx Less work in progress or process (closing) Cost of Goods manufactured (cost of production) (Xxx) Xxx
- 9. Prepare a complete manufacturing account (a) Format of a complete manufacturing account showing clearly: • Raw materials • Prime cost • Factory overheads • Total manufacturing cost • Cost of production (also known as cost of goods manufactured) (b) Format to calculate the unit cost of production
- 11. Prepare manufacturing account • Formula: calculation of cost per unit of items produced Cost of goods manufactured ÷ number of units sold
- 13. Prepare manufacturing account Show the name of the company, the period and the name of the company as part of your heading. The total of all the manufacturing cost is labelled cost of production or cost of goods manufactured. Insert the opening and closing work in progress (process) at the end before calculating cost of production.
- 14. Prepare manufacturing account It is important to show the following sections in the manufacturing account: – The cost of raw materials consumed – Prime cost – Factory overhead – Cost of production
- 15. Prepare manufacturing account Watch the video on preparation of cost of goods manufactured statement Cost of Goods Manufactured Schedule Carolyn Christesen https://www.youtube.com/watch?v=4Oit9o2q-WU