Product Costing
•Download as PPT, PDF•
0 likes•400 views
This document discusses different product costing systems and which one is most appropriate given a company's strategy and environment. It outlines elements to consider like costing objectives, requirements, and system components. Based on the analysis, it recommends an activity-based costing system that tracks full and variable costs for business control, allocates joint costs based on sales value at split off point, and uses process costing with a weighted average and FIFO cost flow assumption.
Report
Share
Report
Share
![Problem definition ,[object Object],Page](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Recommended
Product Costing Solution
This document discusses the need for product costing solutions and Vedant Resources and Infrastructure Development's should costing services. It notes that product costs account for 70% of revenue and are key to profit but detailed cost breakdowns are unknown in the concept stage. The challenges include engineers being unfamiliar with manufacturing processes and limited cost data during development. Vedant provides should costing, tear down analysis, local sourcing support, and cost estimation to help understand cost drivers, optimize design for cost, and aid in supplier negotiations. Their approaches include bottom-up, parametric, and rough order of magnitude cost modeling at different levels of detail and speed.
Product costing
1. Khalid Aziz teaches financial accounting and cost accounting courses for various qualifications including ICMAP stages 1-4, ICAP modules B and D, B.Com, BBA, MBA, and PIPFA.
2. He provides crash courses and fresh classes in financial accounting and cost accounting for individuals and groups.
3. Contact information is provided for Khalid Aziz located in Karachi, Pakistan.
Material Ledger Product costing
Product costing and material ledger documentation was summarized as follows:
[1] Product costing allows companies to plan, track, and analyze product costs from raw materials procurement through production to the final cost of goods sold. The material ledger provides actual costing functionality to revalue inventory costs.
[2] Key aspects of product costing include establishing standard costs, performing costing runs to calculate costs, and updating material master prices. The costing structure includes activity types, cost elements, and cost centers.
[3] The material ledger allows companies to determine actual costs for materials and revalue inventory using methods like moving average or standard price valuation.
Job Order and Process Costin Accounting
This document discusses job order costing and process costing systems. Job order costing accumulates costs for each unique job or batch of products, and is used by companies that produce specialized or custom products. Process costing accumulates costs for each production step and is used by companies that mass produce similar products. The document provides examples of companies that would use each type of system and outlines the key differences between how costs are traced and allocated under job order versus process costing.
An introduction to cost terms and purpose
This document provides an introduction to accounting concepts related to cost. It defines cost accounting as recording and summarizing financial transactions and events in terms of money. It also discusses the different types of accounting, including financial accounting which publishes reports for external users, and management accounting which provides information to managers for decision making. Finally, it outlines the key steps in calculating cost of goods manufactured and cost of goods sold.
Job order cost system
This document provides an overview of a job order cost system. It describes job order costing as a method used when production is done according to customer orders rather than for stock. Each job has a unique cost that is tracked from start to finish using a job cost sheet. The objectives are to determine the accurate cost of each job and identify profitable versus unprofitable jobs to aid future estimates. The key aspects of job order costing include distinct work orders for each job, tracking direct and overhead costs accumulated to each job, and comparing estimated versus actual costs for process improvement and pricing future jobs.
Ckm3 material price analysis
The document provides instructions for using transaction code CKM3 in SAP to perform a material price analysis. This transaction allows users to analyze material movements and costs by entering a material, plant, and period. It then displays the valuated transactions and price/exchange rate differences for that material. Users can view details of specific documents, including purchase orders and cost center consumption documents, and drill down to associated source documents. The material ledger must be activated to use this transaction for analyzing actual costs versus standard costs.
Job order costing
This document discusses job order costing systems, including how they track costs by individual jobs rather than in batches like process costing, how the job order cost sheet accumulates actual direct and overhead costs for each job, and how standard costing compares actual costs to budgeted standards to evaluate performance and set prices.
Recommended
Product Costing Solution
This document discusses the need for product costing solutions and Vedant Resources and Infrastructure Development's should costing services. It notes that product costs account for 70% of revenue and are key to profit but detailed cost breakdowns are unknown in the concept stage. The challenges include engineers being unfamiliar with manufacturing processes and limited cost data during development. Vedant provides should costing, tear down analysis, local sourcing support, and cost estimation to help understand cost drivers, optimize design for cost, and aid in supplier negotiations. Their approaches include bottom-up, parametric, and rough order of magnitude cost modeling at different levels of detail and speed.
Product costing
1. Khalid Aziz teaches financial accounting and cost accounting courses for various qualifications including ICMAP stages 1-4, ICAP modules B and D, B.Com, BBA, MBA, and PIPFA.
2. He provides crash courses and fresh classes in financial accounting and cost accounting for individuals and groups.
3. Contact information is provided for Khalid Aziz located in Karachi, Pakistan.
Material Ledger Product costing
Product costing and material ledger documentation was summarized as follows:
[1] Product costing allows companies to plan, track, and analyze product costs from raw materials procurement through production to the final cost of goods sold. The material ledger provides actual costing functionality to revalue inventory costs.
[2] Key aspects of product costing include establishing standard costs, performing costing runs to calculate costs, and updating material master prices. The costing structure includes activity types, cost elements, and cost centers.
[3] The material ledger allows companies to determine actual costs for materials and revalue inventory using methods like moving average or standard price valuation.
Job Order and Process Costin Accounting
This document discusses job order costing and process costing systems. Job order costing accumulates costs for each unique job or batch of products, and is used by companies that produce specialized or custom products. Process costing accumulates costs for each production step and is used by companies that mass produce similar products. The document provides examples of companies that would use each type of system and outlines the key differences between how costs are traced and allocated under job order versus process costing.
An introduction to cost terms and purpose
This document provides an introduction to accounting concepts related to cost. It defines cost accounting as recording and summarizing financial transactions and events in terms of money. It also discusses the different types of accounting, including financial accounting which publishes reports for external users, and management accounting which provides information to managers for decision making. Finally, it outlines the key steps in calculating cost of goods manufactured and cost of goods sold.
Job order cost system
This document provides an overview of a job order cost system. It describes job order costing as a method used when production is done according to customer orders rather than for stock. Each job has a unique cost that is tracked from start to finish using a job cost sheet. The objectives are to determine the accurate cost of each job and identify profitable versus unprofitable jobs to aid future estimates. The key aspects of job order costing include distinct work orders for each job, tracking direct and overhead costs accumulated to each job, and comparing estimated versus actual costs for process improvement and pricing future jobs.
Ckm3 material price analysis
The document provides instructions for using transaction code CKM3 in SAP to perform a material price analysis. This transaction allows users to analyze material movements and costs by entering a material, plant, and period. It then displays the valuated transactions and price/exchange rate differences for that material. Users can view details of specific documents, including purchase orders and cost center consumption documents, and drill down to associated source documents. The material ledger must be activated to use this transaction for analyzing actual costs versus standard costs.
Job order costing
This document discusses job order costing systems, including how they track costs by individual jobs rather than in batches like process costing, how the job order cost sheet accumulates actual direct and overhead costs for each job, and how standard costing compares actual costs to budgeted standards to evaluate performance and set prices.
Case study material ledger implementation lessons learned
Cooper Tire implemented SAP Material Ledger as part of their initial SAP implementation in order to gain visibility into actual product costs and variances across production processes. Some key lessons learned included making the final decision to implement Material Ledger early, ensuring quality consultant support, and properly configuring for long-term requirements. Material Ledger provided benefits like impact of price variances and actual inventory costs but also challenges like increased data volumes and complexities. Cooper Tire's next steps include further integrating Material Ledger with SAP Profitability and Cost Management for improved cost and profitability reporting and analysis.
Over head expensions IN process planning & cost estimation by G.DINESHPIRAN
This document discusses overhead expenses in business. It defines overhead as ongoing operating expenses that cannot be directly associated with generating profits. It identifies three main types of overhead: 1) Administrative overheads like salaries and office supplies, 2) Manufacturing overheads incurred in factories like depreciation and property taxes, 3) How overheads are applied, such as in break-even analysis and shutdown graphs, to determine pricing and whether a business should continue operating. Examples are provided for each type of overhead.
Job costing
Job costing is a method used to determine the cost of specific jobs or production lots made to customer specifications. Industries like construction, manufacturing, printing, and engineering commonly use job costing. A job can be a single unit or multiple identical units covered by one production order.
The job cost sheet is the central document of job costing. It accumulates direct material, direct labor, and other direct costs as work on a job order progresses. It provides descriptive information from the production order.
The question provides cost data for a factory using job costing for 1994. It asks to prepare a job cost sheet showing prime cost, work cost, production cost, cost of sales, and sales value. It also asks
Job and batch costing
The document discusses job costing and batch costing. It defines job costing as a method where cost is compiled for specific jobs or work orders, rather than for stock. Cost is charged directly to jobs for materials, labor, and expenses. Overhead is apportioned to jobs based on department rates. Batch costing determines cost per unit by dividing total batch costs by the number of units in a batch. The document also discusses determining economic batch quantity to minimize setup and carrying costs, and provides examples of job and batch costing applications.
CK40N-Automation of Standard Cost Estimate
This document describes how to automate the standard cost estimate process (CK40N) in SAP. It involves setting up a costing run with parameters for each step - selection, structure explosion, costing, analysis, marking, and release. These steps are configured to run in the background by activating background processing for each. Finally, the background jobs are scheduled and monitored to completion to automate the full CK40N process.
Job and batch costing
Here are the key steps to determine the price to charge for the customer enquiry:
(i) Calculate direct labour cost:
Preparation: 100 hrs x ¢3.60/hr = ¢360
Machine shop: 500 hrs x ¢4.20/hr = ¢2,100
Assembling: 400 hrs x ¢1.50/hr = ¢600
Total direct labour cost = ¢360 + ¢2,100 + ¢600 = ¢3,060
(ii) Calculate fixed overhead absorption based on direct labour hours using the absorption rate of ¢12 per hour.
Total direct labour hours = 100 + 500 + 400 = 1,000
Job costing slides
The document discusses job costing, which is a product costing method used for unique products made to customer specifications. It describes job costing systems, different costing methods (actual, normal, standard), and reasons why normal and standard costing are preferable to actual costing. The document also provides examples of job costing sheets and case studies calculating costs for different job orders.
COMPONENT OF COST BY G.DINESHPIRAN [DP]
This document contains summaries of seminar notes on cost concepts and cost relationships for a manufacturing company. It discusses different types of costs like direct materials, direct labor, manufacturing overhead and their relationships. It also shows income statements and treatment of beginning and ending work-in-process and finished goods inventory. Concepts around fixed, variable and mixed costs are explained along with methods to separate mixed costs. An example is given to illustrate treatment of mixed utility costs. Finally, conventional product costing method and use of predetermined overhead rates is summarized.
Job Costing & ABC costing
Activity-based costing (ABC) is a method that allocates costs to products and services based on the activities consumed by each. It assigns costs to products by tracing expenses to activities, and then charges each product based on the extent it uses each activity. The primary objective of ABC is to assign costs in a way that reflects the physical dynamics of the business. It helps identify inefficient areas and unnecessary costs.
Batch costing
This document discusses different types of costing methods used in manufacturing including job costing, batch costing, contract costing, and process costing. Job costing is used to determine the costs of specific jobs or orders. Batch costing is a variant of job costing where similar products are manufactured in batches. Contract costing is a variant of job costing applied to construction projects. Process costing is used for mass production of standardized goods and tracks costs at each stage of production. The document outlines key features, advantages, and disadvantages of each costing method.
Co product costing detailed trng
The document discusses product cost controlling and accounting. It covers topics like legal requirements for valuation of raw materials, work in process, and finished goods. It also discusses management requirements like supporting cost reduction and strategic/operational decision making. The document outlines different cost controlling methods like by order, period, or sales order. It provides examples of when each method would be used. It also describes components of cost controlling like cost object controlling, cost planning, actual costing, variance calculation, and period-end closing procedures.
Chapter 9 study guide
This chapter discusses inventory costing methods for manufacturing companies and concepts for measuring production capacity. It describes two main inventory costing methods: variable costing, which expenses fixed manufacturing costs, and absorption costing, which includes fixed costs as inventoriable costs. Absorption costing follows GAAP but variable costing is useful for internal analysis. The chapter also examines four capacity measurement concepts and how the choice of denominator level affects income under absorption costing.
Bba ii cost and management accounting u 3.1 output costing (or unit costing o...
Output or unit costing is used for industries that produce a single or similar products continuously. It can be used for industries like brick works, cement, dairies, steel mills, breweries, sugar mills, and paper mills. Unit costing involves preparing periodic cost sheets to calculate the average cost per unit by dividing total costs by units produced. Cost units may be things like 1000 bricks, a barrel of beer, or a ton of steel. The cost sheet shows total costs and cost per unit. Items like interest, taxes, and dividends are excluded from the cost sheet calculation. Stocks of raw materials, work in progress, and finished goods are accounted for using opening and closing balances when calculating costs.
Job costing 3 a
Here are the steps to solve this problem:
1. Calculate the factory cost of each existing job:
Job 1011: Direct materials (Rs. 37,500) + Direct wages (Rs. 30,000) = Rs. 67,500
Factory overheads @ 25% of wages = Rs. 30,000 * 25% = Rs. 7,500
Factory cost = Rs. 67,500 + Rs. 7,500 = Rs. 75,000
Job 1012: Direct materials (Rs. 54,000) + Direct wages (Rs. 42,000) = Rs. 96,000
Factory overheads @ 25% of wages = Rs. 42,000 * 25% = Rs. 10
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.
ck40 n-edit-costing-run-instruction
This document provides instructions for performing a mass costing run in SAP. It describes running a costing for finished and semi-finished products valued at standard price. The process involves setting selection parameters to choose materials by type and plant, executing a BOM explosion, performing cost estimation, analyzing results, and marking and releasing standard prices. The full procedure takes the user through 63 steps to complete a costing run for multiple materials and plants at once.
Chapter4 job costing
This document discusses key concepts in job costing, including:
1) Job costing systems track costs for distinct jobs or orders, as opposed to process costing for mass production.
2) Direct costs like materials and labor can be traced to specific jobs, while indirect costs like overhead must be allocated using cost pools and allocation bases.
3) The seven steps of job costing include identifying the job, direct costs, allocation bases, overhead rates, applying overhead, and calculating total job costs. Journal entries track costs through production.
4) Variances between actual and allocated overhead are written off to cost of goods sold at completion to adjust for over or under allocation.
Bba ii cost and management accounting u 3.2 job and batch costing
This document discusses job costing and batch costing. It begins by defining job order industries and mass production industries. It then explains that job costing is used in job order industries where production is done according to customer orders. Batch costing is a variation of job costing used when a definite number of identical items are produced in batches to be held in stock. It discusses the objectives of job costing and provides an example of a job cost sheet. Finally, it explains the concept of economic batch quantity and how to calculate it.
Product costing
This document defines key terms related to product costing and pricing. It provides a 6-step process for computing the price per unit of a product: 1) determine total production expenses, 2) determine operational expenses, 3) combine all expenses, 4) add a 25% markup, 5) divide total costs by volume of production to get price per unit, and 6) compute prices for different units (e.g. per pack, dozen, or box) based on the per unit price and typical quantities included in those units. It also outlines a similar process for pricing merchandise.
18.3 Example of Product costing
A firm purchased 100 units of stock on January 1, 2015. The product cost includes the supplier's price of $7 per unit, cartage inwards of $1 per unit, and a share of annual customs duty and delivery van depreciation. This results in a total product cost of $8 per unit. The financial statements show the firm selling the 100 units for $16 each, generating a gross profit of $600 and net profit of $100 after deducting other expenses.
Costing system job costing
Job order costing systems use a predetermined overhead rate to apply manufacturing overhead to jobs, which can result in overapplied or underapplied overhead for the period depending on actual overhead costs. Over or underapplied amounts are allocated to work in process, finished goods, and cost of goods sold inventory accounts or closed directly to cost of goods sold based on the percentage of total overhead applied to each account. This process ensures overhead costs are properly matched with the time period they relate to.
Costing system
The document discusses job-order costing, including:
1. Job-order costing is used when different products are produced to customer orders and the unique nature of each job requires tracing costs.
2. Manufacturing overhead is allocated to jobs using a predetermined overhead rate based on an allocation base like direct labor hours.
3. Underapplied or overapplied overhead can occur if actual overhead differs from the amount applied using the predetermined rate.
More Related Content
What's hot
Case study material ledger implementation lessons learned
Cooper Tire implemented SAP Material Ledger as part of their initial SAP implementation in order to gain visibility into actual product costs and variances across production processes. Some key lessons learned included making the final decision to implement Material Ledger early, ensuring quality consultant support, and properly configuring for long-term requirements. Material Ledger provided benefits like impact of price variances and actual inventory costs but also challenges like increased data volumes and complexities. Cooper Tire's next steps include further integrating Material Ledger with SAP Profitability and Cost Management for improved cost and profitability reporting and analysis.
Over head expensions IN process planning & cost estimation by G.DINESHPIRAN
This document discusses overhead expenses in business. It defines overhead as ongoing operating expenses that cannot be directly associated with generating profits. It identifies three main types of overhead: 1) Administrative overheads like salaries and office supplies, 2) Manufacturing overheads incurred in factories like depreciation and property taxes, 3) How overheads are applied, such as in break-even analysis and shutdown graphs, to determine pricing and whether a business should continue operating. Examples are provided for each type of overhead.
Job costing
Job costing is a method used to determine the cost of specific jobs or production lots made to customer specifications. Industries like construction, manufacturing, printing, and engineering commonly use job costing. A job can be a single unit or multiple identical units covered by one production order.
The job cost sheet is the central document of job costing. It accumulates direct material, direct labor, and other direct costs as work on a job order progresses. It provides descriptive information from the production order.
The question provides cost data for a factory using job costing for 1994. It asks to prepare a job cost sheet showing prime cost, work cost, production cost, cost of sales, and sales value. It also asks
Job and batch costing
The document discusses job costing and batch costing. It defines job costing as a method where cost is compiled for specific jobs or work orders, rather than for stock. Cost is charged directly to jobs for materials, labor, and expenses. Overhead is apportioned to jobs based on department rates. Batch costing determines cost per unit by dividing total batch costs by the number of units in a batch. The document also discusses determining economic batch quantity to minimize setup and carrying costs, and provides examples of job and batch costing applications.
CK40N-Automation of Standard Cost Estimate
This document describes how to automate the standard cost estimate process (CK40N) in SAP. It involves setting up a costing run with parameters for each step - selection, structure explosion, costing, analysis, marking, and release. These steps are configured to run in the background by activating background processing for each. Finally, the background jobs are scheduled and monitored to completion to automate the full CK40N process.
Job and batch costing
Here are the key steps to determine the price to charge for the customer enquiry:
(i) Calculate direct labour cost:
Preparation: 100 hrs x ¢3.60/hr = ¢360
Machine shop: 500 hrs x ¢4.20/hr = ¢2,100
Assembling: 400 hrs x ¢1.50/hr = ¢600
Total direct labour cost = ¢360 + ¢2,100 + ¢600 = ¢3,060
(ii) Calculate fixed overhead absorption based on direct labour hours using the absorption rate of ¢12 per hour.
Total direct labour hours = 100 + 500 + 400 = 1,000
Job costing slides
The document discusses job costing, which is a product costing method used for unique products made to customer specifications. It describes job costing systems, different costing methods (actual, normal, standard), and reasons why normal and standard costing are preferable to actual costing. The document also provides examples of job costing sheets and case studies calculating costs for different job orders.
COMPONENT OF COST BY G.DINESHPIRAN [DP]
This document contains summaries of seminar notes on cost concepts and cost relationships for a manufacturing company. It discusses different types of costs like direct materials, direct labor, manufacturing overhead and their relationships. It also shows income statements and treatment of beginning and ending work-in-process and finished goods inventory. Concepts around fixed, variable and mixed costs are explained along with methods to separate mixed costs. An example is given to illustrate treatment of mixed utility costs. Finally, conventional product costing method and use of predetermined overhead rates is summarized.
Job Costing & ABC costing
Activity-based costing (ABC) is a method that allocates costs to products and services based on the activities consumed by each. It assigns costs to products by tracing expenses to activities, and then charges each product based on the extent it uses each activity. The primary objective of ABC is to assign costs in a way that reflects the physical dynamics of the business. It helps identify inefficient areas and unnecessary costs.
Batch costing
This document discusses different types of costing methods used in manufacturing including job costing, batch costing, contract costing, and process costing. Job costing is used to determine the costs of specific jobs or orders. Batch costing is a variant of job costing where similar products are manufactured in batches. Contract costing is a variant of job costing applied to construction projects. Process costing is used for mass production of standardized goods and tracks costs at each stage of production. The document outlines key features, advantages, and disadvantages of each costing method.
Co product costing detailed trng
The document discusses product cost controlling and accounting. It covers topics like legal requirements for valuation of raw materials, work in process, and finished goods. It also discusses management requirements like supporting cost reduction and strategic/operational decision making. The document outlines different cost controlling methods like by order, period, or sales order. It provides examples of when each method would be used. It also describes components of cost controlling like cost object controlling, cost planning, actual costing, variance calculation, and period-end closing procedures.
Chapter 9 study guide
This chapter discusses inventory costing methods for manufacturing companies and concepts for measuring production capacity. It describes two main inventory costing methods: variable costing, which expenses fixed manufacturing costs, and absorption costing, which includes fixed costs as inventoriable costs. Absorption costing follows GAAP but variable costing is useful for internal analysis. The chapter also examines four capacity measurement concepts and how the choice of denominator level affects income under absorption costing.
Bba ii cost and management accounting u 3.1 output costing (or unit costing o...
Output or unit costing is used for industries that produce a single or similar products continuously. It can be used for industries like brick works, cement, dairies, steel mills, breweries, sugar mills, and paper mills. Unit costing involves preparing periodic cost sheets to calculate the average cost per unit by dividing total costs by units produced. Cost units may be things like 1000 bricks, a barrel of beer, or a ton of steel. The cost sheet shows total costs and cost per unit. Items like interest, taxes, and dividends are excluded from the cost sheet calculation. Stocks of raw materials, work in progress, and finished goods are accounted for using opening and closing balances when calculating costs.
Job costing 3 a
Here are the steps to solve this problem:
1. Calculate the factory cost of each existing job:
Job 1011: Direct materials (Rs. 37,500) + Direct wages (Rs. 30,000) = Rs. 67,500
Factory overheads @ 25% of wages = Rs. 30,000 * 25% = Rs. 7,500
Factory cost = Rs. 67,500 + Rs. 7,500 = Rs. 75,000
Job 1012: Direct materials (Rs. 54,000) + Direct wages (Rs. 42,000) = Rs. 96,000
Factory overheads @ 25% of wages = Rs. 42,000 * 25% = Rs. 10
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.
ck40 n-edit-costing-run-instruction
This document provides instructions for performing a mass costing run in SAP. It describes running a costing for finished and semi-finished products valued at standard price. The process involves setting selection parameters to choose materials by type and plant, executing a BOM explosion, performing cost estimation, analyzing results, and marking and releasing standard prices. The full procedure takes the user through 63 steps to complete a costing run for multiple materials and plants at once.
Chapter4 job costing
This document discusses key concepts in job costing, including:
1) Job costing systems track costs for distinct jobs or orders, as opposed to process costing for mass production.
2) Direct costs like materials and labor can be traced to specific jobs, while indirect costs like overhead must be allocated using cost pools and allocation bases.
3) The seven steps of job costing include identifying the job, direct costs, allocation bases, overhead rates, applying overhead, and calculating total job costs. Journal entries track costs through production.
4) Variances between actual and allocated overhead are written off to cost of goods sold at completion to adjust for over or under allocation.
Bba ii cost and management accounting u 3.2 job and batch costing
This document discusses job costing and batch costing. It begins by defining job order industries and mass production industries. It then explains that job costing is used in job order industries where production is done according to customer orders. Batch costing is a variation of job costing used when a definite number of identical items are produced in batches to be held in stock. It discusses the objectives of job costing and provides an example of a job cost sheet. Finally, it explains the concept of economic batch quantity and how to calculate it.
What's hot (18)
Case study material ledger implementation lessons learned
Case study material ledger implementation lessons learned
Over head expensions IN process planning & cost estimation by G.DINESHPIRAN
Over head expensions IN process planning & cost estimation by G.DINESHPIRAN
Bba ii cost and management accounting u 3.1 output costing (or unit costing o...
Bba ii cost and management accounting u 3.1 output costing (or unit costing o...
Bba ii cost and management accounting u 3.2 job and batch costing
Bba ii cost and management accounting u 3.2 job and batch costing
Viewers also liked
Product costing
This document defines key terms related to product costing and pricing. It provides a 6-step process for computing the price per unit of a product: 1) determine total production expenses, 2) determine operational expenses, 3) combine all expenses, 4) add a 25% markup, 5) divide total costs by volume of production to get price per unit, and 6) compute prices for different units (e.g. per pack, dozen, or box) based on the per unit price and typical quantities included in those units. It also outlines a similar process for pricing merchandise.
18.3 Example of Product costing
A firm purchased 100 units of stock on January 1, 2015. The product cost includes the supplier's price of $7 per unit, cartage inwards of $1 per unit, and a share of annual customs duty and delivery van depreciation. This results in a total product cost of $8 per unit. The financial statements show the firm selling the 100 units for $16 each, generating a gross profit of $600 and net profit of $100 after deducting other expenses.
Costing system job costing
Job order costing systems use a predetermined overhead rate to apply manufacturing overhead to jobs, which can result in overapplied or underapplied overhead for the period depending on actual overhead costs. Over or underapplied amounts are allocated to work in process, finished goods, and cost of goods sold inventory accounts or closed directly to cost of goods sold based on the percentage of total overhead applied to each account. This process ensures overhead costs are properly matched with the time period they relate to.
Costing system
The document discusses job-order costing, including:
1. Job-order costing is used when different products are produced to customer orders and the unique nature of each job requires tracing costs.
2. Manufacturing overhead is allocated to jobs using a predetermined overhead rate based on an allocation base like direct labor hours.
3. Underapplied or overapplied overhead can occur if actual overhead differs from the amount applied using the predetermined rate.
Absorption costing
This document discusses absorption costing and overhead allocation. It defines overheads as indirect costs that cannot be directly traced to products or departments. It explains that absorption costing shares overheads between products on a fair basis using allocation, apportionment, and absorption. Various overhead categories and cost centers are described. Methods for allocating and reapportioning overhead like direct and step-down methods are covered. Finally, it discusses determining predetermined overhead rates and absorbing overhead into production costs.
Job costing Tutorial
This document discusses job costing concepts including:
- Job costing is used to track costs of individual jobs or batches. Costs like direct materials, direct labor, and overhead are accumulated for each job.
- Process costing is used to track costs of mass production through departments. Costs are assigned to products based on units produced.
- Examples show calculating overhead rates and applying overhead to jobs based on direct labor hours. Job costs are transferred to finished goods and then cost of goods sold.
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.
Product costing ppt
This document describes a product costing software that provides several key features for automating and improving the product costing process. The software allows users to perform simulations on product costs, analyze gaps between customer and actual bills of materials, manage different bill of material versions, and generate reports. It is intended to help eliminate issues with manual and Excel-based costing processes for both automotive OEMs and tier 1 suppliers. The software offers cost savings opportunities through improved visibility and accuracy of product costing information.
METHODS & TECHNIQUES OF COSTING
The document discusses different types of audits:
- Statutory audits are legally required reviews of a company's or government's financial records to determine if they provide an accurate representation of their financial position.
- Non-statutory audits are voluntary and terms are agreed upon between the auditor and proprietor.
- Internal audits are independent reviews conducted within an organization to evaluate risk management, controls, and governance processes.
- Special audits are specifically requested to detect potential errors, irregularities, or fraud.
Viewers also liked (9)
Similar to Product Costing
Cost Accounting
This document defines key concepts in cost accounting and cost management. It discusses how cost accounting provides information for both management and financial accounting by measuring and reporting costs. It also describes different types of costs like direct, indirect, fixed and variable costs. Finally, it summarizes standard costing and analysis of variance, which are techniques used to evaluate actual performance against pre-established cost standards.
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.
PPT on PM_Unit 1 .pptx.
1) Activity-based costing (ABC) is a cost accounting method that allocates overhead costs to products and services based on their actual consumption of resources instead of traditional methods that use less accurate cost drivers.
2) Target costing is a process that sets a target cost for a product by subtracting the desired profit margin from an estimated selling price and then works to reduce costs to meet the target.
3) Life-cycle costing tracks and accumulates all costs associated with a product or service over its entire lifetime from design through disposal to determine total profitability.
Cost accounting
Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs.
Traditional & Abc
The document discusses activity-based costing (ABC). It provides an example of calculating activity rates for a purchase invoice processing activity. It shows calculating the activity usage and unused activity amounts as well as the total cost of resources supplied broken into usage and unused amounts. The document also provides an example comparing traditional overhead allocation and ABC for two products. ABC results in more accurate product costs that reflect resource usage compared to traditional methods.
Traditional & Abc
The document discusses activity-based costing (ABC). It provides an example of calculating activity rates for a purchase invoice processing activity. It shows calculating the activity usage and unused activity amounts as well as the total cost of resources supplied broken into usage and unused amounts. The document also provides an example comparing traditional overhead allocation and ABC for two products. ABC results in more accurate product costs than traditional methods.
cost accounting.ppt
This document provides an introduction to cost accounting. It defines cost accounting as the process of accounting for costs from when they are incurred to how they are allocated to cost centers and cost units. The objectives of cost accounting are also outlined, including cost ascertainment, estimation, control, and reduction to aid management decision making. Key cost accounting terminology is defined, such as cost, costing, cost control, job costing, and batch costing. The elements of cost - materials, labor, and other expenses - are also explained in terms of direct and indirect categories.
Cost accounting By CA Ankush Gupta
Cost accounting measures and reports on the costs of acquiring and using resources. It provides information for management and financial accounting to aid in planning and control decisions. Standard costing involves setting cost standards for materials, labor, and overhead and comparing actual costs to the standards to analyze variances and maintain efficiency. Standards can be either ideal, allowing for no inefficiencies, or practical, allowing for normal production inefficiencies. The standard costing process involves gathering information to set standards and then comparing actual performance to the standards to prepare performance reports.
Ch20 Managerial accounting aiou mba mcom 8508
This document discusses direct costing and absorption costing methods. It defines direct costs and explains that direct costing only includes prime costs and variable overhead in product costs, treating fixed costs as period costs. Absorption costing includes both variable and fixed costs in inventory. Arguments for and against each method are provided. The document also discusses break-even analysis, defining key terms like contribution margin and explaining how to calculate break-even points. Potential weaknesses of break-even analysis are outlined.
Cost accounting
Cost accounting is the process of capturing, recording, and analyzing a company's costs. It helps determine the costs of products, services, activities, and processes. Cost accounting provides information to management to help with planning, control, and decision making. Some key aspects covered include cost classification, cost allocation, cost ascertainment, standard costing, cost units, cost centers, and cost objects. Cost accounting data is essential for managerial decision making, cost control, inventory valuation, and financial reporting.
New Chargeback - Sergio Ocon - ManageIQ Design Summit 2016
This document proposes a new chargeback system in ManageIQ to accurately report the financial costs of virtualization and cloud environments. It would integrate with other systems like data warehouses, ERP systems, and billing to understand infrastructure costs and analyze the economic impact of different actions. Costs would be tracked and grouped by activity centers like instances, storage, networks etc. and modifiers like support levels. Expenses would track costs associated with users and services. The system would provide consumption intelligence, budgeting, rating, billing and external cost integration to help strategically manage costs.
Caclubindia.com sap cofi for beginners
This document provides an overview of SAP COFI (Controlling and Finance) modules for beginners. It discusses how the CO (Controlling) and FI (Finance) modules can help with cost and financial accounting practices to improve management decision making. The CO module includes cost element accounting, cost center accounting, internal orders, activity-based costing, product cost controlling, and profit center accounting. It also discusses how these sub-modules integrate with other SAP modules like FI, MM, PP, and PM. Transaction codes for creating cost elements and cost centers are provided as examples.
Chap005 abc
The document discusses activity-based costing (ABC) and activity-based management (ABM). It provides details on how Aerotech, a company that produces circuit boards, implemented ABC to more accurately assign overhead costs. ABC identified multiple cost pools associated with different activities. This revealed that the traditional costing system understated the costs of complex, low volume products. ABM focuses on managing activities to reduce costs by eliminating non-value added activities. Customer profitability analysis and just-in-time inventory systems are also discussed.
Cost Accounting
This document provides an introduction to cost and management accounting. It discusses how cost accounting provides management with cost data for products, operations, and functions to compare actual costs to predetermined budgets and standards. It also discusses how management accounting extends cost accounting to provide information for planning, control, decision making, and other functions. The document outlines key elements of cost accounting like cost objects, cost classifications of direct and indirect costs, cost behavior, and comparisons between cost, management, and financial accounting.
Cost Accounting.pptx
1.This PPT covers Definition of CCost Acccountng, . Scope of cost accounting, Advantages, Limitations of cost accounting, differences between Financial Accounting and Cost Accounting.
Introduction to cost accounting
Cost and management accounting provides managers with cost data to make decisions and compare actual costs to budgets. It determines product costs, provides relevant information for planning and control, and information for decision making. Cost accounting classifies costs as direct, indirect, fixed, or variable and accumulates costs into categories like prime cost, production cost, and total cost. It differs from financial accounting which produces external financial reports based on accounting principles and standards, while management accounting focuses on internal reporting for management.
Co list of topics
The document outlines the key concepts in SAP CO (Controlling), including cost center accounting, activity types, allocation structures, cost component structures, valuation variants, product costing, profitability analysis using COPA, profit center accounting, internal orders, material ledger and actual costing, and the CO month-end process. It provides an overview of how costs flow through the different elements of CO and how the various components like cost centers, internal orders, and profit centers integrate with other SAP modules like FI, CO, SD, and PP.
Fo management accounting
The document provides guidance on developing a strategy, including identifying organizational targets and constraints, performing a SWOT analysis, conducting financial and quantitative analyses of alternatives, making a clear recommendation linked to objectives, and outlining an implementation plan with forecasting. It also covers topics like using the balanced scorecard to track strategy execution, net present value analysis of investments, standard costing and variance analysis, and ABC costing.
SAP CO Configuration Guide - Exclusive Document
Visit to download for free http://sapdocs.info/sap/fico/exclusive-guide-to-sap-co-controlling-configuration-end-user-procedures/
Lecture 3Introduction to SAP Controlling (CO)FIN419 .docx
Lecture 3
Introduction to SAP Controlling (CO)
FIN419
Learning Objectives
Understand the goal of SAP Controlling (CO)
Understand the purpose, master data and reporting of CCA
Understand the purpose, master data and reporting of PCA
Understand the purpose, master data and reporting of Internal orders
Understand the purpose, master data and reporting of Product Costing
Understand the purpose, master data and reporting of Profitability Analysis
Understand the integration of CO and FI
2
SAP Controlling (CO)
Goal
The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial reporting.
Controlling allows an organization to plan and track overhead costs within the company's specific organizational structure.
Standard reports include:
Cost center performance
Profit center performance
Budget analysis
Goal
3
SAP Controlling (CO)
Organizational Structure
Client
An independent environment in the system
Company Code
Represents an independent legal accounting unit
Balanced set of books, as required by law, are prepared at this level
A client may have more than one company code
Controlling Area
The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated.
May contain one or more company codes, which can operate in different currencies.
Company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant
Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
Org
SAP Controlling (CO)
Organizational Structure (Cont)
Operating Concern
It represents an organizational unit in your company for which the sales market data has a uniform structure (characteristics/dimensions)
It is the valuation level for profitability analysis (CO_PA)
Multiple controlling areas can be assigned to one operating concern
Plant
The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning.
A plant is assigned to a company code.
Cost Center Hierarchy
It is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective
Profit Center Hierarchy
It is a tree structure representing all the profit centers belonging to a controlling area from a controlling perspective
Org
SAP Controlling (CO)
Controlling Area and Currencies
By assigning more than one company code to a controlling area you can perform cost accounting for all company codes
The controlling area and company codes can have different currencies
The currency of the controlling area can be the same as that for a company code or different from all the company codes assigned to the controll ...
Similar to Product Costing (20)
New Chargeback - Sergio Ocon - ManageIQ Design Summit 2016
New Chargeback - Sergio Ocon - ManageIQ Design Summit 2016
Lecture 3Introduction to SAP Controlling (CO)FIN419 .docx
Lecture 3Introduction to SAP Controlling (CO)FIN419 .docx
Product Costing
- 1. PRODUCT COSTING Different costs for different purposes? Dries van Boxtel
- 3. Framework used Other requirements Costing system - system elements Costing system - business elements Strategy & objectives Page Profitability Operational Control Business Control Input measurement Product Valuation Cost accumulation Cost flow Recording interval Decisions Joint costs By-product costing Financial accounting Cost of costing Trans-parency
Editor's Notes
- Probleemstelling zoals jullie die hebben kunnen lezen in de scriptie.
- Het gebruikte framework, uit de theorie met daaraan toegevoegd: joint costs, by-product costing, financial accounting, cost of costing en transparency. Voorbeelden van vragen die VION wil beantwoorden Profitability: product, customer, market, country How much profit did we make on smoked bacon in Q1: should we continue to produce this or should we sell the input product as is? How much profit did we make on customer D last year? Should we sell legs in Italy or in Spain? 2. Business control: performance of sales, production, farming How did fine-deboning perform last month? Was total labor cost in production below or above standard? Operational planning & control We need to produce 10000 KG of Ham Selsec UA 11.5+ kg. How much material is required and how much labor needs to be planned? How much should we charge for a deboned leg? Prices for by-product tenderloin went up last week. How to price the bacon this week? Did site X perform against standards last week? If not, why? Focus in scriptie op business elements, immers: system follows business. Focus in deze presentatie op een aantal elementen: product valuation (theorie), joint costs (VION specifiek) en recording interval (besparing op werkwijze).
- Standard + actual needed for variance analysis and financial control Op langere termijn zou toegewerkt kunnen worden naar order specific costing