Have a question?
Message sent Close

IBMS-CA-14 Cost accounting De Haagse Hogeschool

0 reviews
  • Description
  • Full Document

De Haagse Hogeschool

IBMS-CA-14 Cost accounting De Haagse Hogeschool

Chapter 1 Accounting systems take economic events and transactions, such as sales and material purchases, and process the data into information helpful to manager, sales representatives, production supervisors and others. Processing any economic transaction means collecting, categorizing, summarizing, and analyzing. Accounting system provide the information found in the income statement, the balance sheet, the statement of cash flow, and in performance reports, such as the cost of serving customers or running an advertising campaign.
Financial accounting focuses on reporting to external parties such as investors, government agencies, banks and suppliers. It measures and records business transactions and provides financial statements that are based on GAAP. Management accounting measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization. Management accounting measures, analyzes, and reports financial and nonfinancial information relating to the costs of acquiring or using resources in an organization. We use cost management to describe the approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals.
Value chain is the sequence of business function in which customer usefulness is added to products. 1. Research and Development (R&D) 2. Design of products and processes 3. Production 4. Marketing and sales 5. Distribution 6. Customer service In addition to the six primary business functions you have an administrative function.
Supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products To consumers, regardless of whether those activities occur in the same organization or in other organizations.
Customers want companies to use the value chain and supply chain to deliver everimproving levels of performance regarding several of the following:  Cost and efficiency  Quality  Time  Innovation
The five step decision-making process: 1. Identify the problem and uncertainties 2. Obtain information 3. Make predictions about the future 4. Make decisions by choosing among alternatives 5. Implement the decision, evaluate performance and learn
Key management Accounting guidelines:  Cost-benefit approach  Behavioral and technical considerations  Different costs for different purposes
Organization structure and the management accountant  Line and staff relationships  The CFO and the Controller
Chapter 2 An actual cost – the cost incurred (a historical or past cost); A budgeted cost – a predicted or forecasted cost (a future cost) Cost object – anything for which a measurement of costs is desired.  Direct costs are related to the particular cost object and can be traced to it in an economically feasible (cost-effective) way.  Indirect costs are related to the particular cost object but cannot traced to it in an economically feasible (cost-effective) way. The term cost allocation is used to describe the assignment of indirect costs to a particular cost object. Cost assignment is a general term that encompasses both (1) tracing direct costs to a cost object and (2) allocating indirect costs to a cost object.
Factors affecting direct/indirect cost classifications  The materiality of cost in question  Available information gathering technology  Design of operations
Cost behavior patterns: – Variable costs changes in total in proportion to changes in the related level of totally activity or volume – Fixed costs remain unchanged in total for a given time period, despite wide changes in the related level of total activity or volume.
A cost driver is a variable, such as the level of activity or volume that causally affects costs over a given time span. The level of activity or volume is a cost driver if there is a cause-and-effect relationship between a change in the level of activity or volume and a change in the level of total costs. The cost driver of a variable cost is the level of activity or volume whose changes causes proportionate changes in the variable cost. Costs that are fixed in the short run have no cost driver in the short run but may have a cost driver in the long run.
Costing systems that identify the cost of each activity such as testing, design, or set up are called activity-based costing systems.
Relevant range is the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.
Total costs and Unit costs
UnitCosts= Total manufacturingcosts Numberof unitsmanufactured Example 1 Suppose that, in 2011, its first year of operations, $40,000,000 of manufacturing costs are incurred to produce 500,000 speaker systems. 40000000
=$80 perunit
The budgeted costs at different production levels, calculated on the basis of total variable costs, total fixed costs, and total costs are as follows:
Business sectors, types of inventory, Inventoriable costs, and period costs Three sectors of the economy: 1. Manufacturing-sector companies 2. Merchandising-sector companies 3. Service-sector companies Types of inventory 1. Direct material inventory 2. Work-in-process inventory 3. Finished goods inventory Commonly used classifications of manufacturing costs (1) Direct material costs (2) Direct manufacturing labor costs (3) Indirect manufacturing costs
Inventoriable costs are costs of a product that are considered as assets in the balance sheet when they are incurred and that become costs of goods sold only when the product is sold. For manufacturing sector companies all manufacturing costs are Inventoriable costs. The cost of goods sold includes all manufacturing costs incurred to produce them. For merchandising-sector companies, inventoriable costs are the costs of purchasing the goods that are resold in their same form.
Period costs are all costs in the income statement other than cost of goods sold. Period costs, such as marketing costs, are treated as expenses of the accounting period in which they are incurred because they are expected to benefit revenues in that period and are not expected to benefit revenues in future periods.
Illustrating the flow of inventoriable costs and period costs


IBMS-CA-14 Cost accounting De Haagse Hogeschool

NOTE: Please check the details before purchasing the document.