Kế toán, kiểm toán - Chapter 7: Costing concepts

Chapter 7 Costing concepts1 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by ObjectivesDescribe the role of product and service costing in various types of organisations.Define the following costing terms:Fixed and variable costDirect and Indirect costProduct and Period costManufacturing costs.Discuss the difficulties associated with accounting for indirect manufacturing costs.2 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Objectives (continued)Identify the different types of inventory associated with manufacturing. List and compare the key features of the following cost accounting systems:Job costingProcess costingOperations costing.Explain how inventories are valued under each of the costing systems.3 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Product and service costingCost information is used by management in order to: determine selling pricesachieve a certain level of profitcomplete financial statements.Service costing is used by service firms andproduct costing is used by manufacturing firms.4 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Costing termsFixed costs:remain fixed in total, regardless of activity.Variable costs:have a direct relationship to product and change with production.5 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Direct and indirect costsDirect costs:can be easily traced to the manufacturing of a producte.g. wood used in furniture.Indirect costs:cannot be traced directly to a product being produced.must be applied to a product using a base allocation.6 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Product and period costsProduct costs:are manufacturing costs which are accumulated as inventoriesinclude direct materials and labour.Period costs:are all other costs of operating the business, expensed in the accounting period they are incurred.e.g. general administrative, selling and financial.7 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Manufacturing costsManufacturing costs:are incurred in manufacturing a productinclude raw material and the costs of converting the raw material into the completed product.Three categories:direct materialsdirect labourindirect manufacturing costs.8 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Manufacturing costs (continued)Direct materials:are raw materials used in production which becomes a significant part of the product being produced.Indirect materials:are insignificant materials to production.9 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Manufacturing costs (continued)Direct labour:works directly in converting raw materials into finished goods.Indirect manufacturing costs involve:indirect labourindirect materialsmiscellaneous overhead.10 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Manufacturing overheadManufacturing overhead is also known as indirect manufacturing costs and includes all costs other than direct materials and labour.11 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Inventories associated with manufacturing organisationsFinished goods are:the end result of the production process.Raw materials are:materials needed for the production process.Work in process is:production which has been commenced but is incomplete.12 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Cost accounting systemsJob costing is: used when each product or job is different.Process costing is used for batch production or when large quantities of the same goods are being produced.Operations costing is:a combination of process and job costing.13 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by