Costing
Costing is same as cost accounting as it also includes the cost incurred in the production. Costing includes fixed, variable and manufacturing cost of the product. Costing is also known as absorption costing.
Historical cost can be defined as the value of the resource given up or the liability that incurred at the time when the resource was given up. The liability may incur in order to acquire the asset or the service when the resource was
The concept of above the line costs is associated with the production of the advertisement for a product or for the service of the business. These are the costs of the advertisements that are associated with the creative side of the production of the
Mixed cost is a cost that contains both the fixed cost and a variable cost component. It is important to understand the mixed cost so that one can find out the degree of presence of both the fixed and the variable cost factor in
Traditional costing is a method of costing where the manufacturing overhead is related to the manufactured products on the biases of the batch produced and the volume of the products produced in that batch. The metrics that may be involved in traditional costing can
Full cost method of accounting is an accounting system that is used by the companies dealing in with the trading of crude oil and natural gas. There are two methods for accounting used for these natural commodities one is the full cost method and
This is an accounting method that explains the flow of costs among various operations within a business or a company. The flow of cost system is associated with the production or manufacturing cost activities of the business. The manufacturing costs involve a number of
As the name indicates variable costs are the costs that fluctuate or change with the number of goods produced by the business. Variable costs along with the fixed costs comprise the total costs of the goods produced. Variable costs change with the percentage of
Following is the difference between job costing and process costing , below table is meant to make the difference between the two costing systems more clear. Job Costing Process costing 1 Application Where different products having peculiar specifications are produced against customers’ orders. Where single
Process costing system is employed by industries possessing following characteristics: There is mass production of a single product or two or more products in successive runs of scheduled duration e.g., vegetable canning or fruit juice bottling. . All units of output are exactly similar
It is very important to distinguish or differentiate business costs as they help in recognizes the cost figures that your business produce by selling goods or services. There are different types of costs such as direct costs, indirect costs, fixed costs, variable costs,
Stock Control: Definition and Explanation: The materials purchased by a concern may be classified as stock items which are taken into store and held until required, or as direct deliveries to the point of consumption. The control of those materials which are stock items
Step Method of Cost Allocation: Definition: Step method is the method of allocating service department’s costs to other service departments, as well as to operating departments, in a sequential manner. The sequence typically starts with the service department that provides the greatest amount of
Standard Costing and Variance Analysis Case Study: Case A: Effect of assumed standard levels Case B: Factory overhead variance analysis Case A: Effect of Assumed Standard Levels: Harden Company has experienced increased production costs. The primary area of concern identified by management is direct
Standard Costing and Variance Analysis: After studying this chapter you should be able to: Explain how direct materials standard and direct labor standards are set. Compute the direct materials price and quantity variances and explain their significance. Compute the direct labor rate and efficiency
Standard Costing and Variance Analysis Problems & Solution: Problem 1: Materials Variance Analysis: The Schlosser Lawn Furniture Company uses 12 meters of aluminum pipe at $0.80 per meter as standard for the production of its Type A lawn chair. During one month’s operations, 100,000
Standard Costing System Discussion Questions and Answers: Questions: (a) Define standard costs. (b) Name some advantages of standard cost system. See answer A team of management consultants and company executives concluded that a standard cost installation was desirable vehicle for accomplishing the objectives of
Standard Costs-Management by Exception: Learning Objective of the Article: Define and explain the terms “standard cost” and “management by exception”. Definition and Explanation of Standard Cost and Management by Exception: A standard cost is the predetermined cost of manufacturing a single unit or a
Spending Variance in Factory Overhead Learning Objective of the article: Define and explain factory overhead spending variance. How is FOH spending variance calculated? Definition: Factory Overhead spending variance is the difference between actual expenses incurred and the budgeted allowance based on actual hours worked. The