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    Notes Chapter 1 Cost Acc.

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    caraaatbong
    cost accounting and control

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    Notes Chapter 1 Cost Acc.

    Uploaded by

    caraaatbong
    2 views2 pages
    cost accounting and control

    Original Title

    NOTES CHAPTER 1 COST ACC.

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    cost accounting and control

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2 views2 pages

    Notes Chapter 1 Cost Acc.

    Uploaded by

    caraaatbong
    cost accounting and control

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Chapter 1: Introduction To Cost Accounting

    FINANCIAL ACCOUNTING amount is the cost of goods sold during the


    period.
    • It is the use of accounting information for
    reporting to EXTERNAL PARTIES, including EX.
    investors and creditors.
    • It is primarily concerned with financial Beginning MI P 5,000
    statements for EXTERNAL use by those who Plus: Total purchases 24,000
    supply funds to the entity and other persons Cost of goods avail. For sale 29,000
    who may vested interest in the financial Less: Ending MI 6,500
    operations of the firm. Cost of goods sold P 22, 500
    • The reports prepared under financial
    accounting focus on the enterprise as a
    whole. Manufacturing operations – has three inventory
    • The information provided by financial accounts:
    accounting is usually presented in the form
    1.) Materials inventory
    of FINANCIAL STATEMENTS, tax returns, and
    other formal reports distributed to various o unused purchased materials
    external users. makeup the ending inventory
    • Attempts to present a degree of precision in balance
    reporting historical information. o cost of old items is determined as
    cost of goods sold and recorded on
    the income statement
    MANAGERIAL ACCOUNTING
    2.) Work in Process Inventory
    • It focuses on the needs of parties WITHIN o Cost of materials used plus cost of
    THE ORGANIZATION. labor services and factory overhead
    • It commonly addresses individual or are transferred to WIP inventory,
    divisional concerns, rather than those of when materials, labor services, &
    enterprise as a whole. overhead items are used in
    • More concerned on the timeliness of the production process
    information o Direct Materials, Direct Labor and
    Factory Overhead (Indirect
    materials, Indirect labor & labor &
    COST ACCOUNTING Another Factory overhead)
    o Direct Materials + Direct Labor =
    • hybrid of financial and management
    Primary cost
    accounting
    o Direct labor + Factory overhead =
    • Provides cost information to external parties
    Conversion cost
    for credit and investment decisions
    o Direct Materials + Direct Labor +
    • Provides cost information to internal parties Factory Overhead = Manufacturing
    for planning and control cost
    MERCHANDISING VS. MANUFACTURING 3.) Finished Goods Inventory
    OPERATIONS a. When the batch is completed
    (100%), all manufacturing costs
    Merchandising operations – buys a product that is assigned are moved to the finished
    ready for resale when it is received. goods inventory account
    - The difference between the cost of goods
    available for sale and the ending inventory
    USES OF COST ACCOUNTING DATA

    a. Determining Product costs – helps in


    gathering data needed to determine product
    cost thus generate meaningful financial
    statements and other reports.
    i. Determining the selling price of a
    product
    ii. Meeting competition
    iii. Building on contracts
    iv. Analyzing profitability
    b. Planning and Control
    i. Planning – process of establishing
    objectives or goals
    o Strategic Planning – long range
    goals
    o Tactical Planning – plans for shorter
    range
    o Operations Planning – day to day
    implementation of tactical plans
    ii. Control – monitoring the company’s
    operations & determining whether
    the objectives identified in the
    planning process are being
    accomplished.

    TWO BASIC PRODUCT-COSTING SYSTEM

    1.) Job order costing – system for allocating


    costs to group of unique products.

    2.) Process costing – a system applicable to a


    continuous process of production of the
    same or similar goods (e.g., oil refining and
    chemical production).

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