A - Preparing Cost Info Flashcards
what type of costing does specific order costing use?
absorption or ABC
Job costing
for individual products for individual customers
each product is a cost unit
Batch costing
Group of products possibly diff sized, styles, colour
Each batch is a cost unit
Process costing - joint product costing
Many identical products produced from single production processes
Each batch is a cost unit
Joint products
products produced at same time in same processes before being separate for sale or further processing. separation point = split off point
Joint costs
results in >1 main product …. total of raw mat, lab, and OH incurred before initial split off point
common cost
cost relating to >1 product or service
By-product
Output of some value produced incidentally in manufacturing the main products
3X METHODS OF JOINT COST APPORTIONMENT
1) physical measurement (e.g. no of units produced. can also use weighting factors when costs are not incurred equally)
2) market value at separation point (to make each product appear equally profitable)
2) NRV (deduct further processing costs from market value before apportioning)
2 ways to account fo by-products in joint costing
1) any proceeds from sale treated as pure profit
2) proceeds from sale (less any selling expenses) can be used to reduce the cost of the main products
Aim of throughput accouting
to maximises throughput contribution (to INC throughput while DEC inventory and op expense)
THROUGHPUT CONTRIBUTION equation
= revenue - direct mat costs
conversion costs (throughput acc)
other manfucaturing cost (not material costs) = dir labour, factory rent, inspecition costs, depreciation
5 steps of throughput accounting
1) identify the BN resource
2) calculate throughput contribution per unit of each product
3) calculate throughput contribution per unit of BN resource for each product
4) rank products according to 4)
5) allocate resources
Cost per factory hour equation
= factory cost / total time on BN resource
