BEC 3 - Cost Accounting Flashcards
Cost objects
Resources or activities that serve as the basis for management decisions
Prime Costs
DM + DL
Conversion Costs
DL + MOH applied
Product Costs
All costs related to the manufacture of the product (DM, DL, MOH applied
When are product costs expensed
Expensed when the product is sold (matching principle)
Period Costs
Selling, general and administrative expenses + interest
When are period costs expensed
As incurred. They are not inventoriable meaning they do not touch the balance sheet
Freight-in vs. Freight out (Product vs Period cost?)
Freight in = Product cost
Freight out = Period cost
Normal Scrap vs. Abnormal scrap (Product vs Period cost?)
Normal scrap = Product cost
Abnormal scrap = Period cost
How to find EUs using Weighted Average (2 steps)
1) Units Completed
2) + Ending WIP x % completed
= Equivalent Units
How to find EUs using FIFO (3 steps)
1) Beginning WIP x % TO BE completed (1 - % complete)
2) + Units completed - beginning WIP (units started and completed this period)
3) + Ending WIP x % completed
= Equivalent Units
Cost per EU under Weighted Average
Beginning cost + Current cost / EUs
Cost per EU under FIFO
Current costs ONLY / EUs
Joint Products
Two or more products that are generated from a common input
Split off point
The point in the production process at which the join products can be recognized as individual products
