chapter 34 Flashcards
what costing systems can be applied to different types of business
public or privately owned organisations
manufacturers of goods
providers of services
what are continuous or process operations
operations that are typically those in which a single type of good is produced and the cost units are identical. productions may involve a sequence of continuous or repetitive operations. it involves a product passing through a number of processes or different operations. the final product would probably then be packed before being sent to customers
what are specific order operations
operations that are performed in response to special order received form customers and may be classified according to whether the operations consists of individual jobs, or the production of batches of identical units for a customer
unit costing
the costing method to find the cost of a single cost unit. a single unit may be a single item or a large volumes of a single product
job costing
a costing method that calculates the cost of meeting a specific customer order or job. the price can be given to a customer as a quotation (quote) for the job, the customer then decides whether to place an order.
process of job costing
if the job goes ahead, the costs will be recorded on a job card as they are incurred. there is no set format for a job card that all businesses must follow, but each job card should know the cost of a job broken down into direct materials, direct labour, direct expenses where necessary and the indirect costs. each of these can be divided into separate cost centres if appropriate
advantages of job cards
they provide useful information about costs that can be used when quoting for similar jobs in the future. they also give managers information to identify which areas have caused an overspend or underspend on the job. managers can then investigate the causes of this and take corrective action for future jobs
how is classifying costs for each job one of the advantages of cost accounting over financial accounting to decision makers of a business
in the financial accounts, the costs for a particular job will be lost in among all the labour, materials and overhead costs, giving managers more limited opportunities to analyse the cause of any differences or plan for the future
batch costing
a costing method to find the cost of a batch of items produced. all the costs incurred are charges to the batch and the cost per unit is found by dividing the cost of the batch by number of units in the batch
