cost accounting (theories) Flashcards
what term is used to refer to the cost of changing direct materials into finished manufactured product?
conversion cost
under this system, the product costs are determined as they occur simultaneously with the manufacturing operation, but the total of product cost is only known as the operation has been completed.
ACTUAL COSTING
The product costs are determined in advance from analysis and forecasts made before the production begins.
STANDARD COSTING
combination of actual and standard costing
NORMAL COSTING
under this method, only direct materials are recorded as part of the inventory while DL and FOH costs are charged as an expense.
THROUGHPUT COSTING
this methods treats all variable costs as part of the inventory and all fixed costs as period cost.
DIRECT (VARIABLE) COSTING
all product costs are capitalized in the inventory once incurred and will be charged as an expense when the inventory is sold to the customer.
FULL ABSORPTION COSTING
this method assigns FOH costs to products in a more logical manner than the traditional way of simply allocating costs on the basis of direct labor hours or machine hours.
ACTIVITY BASED COSTING
it is applicable to companies producing heterogenous products. It is also applicable for work done based on customer’s specifications.
job order costing
it is used when the units are not separately distinguishable from one another during the manufacturing process.
process costing
it is a combination of job order and process costing method.
hybrid costing
the inventory costs are recorded at recent or new prices while the inventory sold is recorded at older prices.
FIFO
the inventory is recorded in terms of older prices and the cost of goods sold is recorded at recent prices.
LIFO
this system requires maintenance of records called stock cards.
perpetual system
it requires the physical counting of inventories on hand at the end of the accounting period to determine the total inventories.
periodic system
it includes direct materials and direct labor
prime cost
what are the three types of inventories in a manufacturing company?
raw materials, work in process, and finished goods inventory.
combination of DL, DM, and FOH
manufacturing/product cost
referred to as inventoriable costs
product cost
the recording of application of factory overhead cost to jobs would include a debit to
work in process
the benefit given up when one alternative is chosen over another.
opportunity cost
costs that is present under one alternative but is absent in whole or in part under another alternative.
differential costing
costs that affect the decision making of the management.
relevant costs
costs or expenses that require the payment of money as a result of their incurrence. It is also called “explicit costs”.
out of pocket money costs
costs which is doesn’t involve an actual cash outlay. Also known as “implicit cost or hypothetical cost”
imputed cost
cost that are always results of decisions taken in the past. this cannot be changed by any decision in the future.
sunk cost
if the manager has the power to influence or authorized the incurrence of such cost is considered as_____
controllable cost
these are costs which cannot be influenced by the action of the person in whom control of the center is vested.
uncontrollable cost
these are also called as “escapable cost”
avoidable cost
are increase or decrease in the total cost of a production run for making one additional unit of the item.
marginal cost
are costs which do not change with the level of activity within the relevant range. these costs will be incurred even if there are no units produced.
fixed cost
are costs that change in direct proportion to the level of production.
variable cost
it is a graphical technique of separating fixed and variable components of mixed cost.
scattergraph method
it is a statistical technique that investigates the association between dependent and independent variables.
least-square regression method
also known as chargeable expenses
direct expenses
also known as factory burden cost
factory overhead
also known as a commercial cost
period cost
types of fixed cost which are costs may be altered, reduced or eliminated in the short term.
discretionary fixed cost
types of fixed cost which is that it cant be significantly reduced even for a short period of time.
committed fixed cost
types of expenditures which are costs that are directly charge as an expense because it benefit only the current period.
revenue expenditures
are costs that arise from floods, riots, accidents, earthquake, fire, and shut down of machinery
abnormal cost
the relationship between cost and activity is termed as
cost behavior
this department responsible for carrying out the labor policies laid down by the top management.
personnel department
responsible for the accumulation of the total hours worked spent by each worker on a job, product, and processes
timekeeping dept.
two important activities of the timekeeping department
time keeping, time booking
in this method a log book or time register book is maintained by the timekeeper.
attendance register method
in this method a token or disc is given to each worker bearing his identification number.
token or disc method
each worker is given a time card
time recording clocks
this machine recorder has a number of holes which represents each worker’s identification number.
dial time records
it refers to the analysis of time of each worker in terms of department, operation, process or jobs.
time booking
responsible for the computation of the total gross earnings
payroll department
responsible for collecting, classifying and assigning all costs to jobs, productions, and processes.
cost accounting department
wages are determined on the basis of time worked spent by workers irrespective of the quality of work done.
time based wage plan
wages are determined on the basis of output produced by the workers without considering the time spent in performing the job.
piece based wage plan
each worker is paid based on a minimum hourly rate regardless if an established quota of production is not met. however, workers are given a bonus for the additional piece of output if they exceeded the established quota.
modified based wage plan
other term of bonus or incentive schemes
premium bonus plan
two types of incentive plan
individual incentive plan, group incentive plan
the regular time pay is charged to
work in process account
employer contributions relating to other employees (administrative and sales function) are charged to
expense
it is the total compensation of employee which includes the regular pay and other benefits
gross earnings
it is earnings of an employee who are paid per production output or on an hourly worked
wages
it is an earnings paid to an employee who received a fixed amount per month or semi monthly
salaries
what are the labor time losses?
idle time, machine set up time, labor cost of reworking defective units
other labor related costs charged to FOH
- overtime premium
- sss, philhealth, and pagibig contribution of employer
- fringe benefits
- shift premium pay
- incentive plans
The document that serves as the basis for recording direct labor on a job cost sheet is the____
time ticket
labor costs significantly influence the ____
conversion cost per unit
indirect labors cost are charged to____
factory overhead
it is the time wasted in which the workers spend their time without giving any production
idle time
it refers to a loss of time, which is inherent in production or cannot be avoided.
normal idle time
refers to a loss of time due to power failure; avoidable machine breakdown, time loss due to inefficiency of workers
abnormal idle time
it is the time for non-productive hours paid to workers while the machines are being prepared for new jobs.
machine set-up time
it is an additional labor cost paid to workers to correct defective unit of products
labor cost of reworking defective units
when overtime premium is charged to a specific job, it should be debited to
work in process account
shift premium pay of factory supervisor is charged to
administrative expenses
shift premium of factory laborer is charged to
FOH
it is the amount paid to the employee after the employer makes a deduction for income tax and other statutory amounts.
net pay
it refers to plant or department’s capability to produce without any interruptions.
theoretical (maximum/ideal)
