Further aspects of costing Flashcards
What must I learn from further aspects of costing? P131
GRAPPLE
G- Gains and losses in process costing
R- record costs info - unit, job , batch, service costing
A - activity levels on unit costs- explain & calculate
P - by product calculation- costs, contribution , reported profits
P - processing costing - cost per unit
L - losses in processing costing
E - equivalent unit - calculate costs
Why must an orgnaisation need to identify a costs of making/providing one unit of product/service ? P132
- set selling price
- direct costs covered
- fixed costs are covered
How are effective selling prices achieved? P132
achievable forecasts = sensible demand levels
What does forecasting costs require? P132
understanding:
* quantities of inputs + average costs of inputs & their behaviour
What principle does forecasting unit costs use?P132
- Marginal costing principles - variable oor fixed
- semi variable costs = constituebt elements
- fixed costs - reviewed - step fixed andc increase in value
- discounts = activity iincrease = variable costs of a unit may fall
What must you when yoou’re forecasting costs at different activity levels?P133
- Reasonableness check
- costs per uni is significantly different = calculation error
How do some organisations undertake work? P136
Specific needs of a customer
What must the price for job costing cover? P136
- Cost incurred
- as well as making a profit
What is job costing usually used in conjunction with? P136
Absorption costing
How does an organisation keep records of indiviual jobs for job costing ? P136
Job sheets - costs invoolved + mark up for profit
How are control of costs kept in job costing? P137
- Actual costs compared to budgeted costs
- differences = identified quickly & corrective action taken
What is batch costing ? P138
Identical items as batch
How is costs per bAtch calculated? P138
total costs incurred (estimated) / number of batches produced = cost per batch
How is the cost per unit calculated in batch costoing ? P138
Total batch cost / number of units in batch = cost per unit
Why are batchh numbers used ? P138
- Variation in materials
- Customer requires more than one unit - items that mmatch
- products sold recalled - use of batch number
What is service costing ? P138
- Calculating the cost of service provided
- costs per unit = service offered
- laboour = majority of cost of service & overheads
What is process costing ? P139
- Valuing unit of output
- result of one or more stages of production
What process requires process costing ? P139
Continuous process
How are units treated in process costing and how is the cost pper unit calculated? P139
- Units are identical
- total costs ( material , labour , and overheads) / number of units pproduced
How are materials converted into output ? P140
Conversion costs
How are all the costs of a particular process gathered ? p140
- process account
- more than one process = more than one accout
Where are material and conversion costs all entered into on the process account ? P140
Debit side
Where is the output entered on the process account ? P140
Credit side
How is the process account different from the normal ledger account ? P140
- records quantity of materials
- records the unit costs
- records the total costs
- quantities & total coosts must balance
