Lecture 3 Flashcards
What does cost assigning encompass?
Cost tracing for direct costs to a cost object
Cost allocation for indirect costs to a cost object
Factors affecting direct/indirect cost classification?
Materiality of the cost in question
Availability of information-gathering technology
Design of operations
Job costing system?
Distinct unit of a product or service
Process-costing system?
Masses of identical or similar units of a product or service
Job costing examples in the service sector?
Accounting firm audits
Advertising agency campaign
Job costing examples in the merchandising company sector?
Sending a catalogue to a mailing list
Special promotion of a new store product
Job costing examples for a manufacturing sector company?
Aircraft construction
House construction
Process costing examples for service sector?
Deposit processing
Postal delivery
Process costing for merchandising sector?
Grain dealing
Processing new magazine subscriptions
Process costing for manufacturing companies?
Oil refining
Beverages production
cost object = ?
anything for which a separate measurement of costs is desired
direct costs = ?
traceable costs to a particular cost object
indirect costs = ?
costs of a cost object that aren’t traceable
cost pool = ?
a grouping of individual cost items
what are the two types of costing?
job costing
process costing
job costing means…
to cost cost objects 1 by 1
usually done for personalised/custom-made goods/services
process costing means…
to cost cost objects at mass in batches
usually done for homogenous goods in abundance
first step of job costing?
identify the job that is the cost object
step 2 of job costing?
identify the direct costs for the job
step 3 of job costing?
identify the indirect cost pool associated with the job
step 4 of job costing?
select cost allocation base for indirect costs
step 5 of job costing?
develop rate per unit for indiret costs
step 6 of job costing?
assign the costs to the cost object
two types of job costing?
actual costing
normal costing