Cost Accounting Principles Quiz

Course Information

• Course title: 4H1CD: Costs and decisions
• Course supervisor: Agathe Morinière
• Teacher: (Not specified)
• Academic year: 2024-2025

Part 1: Main Concepts

• Sections: Introduction, Classification of costs, Costing methods, Management accounting vs. financial accounting, Objectives of cost (management) systems or management accounting, Costing, and costs behaviour.

Evaluation

• Assessment methods: Quizzes in sessions, Final exam
• Grading elements: Malus (deduction of points) for arriving late or chatting, Bonus points for participation

Abbreviations

• Q: quantity or volume
• SPu/SP: selling price per unit / selling price
• Sales: sales revenue, turnover
• TC: total cost
• Cu: unit cost
• VC: total variable cost
• VCu: unit variable cost
• FC: total fixed cost
• FCu: unit fixed cost
• DC: total direct cost
• DCu: unit direct cost
• IC: total indirect cost
• ICu: unit indirect cost
• MC: marginal cost
• DVC: total direct variable cost
• DVCu: unit direct variable cost
• IVC: total indirect variable cost
• IVCu: unit indirect variable cost
• DFC: total direct fixed cost
• DFCu: unit direct fixed cost
• IFC: total indirect fixed cost
• IFCu: unit indirect fixed cost
• CM: total contribution margin
• CMu: unit contribution margin
• ACM: total advanced contribution margin
• ACMu: unit advanced contribution margin
• Income: analytical income or profit

The Organisation as a Black Box/Financial Accounting Lenses/Cost Accounting Lenses

• The organization is depicted as a black box that transforms resources into income
• Financial accounting: resources, transformation process, products/services, costs, income, revenues
• Cost accounting: resources, purchasing, production, sales, income

Costs by Stage/Operational/Running Costs

• Costs by stage: Acquisition costs (materials and components), Production costs, Selling costs (and distribution), and Administrative & general costs.
• Costs are broken down into categories as they move through the supply, production, and sales cycles

From Purchases to Expenses

• Supply: Price of raw material + purchasing cost = Acquisition cost, Inventory of raw materials
• Production: Cost of raw material + Direct labor + Manufacturing overheads = Cost of goods, Inventory of finished goods
• Sales: Cost of goods sold + Selling expenses + General expenses = Operating expenses, Quantity sold, Expenses are handled in the income statement/balance sheet

Understanding Questions

• These are questions for the student to answer during the course.

Costs and Cost Objects

• Cost: Monetary measure of resources consumed to perform an activity (e.g., product/service delivery, acquisition of an asset). It's the sum/accumulation of expenses to achieve a specific objective (cost object).
• Cost object: Any activity for a separate cost measurement (e.g., product, activity, department, customer).

Cost Timing

• Actual cost: Cost calculated ex-post (after the fact), based on actual expenses incurred.
• Standard cost: Cost estimated ex-ante (before the fact), calculated using predetermined standards (often based on past data and industry norms).

Costs and Cost Management Systems (CMS)

• CMS purpose: Gathering, classifying, accumulating costs to help managers make decisions.
• Costs are assembled differently based on managerial need

Costing Means Choosing

• Costing methods are chosen based on the managerial decisions needing to be made (e.g., pricing, assessing product profitability, outsourcing decisions).

Costs and Cost Objects - Classification

• Costs are categorized as:

  • Direct, variable
  • Indirect, variable
  • Direct, fixed
  • Indirect, fixed

  These categories are used to analyze costs relevant to a specific cost object

Costs and Cost Objects - Frameworks

• This shows different ways costs are classified depending on how they relate to cost objects:
  • Direct, variable
  • Indirect, variable
  • Direct, fixed
  • Indirect, fixed

Understanding Questions (continued/new)

• Questions on the nature of costs, variable and fixed costs, and cost classifications (e.g., what is a cost? Why analyze costs?).

Costs Behaviour: Variable vs. Fixed Costs

• Variable costs change in direct proportion to the level of activity or volume.
• • Example: wood for desks

Variable Costs: Examples

• Lists of costs by department and the factor influencing the cost (in the table structure)

Variable Costs: Graph

• Graphs illustrate the behavior of variable costs, unit and total cost.

Costs Behaviour: Variable vs. Fixed Costs (2)

• Fixed costs remain constant despite changes in the level of activity or volume

Fixed Costs: Graph

• Graphs show the behavior of total fixed cost and unit fixed cost as production levels change

Fixed Costs: Examples

• Lists fixed costs depending on the factors contributing to these costs

Fixed and Variable Costs

• Charts of cost behaviours, showing total variable cost and total fixed cost relative to volume

Understanding Questions (continued)

• Questions about specific cost types.

Cost Assignment: Direct vs. Indirect Costs

• Direct cost: Costs specifically identifiable with a particular cost object (e.g. raw materials for a product).
• Indirect cost: Costs that cannot be specifically identified with a cost object and must be allocated (e.g. rent of a production facility)

Cost Assignment: Direct vs. Indirect Costs (2)

• Indirect costs are assigned to cost objects using allocation bases/allocation keys.

Classification of Costs: Examples

• Examples illustrating the different types of direct and indirect costs (variable and fixed) categorized within the context of a business.

Exercises

• Quiz marathon, Quiz noir, Best Bread, Exercise Deker, Exercice Presto services + exercice Quel coût.

Cost Calculation

• Examples of different cost calculations.

Parts

• Part 1: Main concepts (overview)