Module 1: Introduction to Cost Accounting PDF

PRICING AND COSTING PRICING AND COS TING PRICING AND COSTING PRICING MODULE 1 FUNDAMENTALS OF COSTING...

PRICING AND COSTING PRICING AND COS TING PRICING AND COSTING PRICING MODULE 1 FUNDAMENTALS OF COSTING Section 1: Introduction to Cost Accounting AND Section 2: Cost Behavior Analysis Section 3: Cost Accumulation and Allocation PRICING AND COSTING PRICING AND COS TING PRICING AND COSTING PRICING Section 1: AND INTRODUCTION TO COST ACCOUNTING Understanding the Foundation PRICING AND COSTING PRICING AND COS I. What is COST ACCOUNTING? TING PRICING AND COSTING PRICING Definitions of Cost Accounting Branch of Accounting focusing on the costs of AND production and services Tracks, analyzes, and controls costs at various stages. Provides crucial data for managerial decision- making. PRICING AND COSTING PRICING AND COS II TING PRICING AND COSTING PRICING Key Cost Terminology. COST  The monetary value of resources used in producing AND goods or services. Examples: raw materials, labor, factory rent PRICING AND COSTING PRICING AND COS II TING PRICING AND COSTING PRICING Key Cost Terminology. EXPENSE  The cost of resources used in generating revenue. AND Examples: salaries, marketing costs, utilities PRICING AND COSTING PRICING AND COS II TING PRICING AND COSTING PRICING Key Cost Terminology. DIRECT COST  Costs directly traceable to a specific product or AND service. Examples: raw materials used in a specific product PRICING AND COSTING PRICING AND COS II TING PRICING AND COSTING PRICING Key Cost Terminology. INDIRECT COST  Costs that cannot be directly traced to a specific AND product or service. Examples: factory rent, utilities, salaries PRICING AND COSTING PRICING AND COS II TING PRICING AND COSTING PRICING Key Cost Terminology. OVERHEAD  Indirect costs associate wit production. AND Examples: depreciation PRICING AND COSTING PRICING AND COS III. TING PRICING AND COSTING PRICING Direct vs Indirect Cost As alluded to earlier, direct costs are costs that are directly related to the creation of a product and AND can directly associated with that product. While, indirect costs are not directly related to a specific cost object. PRICING AND COSTING PRICING AND COS DIRECT COST INDIRECT COST TING PRICING AND COSTING PRICING It affects the product’s price and It affects the whole business and are thus calculated per project or are thus calculated monthly or per unit. annually. The volume of products affects Changes in the production final product costs. volumes do not significantly affect indirect costs. AND Highly variable mainly due to Relatively stable. market factors. Includes raw material, Includes rents, leases, utilities, manufacturing, and direct labor. insurance, legal, financial fees, office expenses, maintenance, and telecommunications. Included in the costs of goods sold Included in the operational in the income statement. expenses segment in the income PRICING AND COSTING PRICING AND COS IV. TING PRICING AND COSTING PRICING The Purpose of Cost Accounting  Pricing Decisions: Determine cost to set profitable AND prices.  Cost Control: Identify Areas for efficiency improvements PRICING AND COSTING PRICING AND COS IV. TING PRICING AND COSTING PRICING The Purpose of Cost Accounting  Performance Evaluation: Assess the efficiency of AND departments/processes.  Budgeting and forecasting: Plan future costs and resource allocation. PRICING AND COSTING PRICING AND COS IV. The Purpose of Cost TING PRICING AND COSTING PRICING Accounting  Product Mix Decisions: Evaluate the profitability of different products. AND  Make-or-buy Decisions: Determine whether to manufacture internally or outsource.  Investment Decisions: Evaluate the profitability of capital investments. PRICING AND COSTING PRICING AND COS Cost Accounting in V. TING PRICING AND COSTING PRICING Managerial Decision- Making Here are some examples: Evaluating employee productivity by comparing AND direct labor hours to units produced. Identifying areas for cost reduction by analyzing utility bills, rent and equipment depreciation. Choosing suppliers based on total landed cost. PRICING AND COSTING PRICING AND COS VI. TING PRICING AND COSTING PRICING Different Costing Methods  Job Order Costing AND  Process Costing  Activity-Based Costing  TING PRICING AND COSTING PRICING AND thank u. PRICING AND COSTING PRICING AND COS