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    01 Introduction To Cost Accounting

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    Eunice Milo
    This document provides an introduction to cost accounting, including definitions, relationships to other accounting fields, and key concepts. It defines cost accounting and distinguishes it from financial and managerial accounting. It also distinguishes between merchandising and manufacturing operations. The document outlines the uses of cost accounting data, including determining product costs, determining selling prices, and planning and control. It defines and compares job order costing and process costing systems.

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    01 Introduction To Cost Accounting

    Uploaded by

    Eunice Milo
    87 views18 pages
    This document provides an introduction to cost accounting, including definitions, relationships to other accounting fields, and key concepts. It defines cost accounting and distinguishes it from financial and managerial accounting. It also distinguishes between merchandising and manufacturing operations. The document outlines the uses of cost accounting data, including determining product costs, determining selling prices, and planning and control. It defines and compares job order costing and process costing systems.

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    Accounting students

    Original Title

    01 Introduction to Cost Accounting

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    This document provides an introduction to cost accounting, including definitions, relationships to other accounting fields, and key concepts. It defines cost accounting and distinguishes it from financial and managerial accounting. It also distinguishes between merchandising and manufacturing operations. The document outlines the uses of cost accounting data, including determining product costs, determining selling prices, and planning and control. It defines and compares job order costing and process costing systems.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    87 views18 pages

    01 Introduction To Cost Accounting

    Uploaded by

    Eunice Milo
    This document provides an introduction to cost accounting, including definitions, relationships to other accounting fields, and key concepts. It defines cost accounting and distinguishes it from financial and managerial accounting. It also distinguishes between merchandising and manufacturing operations. The document outlines the uses of cost accounting data, including determining product costs, determining selling prices, and planning and control. It defines and compares job order costing and process costing systems.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    Introduction to

    Cost Accounting
    Objectives

    Define cost accounting.

    Distinguish between financial, managerial and cost accounting.

    Distinguish between merchandising and manufacturing operations.

    Identify the uses of cost accounting data.

    Distinguish between job order costing and process costing.


    Definition

    Cost accounting is an expanded phase of general or


    financial accounting which informs management
    promptly with the cost of rendering a particular
    service, buying and selling a product, and producing
    a product.
    Relationship of Financial, Management and Cost Accounting

    Financial Cost Management


    Accounting Accounting Accounting
    Merchandising Operations
    Balance Sheet

    Inventory
    Ending
    Cost of
    Inventory Goods
    Cash Purchases
    Beginning Available for
    sale
    Cost of
    Goods Sold

    Income
    Statement
    Manufacturing Operations
    Cash

    Balance Sheet Materials Labor FOH

    Materials Materials
    Inventory Storage

    Work in
    Process Production Process
    Inventory Income Statement

    Finished Goods Finished Goods Cost of Goods


    Inventory Storage Sold
    Uses of Cost Accounting Data

    Basis for Determining Use for Planning and


    Product Cost Control
    Determining Product Cost

    Cost accounting procedures help management in


    gathering the data needed to determine product
    costs and thus generate meaningful financial
    statements and other reports.
    Determining Product Cost

    Other uses of unit costs information:

    1. Determining the selling price of a product.


    2. Meeting competition.
    3. Bidding on contracts.
    4. Analyzing profitability.

    Costs are said to be used for managerial purposes when costs are used
    inside the organization by managers to evaluate performance of
    operations or personnel as a basis for decision making.
    Planning and Control

    Planning Control

    The process of monitoring the


    Cost accounting helps in the
    company’s operations and
    development of plans by
    determining whether the
    providing historical costs that
    objectives identified in the
    serves as a basis for projecting
    planning process are
    data.
    accomplished.
    Planning and Control

    Three components of planning:

    1. Strategic planning – concerned with setting long range goals and


    objectives to determine the overall direction of the company.
    2. Tactical planning – concerned with plans for a shorter range (or time
    period) and emphasizes plans to achieve the strategic goals.
    3. Operations planning – relates to the day to day implementation of
    tactical plans. Coordination of the major factors of production
    (materials, labor and facilities)
    Cost Accounting and other Fields of Study

    Part of financial accounting is the recording of the cost of the product and
    the use of cost for valuation of inventory and cost of goods sold. This is
    reported in the financial statements.

    The use of data in choosing between two or more alternatives is part of


    managerial accounting.

    The use of differential cost analysis is considered by others as a form of


    applied micro economics.

    Cost accounting provides data for use in decision models for finance,
    operations management and marketing.
    Product Costing System
    Product Costing System

    JOB ORDER COSTING PROCESS COSTING


    1. Unique jobs are worked during a time 1. Homogenous units pass through a
    period. series of similar process.
    2. Costs are accumulated by individual 2. Costs are accumulated by processing
    jobs. department.
    3. Unit costs are determined by dividing 3. Unit costs are computed by dividing the
    the total cost sheet by the number of individual department’s costs by the
    units on the job. equivalent production.
    4. The job cost sheet provides the details 4. The cost of production report provides
    for the work in progress account. the detail for the work in process
    account for each department.
    End

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