Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn
اسلاید 1: Chapter 2Cost Terminology and Cost BehaviorsCost AccountingFoundations and EvolutionsKinney, Prather, Raiborn
اسلاید 2: Learning Objectives (1 of 2)Explain assumptions about cost behavior and why these assumptions are necessaryList the cost classifications and explain why the classifications are usefulDescribe the conversion process in service and manufacturing companies
اسلاید 3: Learning Objectives (2 of 2)List product cost categories and their componentsCalculate the Cost of Goods Manufactured and explain how it is used in the Income Statement
اسلاید 4: Cost CategoriesAssociation with cost objectCost object is anything for which management wants to collect or accumulate costsReaction to changes in activityClassification on the financial statements
اسلاید 5: Cost CategoriesAssociation with cost object Direct - traceable to a cost objectIndirect - not conveniently or practically traceable to a cost objecttreated as overhead allocated
اسلاید 6: Cost CategoriesReaction to changes in activityVariableFixedMixed StepRelevant Range – normal operating range
اسلاید 7: Total and Unit Cost BehaviorVaries in direct proportion to changes in activityRemains constant throughout the relevant rangeRemains constant throughout the relevant rangeVaries inversely with changes in activity throughout the relevant rangeVariableCostFixedCostTotal CostUnit Cost
اسلاید 8: Cost CategoriesClassification on the financial statementsUnexpired – balance sheet assetsExpired – income statement expensesProduct – inventoriable costs Prime – direct material and direct laborConversion – direct labor and overheadPeriod – expensed in period incurred
اسلاید 9: Product CostsDirect materialMeasurable part of a productDirect laborLabor used to manufacture a product or perform a serviceOverheadIndirect production cost
اسلاید 10: Period CostsSelling and administrative costsDistribution costsCost to warehouse, transport, and/or deliver a product or serviceMajor impact on managerial decision making
اسلاید 11: Purchaseraw materialsor suppliesInputProduct orServiceOutputConversion ProcessChange Inputs into OutputsCONVERSION
اسلاید 12: Manufacturer Significant amount of labor and machinery Tangible output Purchaseraw materialsand suppliesFinishedproductSell tocustomerInputOutputProduction Centeradd labor and overhead
اسلاید 13: Cost Accumulation in a Manufacturing Company MaterialsInventoryWork in ProcessInventoryFinishedGoodsInventoryCost of GoodsSoldBalance SheetIncomeStatement
اسلاید 14: Product Cost - DirectDirect MaterialConveniently and economically traced to cost objectDirect Labor to manufacture a product or perform a service includes wages paid to direct labor employees, production bonuses, payroll taxesmay include holiday and vacation pay, insurance, retirement benefits
اسلاید 15: Product Cost - IndirectOverhead - indirect production costsFringe benefits, if cannot be easily traced to productOvertime, if due to random schedulingCost of qualityPrevention costsAppraisal costsFailure costs
اسلاید 16: Product Cost BehaviorDirect MaterialVariableDirect LaborVariableOverheadVariable, fixed, or mixed
اسلاید 17: Overhead Cost AllocationAssign indirect costs to one or more cost objectsTo determine full absorption cost (GAAP)To motivate managementTo compare alternative courses of action for planning, controlling, and decision makingAllocation process should be rational and systematic
اسلاید 18: Allocating Overhead Actual vs. NormalProduct CostDirect MaterialsDirect LaborOverheadActual Cost SystemActualActualActualNormal Cost SystemActualActualPredeterminedOverhead Rate
اسلاید 19: Predetermined Overhead RateAllows overhead to be assigned during the periodCompensates for fluctuationsthat are not related to activity levelin activity level that do not affect fixed overhead
اسلاید 20: QuestionsWhat is the difference between a fixed and variable cost? What are the three components of product cost?What are the three inventory accounts for a manufacturing company?
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