KONSEP DASAR

COST ACCOUNTING
 Planning Organizing

Managers need cost information to

perform each of these functions.

Controlling Directing
Decision
Making
It measures and reports financial and
nonfinancial information that helps
managers make decisions to fulfill the
goals of an organization.

1-
3
Its focus is on reporting to external parties.
It measures and records business transactions.

It provides financial statements based on

generally accepted accounting principles.

1-
4
 It provides information for both
management and financial accounting.

It measures and reports financial

and nonfinancial data.

1-
5
 It describes the activities of managers in
planning and control of costs.
It includes the continuous reduction of costs.

It is a key part of general management

strategies and their implementation.

1-
6
 Tujuan/Peranan
Akuntansi Biaya

Penentuan Perencanaan, Pengambilan

Biaya Pengendalian, Keputusan
Produk & Evaluasi Khusus
 ACCOUNTING

MANAGEMENT FINANCIAL
ACCOUNTING ACCOUNTING

PEMAKAI FORMAT FREKWENSI

INFORMASI INFORMASI PELAPORAN

LINGKUP ORIENTASI SIFAT

INFORMASI WAKTU INFORMASI

KEWAJIBAN
PENYAMPAIAN
LAPORAN
 ACCOUNTING

MANAGEMENT FINANCIAL
ACCOUNTING ACCOUNTING

INSTITUTE OF AMERICAN INSTITUTE

MANAGEMENT OF CERTIFIED PUBLIC
ACCOUNTING (IMA) ACCOUNTANTS (AICPA)

CERTIFIED
MANAGEMENT CERTIFIED PUBLIC
ACCOUNTANT (cMA) ACCOUNTANT (CPA)
 ACCOUNTING

MANAGEMENT FINANCIAL
ACCOUNTING ACCOUNTING

INSTITUT AKUNTAN INSTITUT AKUNTAN

MANAJEMEN PUBLIK INDONESIA
INDONESIA (IAMI) (IAPI)

CERTIFIED PROFESSIONAL
MANAGEMENT ACCOUNTANT CERTIFIED PUBLIC
(cPMA) ACCOUNTANT (CPA)
COST
AND
EXPENSE
???
WHAT DO WE MEAN BY A COST?

A cost
is the measure of
resources given
up to achieve a
particular purpose.
 COST
CLASSIFICATIONS
???
COST CLASSIFICATION

Product: Volume:
• Direct Cost • Variabel Cost
• Indirect Cost • Fixed Cost
• Mixed Cost

Function: Production Cost:

• Production Cost • Raw Materials
• Marketing Expense • Work in Process
• General &
Administrative Expense • Finished Goods
COST CLASSIFICATION

Managerial Function:
• Standard Cost
• Actual Cost
• Controllable Cost
• Uncontrollable Cost
• Committed Cost
• Discretionary Cost
• Relevant Cost
• Opportunity Cost
 Manufacturing Costs

Direct Direct Manufacturing

Labor Material Overhead

The
Product
 Direct Material

Cost of raw material that is used to

make, and can be conveniently
traced, to the finished product.
Example:
Steel used to
manufacture
the automobile.
 Direct Labor

Cost of salaries, wages, and fringe

benefits for personnel who work
directly on manufactured products.

Example:
Wages paid to an
automobile assembly
worker.
 Manufacturing Overhead
All other manufacturing costs
Indirect Indirect Other
Material Labor Costs

Materials used to support

the production process.
Examples: lubricants and
cleaning supplies used in an
automobile assembly plant.
 Manufacturing Overhead
All other manufacturing costs
Indirect Indirect Other
Material Labor Costs

Cost of personnel who

do not work directly on
the product. Examples:
maintenance workers,
janitors and security
guards.
 Manufacturing Overhead
All other manufacturing costs
Indirect Indirect Other
Material Labor Costs

Examples: depreciation
on plant and equipment,
property taxes,
insurance, utilities,
overtime premium, and
unavoidable idle time.
 Classifications of Costs in
Manufacturing Companies
Manufacturing costs are often
combined as follows:
Direct Direct Manufacturing
Material Labor Overhead

Prime Conversion
Cost Cost
Cost Classifications on Financial
Statements – Income Statement

Product Costs Period Costs

Cost of goods sold Operating expenses

Cost Classifications on Financial
Statements – Balance Sheet

Merchandiser Manufacturer
Current Assets Current Assets
– Cash  Cash
– Receivables  Receivables
– Prepaid Expenses  Prepaid Expenses
– Merchandise  Inventories
Inventory Raw Materials
Work in Process
Finished Goods
Cost Classifications on Financial
Statements – Balance Sheet

Merchandiser Manufacturer
Current Assets Current Assets
– Cash  Cash
Those materials
– Receivables  waiting to be
Receivables
processed.
Prepaid Expenses
– Prepaid Expenses 

– Merchandise  Inventories
Inventory Raw Materials
Work in Process
Finished Goods
Cost Classifications on Financial
Statements – Balance Sheet

Merchandiser Manufacturer
PartiallyAssets
Current complete
Current Assets products – material to
 Cash
– Cash which some labor
 Receivables
and/or overhead has
– Receivables
been added.
 Prepaid Expenses
– Prepaid Expenses
 Inventories
– Merchandise
Inventory Raw Materials
Work in Process
Finished Goods
Cost Classifications on Financial
Statements – Balance Sheet

Merchandiser Manufacturer
Current Assets Current Assets
– Cash  Cash
 Receivables
Completed products
– Receivables
awaiting sale.
 Prepaid Expenses
– Prepaid Expenses
 Inventories
– Merchandise
Inventory Raw Materials
Work in Process
Finished Goods
 Manufacturing Cost Flows
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
 Manufacturing Cost Flows
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
Finished
Goods
Inventory
 Manufacturing Cost Flows
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
Finished Cost of
Goods Goods
Inventory Sold
 Flow of Costs in Manufacturing Firm

Work-in-Process Inventory Finished Goods Inventory

Direct material cost Product cost transferred
Direct labor cost
Manufacturing overhead when product is finished

Cost of Goods Sold Income Summary

Expense closed into

Income Summary at end

of accounting period
 Unit Cost Computations

Bases:
• Historical Costing
• Standard Costing

Methods:
• Absorption/Full Costing
• Direct/Variable Costing
• Hybrid
 Absorption Costing

A system of accounting for costs in which

both fixed and variable production costs
are considered product costs.

Fixed
Costs
Product
Variable
Costs
 Variable Costing

A system of cost accounting that only

assigns the variable cost of production
to products.

Fixed
Costs
Product
Variable
Costs
 Absorption and Variable Costing
Absorption Variable
Costing Costing

Direct materials
Direct labor Product costs
Product costs Variable mfg. overhead

Fixed mfg. overhead

Period costs
Period costs Selling & Admin. exp.
 Absorption and Variable Costing
Absorption Variable
Costing Costing

Direct materials
Direct labor Product costs
Product costs Variable mfg. overhead

Fixed mfg. overhead

Period costs
Period costs Selling & Admin. exp.

The difference between absorption and variable

costing is the treatment of fixed manufacturing overhead.
Cost Accumulation Systems

Process Job-Order
Costing Costing

 Used for production of large,

unique, high-cost items.
 Built to order rather than mass
produced.
 Many costs can be directly traced
to each job.
 Cost Accumulation Systems

Process Job-Order
Costing Costing

 Used for production of small,

identical, low cost items.
 Mass produced in automated
continuous production process.
 Costs cannot be directly traced to
each unit of product.
 End of Chapter

Next Week:
• Accounting for direct materials
• Accounting for direct labor