MAS

REVIEWER
Cost Accounting- intersection between financial and managerial accounting. Variable Cost Constant Proportionate
3. Mixed Costs- cost with fixed and variable components
Merchandising vs. Manufacturing
2 Types:
- one inventory account - 3 inventory accounts (M, WIP, FG) a. Semivariable Cost- usually represents a minimum fee
b. Step Costs- fixed part changes abruptly
TWO BASIC PRODUCT-COSTING SYSTEMS
1. Job Order Costing- unique, one-of-a-kind or special-order products
- uses just one WIP account
- usually more costly than process costing
2. Process Costing- same or similar goods
- Uses several WIP account
Hybrid costing- combination of job-order and process costing
- Operation costing- a hybrid costing system often used in repetitive
manufacturing
Cost vs. Expenses
- cash/cash equivalent value - expired costs
sacrificed for goods/services - cost that expires without producing
any revenue benefit
Direct Materials- can be traced to finish product
Direct Labor- amount paid as wages to those working directly on the product
Prime Costs = DM + DL
Conversion Costs = DL +FOH
Total Manufacturing Cost = DM + DL + FOH (Indirect materials, Indirect labor)
Costs Classified as to Variability
1. Fixed Costs- constant in total, irrespective of volume of production
2 Categories:
a. Committed- long term (e.g. depreciation of equipment)
b. Managed (discretionary, programmed or planned)- short term
2. Variable Costs- vary directly in total in relation to volume of production
Per Unit Total
Fixed Cost Inverse Constant