Professional Documents
Culture Documents
Production Costing
Production Costing
In practice, eto ang ginagamit under the assumption that an accountant will be working in a
manufacturing company.
We need to assign costs because we need to look at efficiency. The management will look at how it can
control costs.
Looks at several companies using costing systems and how we're able to use these when we assume the
management accounting post in the future.
In Managerial Accounting, a management accountant must be well-versed. Dapat alam niya ang
nangyayari sa operations para makapagbigay ng something sa company.
Ang pinagkaiba is that in nonmanufacturing firms, nabibili na nila at its final state/final inventory value.
Pero sa manufacturing firms, we purchase materials at its raw state and then we convert it to a finished
good.
Raw Materials Inventory will be placed in process. Once it is placed in process, this will form part of the
WIP inventory. The direct labor cost is the number of workers in the company that is directly involved in
the production of a particular product. The manufacturing overhead will be the indirect cost. Once the
WIP is 100% completed, it will transferred to finished goods inventory. When the FG inventory is sold, it
will be transferred to COGS. COGS is an expense. COGS expense is not seen much since pinapasimplify
lang siya. COGS already means cost so sometimes, madaling tingnan para sa'tin kung revenue or
expense pero exemption ang COGS. COGS is an expense. Once the COGS now will then be closed to your
income summary.
How do we compute?
For a particular problem, ilang items ang requirement for a direct material for a particular job?
In indirect cost, just like in the manufacturing overhead, normally, may assignment siya ng costs and in
the most normal cases, may overhead na applicable for the entire batch production and then, i-aassign
siya according to the number of jobs. May problem na 'yung mismong overhead na i-aapply on a
particular overhead rate per job. May problem na hindi lang basta itotal ang overhead
May cases na a particular overhead rate is used in a particular job. May gano'n just because of the
internal policies of the company. Na-experience nila kasi that this job is really the one that is incurring
costs. Siya 'yung job na magastos on a particular item of cost so kailangang i-assign 'yon reliably to
measure the performance per job.
As management accountants, we have to be the best in accounting for the costs because our decisions
on assigning costs on a particular item will have greater impact on decisions made by the management.
Under process costing, mas marami ang gumagamit niyan kasi ang normally, ang mga factory firms,
nagproproduce siya ng large number of items in identical states. For example, chemicals, processed
foods, beers, etc.
We need to study supply chain management because of the limited number of suppliers. We have to get
the best suppliers with the least possible cost. The terminology is actively working because this is
maintaining relationships with the suppliers. We can't achieve the quality items or timely delivery of our
output without the good relationship.
Kailangang ma-identify ang mga items falling below of our minimum so makapagplace agad ng order.