Accounting

Week Two Content Outline: Cost Analysis

OBJECTIVE: Apply the concepts of cost estimation, cost driver, and cost allocation to a business situation.

Resource: Ch. 16 of Fundamental Financial & Managerial Accounting Concepts (Edmonds, et al.)

Content

• Cost Accumulation, Tracing, and Allocation (in Edmonds, et al.)

o Use of Cost Drivers to Accumulate Costs (p. 794)

o Assignment of Cost to Objects in a Retail Business (pp. 794–801)

1. Direct Costs

2. Indirect Costs

3. Overhead Costs

o Effects of Cost Behavior on Selecting the Most Appropriate Cost Driver (pp. 802–805)

1. Using Units as Cost Driver

2. Using Direct Labor Hours as Cost Driver

3. Using Material Dollars as Cost Driver

o Establishing Cost Pools (p. 806)

o Allocating Joint Costs (pp. 806–808)

o Cost Allocation: The Human Factor (pp. 808–810)

OBJECTIVE: Use the techniques of job order and process costing to determine product cost.

Resource: Ch. 17 & 18 of Fundamental Financial & Managerial Accounting Concepts (Edmonds, et al.)

Content

• Product Costing in Service and Manufacturing Companies (in Edmonds, et al.)

o Cost Flow in Manufacturing Companies (p. 834)

o Cost Flow in Service Companies (pp. 834–835)

o Manufacturing Cost Flow Illustrated (pp. 836–846)

o Preparing the Schedule of Cost of Goods Manufactured and Sold (pp. 846–847)

o Financial Statements (pp. 847–848)

o Motive to Overproduce (pp. 848–850)

• Job-Order, Process, and Hybrid Cost Systems (in Edmonds, et al.)

o Cost Systems (pp. 882–904)

1. Job-Order Cost Systems

a. Job Cost Sheet

2. Process-Cost Systems

a. Transferred In Costs

OBJECTIVE: Integrate cost behavior concepts with cost-volume-profit (CVP) analysis.

Resource: Ch. 15 & 19 of Fundamental Financial...