Notes

Costing system help management estimate cost and accurately charge customers. Product costing: the process of assigning both direct and indirect cost to product or services. Direct cost- traced. Indirect cost- allocated. Product costing system decisions: costing accumulation method (job or process costing). Cost measurement method: (actual, normal or standard costing). Overhead assignment method: (volume-based, activity- based). Cost measurement systems : Actual costing(actual labor, material and overhead)is not common, fluctuation costs. Normal costing: actual direct materials and labor plus normal (estimated cost for overhead. Standard costing: standard cost and quantities are used for each type of cost(DL, DM and OH)expected costs. Cost accumulation methods job costing system- all manufacturing cost incurred are assigned to jobs, appropriated when cost can be readily identified with specific customer, jobs or projects,(often found in small or medium firms that produce customized products. Process costing is often found in large firms that produce one or few homogeneous products through continuous mass production(ex: petrol chemicals.) Normal costing volume based costing system: allocate using a volume base cost driver (direct labor hours, direct labort cost, machine hours. This approach assumes that OH cost is relate to output volume. Activity base costing (ABC) allocate to product using cause and effect criterion with multiple cost driver, volume base and non-volume base. This system allocates factory OH more accurately based on resources consumption and activity consumption cost drivers. Job costing is a system that accumulates cost and assigns them to specific jobs, customers, projects, clients or contracts. All the job that appear in the job costing sheet are recorded in the WIP inventory. DM: are first recorded in the materials inventory, bill of materials is listing like a recipe. IM: when issue to production, are taken out of material...