COST ACCOUNTING [short quiz]
Total
Ma’am Pricilla Alvarez
(from notes. Prev. discussion)
Fixed cost
+Cost accounting
Variable
-system that accumulates, gather
data, summarizes, analyzes and interprets
the details of the cost of materials, labor and
overhead necessary to produce product or
services.
SHORT TERM PLAN- decisions affected
for a short period of time/meantime.



LONG TERM PLAN- decisions last longer.
+ difference of expenses and cost
EXPENSES

After purchasing you cannot
consume or use in the future.
COST

Used and is beneficial up to the
future and still gives future benefit.
+process of accounting
Identifying, analyzing, recording, classifying
and summarizing.
unchanged
change
change
unchanged
+Cost elements
Used in: budgeting, pricing and control.
+Types of planning
per unit

Direct Material- raw materials used
in generating the product that
become a significant part of the
finished product.
Direct Labor- Employees who work
directly with the raw materials to
produce the finished product.
Manufacturing Overhead- Other
expenses incurred in the factory to
make the finished product that
cannot be considered direct
materials (ex. Utilities, wages).
Indirect Materials- Materials used in
small amounts or cannot easily be
traced to specific products. (glue,
thread)
Indirect labor- Wages of factory
personnel who do not work directly
on the raw materials. (ex. Clerks,
janitors)
Other manufacturing overheadincludes rent, depreciation,
insurance.
+MANAGERIAL ACCOUNTING
+Prime and conversion cost
Internal users: reports depend on
what the management asks: involves
decision making and sometimes follow the
standard procedures.
Prime cost is the sum of direct
materials and direct labor. Primary
sources of costs for unit in production.
+FINANCIAL ACCOUNTING
External users: recording of
transactions: follows accounting standard.
Conversion cost is the sum of direct
labor and manufacturing overhead. The
cost required to convert the raw
materials into finished products.