ACC210 Ch4 Set 1 Flashcards
Product costing system
a system that accumulates product-related costs & uses a series of procedures to assign them to the organisation’s final products
Product costs
the costs incurred during the production process
Product costing system diagram?
Input of the product costing system: Product-related costs incurred by the business —————>
Activities performed by the system: Procedures used to accumulate and assign costs to final products ———->
Output of the product costing system: Product costs
Product costs may differ over?
- the range of costs included
- whether current costs or future costs are included
- how frequently the information is required
In designing a product costing system, the management accountant must identify?
manager’s needs
All product cost information may not come from?
one product costing system
Product costing systems in many businesses are used to?
value inventory
Manufacturing costs are assigned to?
products. When product costing systems are used fro inventory valuations
- required by the Australian accounting standards
Australian accounting standard AASB 102 Inventories (2007)
- prescribes the measurement of inventories
- require inventories to be measured at the lower cost or net realisable value
Net realisable value
the estimated sales value of the merchandise less any anticipated costs of completing & selling the products
Manufacturing costs
the cost of direct material, direct labour & manufacturing overhead
Raw materials inventory
the major materials that will be used in production
Work in process inventory
the products on which manufacture has begun but is only partially complete at balance date
Finished goods inventory
the manufactured goods that are complete & ready for sale
Cost of goods sold expense
the cost of the products that are sold, which is matched against revenue to determine gross margin
