chapter 4 product and service costing - job shop production (individual and batch) (job costing and machine hour costing) and multi stage process costing (for mass and variant) Flashcards
(42 cards)
in the third step of cost center accounting we have allocation of overhead costs, how do we use this for product and service costing ?
we use ovrehead cost and their percentages (rates, and we use direct costs from cost type accounting and add the correct overhead rate money amount to find the cost of the object in the end
what three purposes product and service soting have that are similair to the purpose of cost accounting but without one thing
planning control documentation (without monitoring)
example of how to use product costing for planning
plan production program, procurement decisions, sales prices
how is control used in product costing
cost control, performance review (did the planned performance happend)
how does documentation relate to product costing
inventory valuation , how valuable is the inventors
what is the task of product and service costing
costs from production process are recorded and allocated to companys products.
4 types of sales costing in industrial companeis
cash sales price = total costs + prfoit markup
target sales price cash sales price + discount
net list sales price = target sales price + rebate
gross list sales price = net list sales price + sales tax
4 classification of cost objects
production stage (final or middle) purpose ( to be sold or used by company) production related connection ( non.- connected or joint or byproducts) type of good ( tangible or intangible)
which costing methods are used for individual and batch prodcutION?
job costing, machine hour costing
what costing methods are used for variant and mass production?
process costing, equivalnece number method
what is the difference in calucation procedure to find unit costs between invidual/series and variant/mass production
unit costs = job costs/ order volume for individual /series
unit costs = sum of costs per production department / production quantity for variant/mass
for what type of production does job shop production apply ?
individual and batch
what are the 4 methods for product and service costing for mass and batch production?
single stage process costing, multi stage process costing, equivalence method, joint and byproduct methods
what is a job shop ?
small manufacturing system that handles custom / semi custom manufacuring process for small to medium size customer orders or batch jobs.
a job shop may have many different kinds of machines, allowing for flexibility for the type of job
difference between job costing and process costing
Job costing involves the detailed accumulation of production costs attributable to specific units or groups of units. … Process costing involves the accumulation of costs for lengthy production runs involving products that are indistinguishable from each other
how does single stage process costing work
total cost per unit = total costs of the period / produced quantity
(total costs being wages, operating materals, deprecations, SGA)
when do you do multi stage process costing?
if manufacturing process meets different quality standards, (so at each production stage x amount get rejected) stock changes occur to varying degree or the products degree or completion differ (different levels of completion, like not put together but used all materials)
what are primary step costs in the multi stage process costing?
those are the material, labor, material overhead, labor overhead costs for a single stage so production 1 or 2 or 3 or packaging stage
what are costs of preliminary products in multi stage process costing?
those are the stage related unit costs per 1000 m squared (of the previous production stage) x the input quantity of this production stage
how do you calculate the stage related unit costs in the second production step ?
you add the costs of the preliminary products and the primary step costs which gives you the total cost per stage.
then you divide the total costs per stage by the output quantity.
how do unfinished intermediate products affect stage related unit costs ?
all subsequent production stages are affected
do material costs or production costs change is the product is unfinished?
the material costs and production costs themselves do not change. you just adjust the quantity, having instead of 10 finished quantities 7 “equivalent quantities” if 10 products are unfinished at a 70% degree of completion.
so for material costs you have 10 total units, and for production costs you have 10 total equivalent units
if you add the material and production costs to get the total costs if some are unfinished what changes?
for material costs you allocate the costs to 270 units and the production costs to 267 units ( 3 less because 10 are 70% finished making it 7 equivalent finished units so 260 + 7)
so the costs per equivalent unit are based on the “equivalent unit calculated because of the degree of completion”
how do the stage related unit costs change is instead of 270 finished products you have 267 equivalent unit costs ?
the unit costs increase bc lower denominator.
