Скачать презентацию CHAPTER 2 Measuring Product Costs Power Point Presentation Скачать презентацию CHAPTER 2 Measuring Product Costs Power Point Presentation

5bd9db3eacef088437997606b3eced48.ppt

  • Количество слайдов: 28

CHAPTER 2 Measuring Product Costs Power. Point Presentation by Lu. Ann Bean Professor of CHAPTER 2 Measuring Product Costs Power. Point Presentation by Lu. Ann Bean Professor of Accounting Florida Institute of Technology © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Managerial Accounting 11 E Maher/Stickney/Weil 1

☼ CHAPTER GOAL ☼ This chapter shows how the accounting system records and reports ☼ CHAPTER GOAL ☼ This chapter shows how the accounting system records and reports the flow of costs in organizations to answer questions such as these: ¯To determine product/service cost ¯To compare cost with management’s expectations 2

LO 1 DIRECT MATERIALS: Definition Can be easily traced directly to a product. 3 LO 1 DIRECT MATERIALS: Definition Can be easily traced directly to a product. 3

LO 1 DIRECT LABOR: Definition Is labor of workers who transform materials into a LO 1 DIRECT LABOR: Definition Is labor of workers who transform materials into a finished product. 4

LO 1 MANUFACTURING OVERHEAD: Definition Includes all other costs of transforming the materials to LO 1 MANUFACTURING OVERHEAD: Definition Includes all other costs of transforming the materials to a finished product. 5

LO 1 How are materials, labor not directly traceable to a product categorized? All LO 1 How are materials, labor not directly traceable to a product categorized? All costs, including materials and labor, not directly traceable to a product are categorized as Manufacturing Overhead. 6

LO 2 RESPONSIBILITY CENTER: Definition Is any organizational unit with its own manager or LO 2 RESPONSIBILITY CENTER: Definition Is any organizational unit with its own manager or managers. 7

LO 2 Responsibility center (department) Records costs & assigns to products Direct materials Direct LO 2 Responsibility center (department) Records costs & assigns to products Direct materials Direct labor Overhead Management compares costs to standards 8

ACCOUNTING SYSTEM PURPOSES LO 3 1) To record costs by responsibility for performance evaluation ACCOUNTING SYSTEM PURPOSES LO 3 1) To record costs by responsibility for performance evaluation and control. 2) To assign manufacturing costs to units produced for product costing. 9

LO 3 BASIC COST FLOW EQUATION Beginning + Transfers = Transfers + Ending Balance LO 3 BASIC COST FLOW EQUATION Beginning + Transfers = Transfers + Ending Balance In Out Balance BB + TI = TO + EB* *Recall from financial accounting: Beginning Balance + Additions - Withdrawals = Ending Balance 10

COMPARING NORMAL and ACTUAL COSTING LO 4 ¯Normal costing advantages ¯Smoothes seasonal and other COMPARING NORMAL and ACTUAL COSTING LO 4 ¯Normal costing advantages ¯Smoothes seasonal and other fluctuations that don’t relate directly to activity levels ¯More timely than actual because of estimating process 11

LO 4 USING NORMAL COSTING ¯Select a cost driver (allocation base) to apply overhead LO 4 USING NORMAL COSTING ¯Select a cost driver (allocation base) to apply overhead ¯Estimate dollar amount of overhead and level of activity for period ¯Compute predetermined (normal) overhead rate ¯Apply overhead to production 12

LO 4 EXAMPLE Plantimum Builders manually assembles small modular homes. Using prior year data, LO 4 EXAMPLE Plantimum Builders manually assembles small modular homes. Using prior year data, Plantimum estimated variable manufacturing overhead at $100, 000, 50, 000 direct labor hours, and $50, 000 fixed manufacturing overhead. What is Plantimum’s variable overhead rate? $100, 000 / 50, 000 dlh = $2. 00 per direct labor hour What is Plantimum’s fixed overhead rate? $ 50, 000 / 50, 000 dlh = $1. 00 per direct labor hour 13

LO 4 EXAMPLE Actual direct labor hours for the month was 4, 500. How LO 4 EXAMPLE Actual direct labor hours for the month was 4, 500. How much variable overhead did Plantimum charge to production for the month? 4, 500 dlh X $2. 00 per direct labor hour = $9, 000 How much fixed overhead did Plantimum charge to production for the month? 4, 500 dlh X $1. 00 per direct labor hour = $4, 500 14

LO 5 COST SYSTEMS ¯An effective cost system must have ¯Decision focus: meets needs LO 5 COST SYSTEMS ¯An effective cost system must have ¯Decision focus: meets needs of decision makers ¯Different costs for different purposes ¯Variable costing for decision making ¯Full absorption for financial reporting ¯Cost-benefit test: benefits from cost system must exceed its costs 15

LO 5 COST SYSTEMS: Examples ¯ Job costing ¯For custom production jobs ¯Users: accounting LO 5 COST SYSTEMS: Examples ¯ Job costing ¯For custom production jobs ¯Users: accounting and consulting firms, health care organizations ¯ Process costing ¯For standardized production ¯Users: drink makers (e. g. , Coca Cola, etc. ) ¯ Operation costing ¯A hybrid of job and process combined ¯Users: Levi Strauss, Dell 16

LO 6 PLANTIMUM PRODUCTION Plantimum produced 3 modular homes during the month. Plantimum wonders LO 6 PLANTIMUM PRODUCTION Plantimum produced 3 modular homes during the month. Plantimum wonders whether they should use job order costing or process costing? What do you think? Continued 17

LO 6 PLANTIMUM PRODUCTION COSTS: Using Job Order Jobs Job #1001 Direct Labor $ LO 6 PLANTIMUM PRODUCTION COSTS: Using Job Order Jobs Job #1001 Direct Labor $ 8, 000 Direct Overhead Materials ($3/dlh) $20, 800 $1, 200 Total Cost $30, 000 Job #1002 6, 000 18, 100 900 25, 000 Job #1003 5, 000 11, 250 750 17, 000 $19, 000 $50, 150 $2, 850 $72, 000 Continued 18

PLANTIMUM PRODUCT COSTING: Using Process LO 6 Unit costs = Total manufacturing costs / PLANTIMUM PRODUCT COSTING: Using Process LO 6 Unit costs = Total manufacturing costs / Units produced (DL + DM + Overhead) / 3 ($19, 000 + $50, 150 + $2, 850) / 3 Average unit cost is $24, 000 per modular house Continued 19

LO 7 COMPARING COST SYSTEMS Nature of Production Heterogeneous Each Units Large Costing System LO 7 COMPARING COST SYSTEMS Nature of Production Heterogeneous Each Units Large Costing System Used Job Costing Homogeneous Many Small Continuous Units Process Costing 20

LO 8 FLOW OF COSTS: A Service Company Example An accounting or consulting service LO 8 FLOW OF COSTS: A Service Company Example An accounting or consulting service firm collects costs by job or client and uses an accounting method similar to that used in manufacturing. The flow of costs accounted for include: Materials and overhead costs are transferred into Work-in. Process accounts for each job. Work-in-Process costs are transferred to Cost of Services Billed. 21

LO 8 FLOW OF COSTS REPORTING The income statement reports: Revenue - Cost of LO 8 FLOW OF COSTS REPORTING The income statement reports: Revenue - Cost of services billed = Gross Margin - Expenses (e. g. , unbilled direct labor, underapplied overhead, marketing expenses) = Operating Profit 22

LO 10 CHARACTERISTICS OF JIT: (Just- in-Time Inventory) JIT inventory methods attempt to obtain LO 10 CHARACTERISTICS OF JIT: (Just- in-Time Inventory) JIT inventory methods attempt to obtain materials just in time for production or sale ¯Reduces/eliminates inventory and carrying costs ¯Leads to immediate correction of defective units ¯Helps expose production problems ¯Relies on high-quality materials, production ¯Charges all costs directly to cost of goods sold 23

LO 10 What happens to inventory leftover after costs are charged to cost of LO 10 What happens to inventory leftover after costs are charged to cost of goods sold in a JIT system? Cost of leftover inventory is “backflushed, ” i. e. , taken out of cost of goods sold and put into finished goods inventory. 24

LO 11 What are equivalent units? Equivalent units (E. U. ) represent the translation LO 11 What are equivalent units? Equivalent units (E. U. ) represent the translation of partially completed work into equivalent whole units. 25

LO 11 The five steps required to compute product costs, the cost of ending LO 11 The five steps required to compute product costs, the cost of ending Work-in- Process Inventory, and the cost of finished goods using equivalent units are: 1. Summarize the Flow of Physical Units 2. Compute Equivalent Units (For example, two units, each 50 percent complete, represent one equivalent unit. ) 3. Summarize Costs to Be Accounted For 4. Compute Unit Costs for the Current Period 5. Compute the Cost of Goods Completed and Transferred Out of Work-in-Process and the Cost of Ending Work-in-Process Inventory 26

Costs flow from basic records of materials purchases, labor costs, and overhead costs to Costs flow from basic records of materials purchases, labor costs, and overhead costs to Work-in-Process Inventory accounts that show the cost of ongoing work. When products are complete, they and their costs are transferred to Finished Goods Inventory. When sold, the cost of the products is transferred out of Finished Goods Inventory to Cost of Goods Sold. 27

End of CHAPTER 2 28 End of CHAPTER 2 28