Cost accounting Essays

Introduction: Fair cost is the cost that is estimated or can be determined by the market while historical cost is related to the cost that is fixed i.e. purchasing cost. Fair cost is the cost on which the assets can be sold or exchanged among the different parties and the liabilities can also be settled with the other parties while the historical cost of an asset is that cost on which that particular asset was purchased. The fair value of an asset can be determined from the current situation of

Conservatism has been reported to effect financial statements in a number of ways including: earnigs quality, balance sheets, value relevance and on other related factors. It has also been reported that this factor has a considerable impact on all forms of accounting information, decision making of the shareholders and listings on the stock exchange. The impact primarily occurs on quality of information reported in the financial statements which ultimately leads to higher profitability and sustainability for

intention of this exercise is to understand the integrated cost center accounting process and helps in grasping the SAP functionality in each step of the processes where the cafeteria costs of Global Bike are assessed. The integral part of the controlling segment, which controls the costs of the organization is known as a cost center. The cost center in SAP maintains and helps to track the cost the occurs in every department of an organization. The costs that occur in the organization can be collected based

Recently, accounting standard-setting body such as the IASB have focused on the issue of how assets and liabilities should be measured (Penman, 2007, p.33). This issue is related to the fair market value accounting as an alternative method against historical cost accounting. The fair market value of an asset (liability) is the amount at which that asset (liability) could be bought or sold (incurred or settled) in a current transaction between willing parties. Historical cost accounting is based on

solve actual problems and prevent potential problems. Disadvantages of Doing Operational Reporting While operational reporting can be advantageous in a number of ways, there are also times in which it can be a disadvantage to the team. First is the cost operational reporting brings to the team, especially start-up teams or businesses. These teams do not have adequately high funds yet and doing the operational report can add to their expenses. Another issue in doing reports is the use of the power

thickness and different colors. The company needs to determine the cost accurately and think about the method of calculating the cost appropriate for its best use. Cost accounting is “a form of managerial accounting that aims to capture a company's total cost of production by assessing the variable costs of each step of production as well as fixed costs.”(Tuovila, 2022) It is a type of accounting that differs from general or financial accounting in that it is more flexible and specific and focuses

essential managerial instrument for cost control. The advantages of standard costing are that standard costing involves a great deal of introductory work for set standards but once standards have been established the clerical work

FRAME 14 CONTINUED... The toral costs to be assigned to the various products manufactured are usually measured in accordance with the principles of financial accounting. The accrual concept, the distinction between costs that are to be capitalized and those that are to be expensed, the various methods of depreciation, and similar topics apply equally here. Product cost information is used for purposes other than the preparation of financial statements, however, and for these other purposes, the

(chapter 6) discuss the activity-based management and cost management tools. The focus company used in this chapter is the same from chapter 5, Patio Grill Company. On the previous chapter we discuss that the company was moving to the activity based costing system (ABC), and now we are going to discuss the activity based management which used data from the ABC system. The relationship between costs and activities are called behavioral costs, this is relevant for management functions to plan, control

numbers, the flow controllers, which controlled the rate and direction flow of chemicals, could increase its prices without significant loss or any competitive response. Wilkerson, his controller, and manufacturing manager developed an activity-based cost model (ABC) to better comprehend the various demands that each product line makes on the organization 's indirect and support resources. Exhibit 1 showed us our operating results, Exhibit 2 showed us our product profitability analysis, Exhibit 3 displayed

Expansion created additional fixed costs. The cost behavior of Home Depots fixed costs remain constant. If Home Depot has fixed costs of $120,000 per year, the cost remains constant despite the volume of building supplies sold. Home Depot does not operate on per-unit fixed costs but rather a total fixed. The company also incurred a larger variable cost. The labor of hourly workers, utilities, etc. would be increased as new stores are opened. Suppose that variable costs are $60,000. Operating leverage

Plant-wide allocation method - method of allocating costs that uses one cost pool, and therefore one predetermined overhead rate, to allocate overhead costs. Departmental allocation method – is very similar to a plant-wide allocation method, however in this method one cost is allocated to a particular department. Activity-based costing (ABC) method was created in 1980s. It uses several cost pools, organized by activity, to allocate overhead costs in contrast to previously popular models of allocation

inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Target use the retail inventory method to account for inventory and cost of sales. Under LIFO Target uses this method for inventory because using the last-in, first-out (LIFO) method this determines the cost-to-retail ratio to each merchandise ending retail value. The cost of our inventory includes: 1. the amount we pay to

system for tracking inventory costs. However, at year end, there was a discrepancy between what the system reported and what the independent auditor reported after a physical count. There was a difference of $1.0 million dollars which need to be accounted for. Therefore, the CBU’s accounting staff processed an adjusting entry to reduce inventory by the difference. Accountant Philosophy The two accountants are debating over two different types of accounting practices known as the periodic

the urban development pressures there is a higher agricultural rent which yields capacity and intensity of production. In his theory the land uses that are more intensive are normally found on high-rent close to the city, in order to minimize the costs of transporting bulky perishable goods to the market. Farmers are normally nervous to invest capital and labor in the close to the market due to the urban uses that will outbid those of agriculture. Therefore, the sequence of agricultural use becomes

Question (a) Management accounting is the provisions of financial and non-financial decision making information to managers. According to the Institute of Management Accounting (IMA), management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy. Traditional standard

Product cost is described as the cost used to create a product or service. As stated in the video, it depends on who we ask concerning product cost, an IRS agent would have a different perspective than a Certified Public Accountant (CPA). To put it differently, an IRS agent may view product cost for new and future revenue in terms of income taxes. The IRS agent may suggest a business owner to put more cost in the product to increase inventory, the more the IRS agent can defer inventory the more can

In this section, I’ll be explaining the difference between implicit and explicit costs. I will also provide two examples when they differ. An explicit cost is the amount of expenses a business incurs when conducting an activity. This type of cost includes but not limited to salaries, materials, rent and utilities. (Explicit Cost, n.d.). An implicit cost is considered the opportunity cost of an activity. This is when the firm use its own resources to cover the expense of an activity. If the firm

Management Accounting Practices of the easyJet plc Introduction The main objective of the paper to explain the accounting practices of easyJet plc. The paper will explain the summary of the company including its business activities, along with the management accounting information that helps managers of business. Examples of types of information will need to be responding. Furthermore, the paper will evaluate the budgeting, variance analysis, and activity based information, which is used within

value is nil. IAS 18 Revenue. No further accounting changes expected to Tesco group sales. IAS 38 Intangible assets. There is no any adoption of IAS 38 but there is adoption of IAS 39 . Task 2 /M2: I will be assessing the impact of adjustments to profit and loss account and balance sheet items for a limited company . Adjusting entries are part of accounting journal entries which convert a company's accounting records to the accrual basis of accounting , especially to issue the company's financial