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Published byGeorgina Casey Modified over 8 years ago
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Cost Page 1
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Determining unit costs … HOW MUCH DOES IT COST? On what financial statements do unit costs appear? Income Statement Balance Sheet Statement of Cash Flows Why would a manager want to know unit costs? … to learn if making money … Revenue – Cost = Profit Page 2
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MATCHING PRINCIPLE = match revenues with expenses It matches better than the variable costing income statement format. Page 3
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Rev - COGS GM - S&A NI Inv: (DM, DL, VOH, FOH) Rev - VC CM - FC NI Inv: (DM, DL, VOH) Page 4
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Job-Order Costing distinct products e.g., house construction oil wells shipbuilding PC mfg. (e.g., Dell) ABCCosting Job $ / # units = cost per unit Page 5
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Have students do this on their own. All of these costs benefit multiple periods and should be spread throughout the year. This illustrates why MOH is allocated. Page 6
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Estimated MOH Estimated Activity Actual Activity × PDOR Over- and under-allocated overhead is closed to COGS if immaterial, is closed to EI of WIP, FG and COGS if material Page 7
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IN CLASS: –Halo Products Company EXTRA: –Narcissus Needles –McKay Mills –Buffalo Broilers Cost Page 9
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Cost Page 10
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Normal Costing differs from Actual Costing on only one count: Actual DM and DL transferred to WIP, but MOH is allocated to WIP
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IN CLASS: –Plentiful Printing EXTRA: –Polaris Company DM issued to DM and IDM issued to MOH!! –The Swizzle Manufacturing Company Cost Page 13
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