ADMS 3510 Lecture Notes - Subledger, Cost Accounting, Perpetual Inventory

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raspberryantelope879

2 May 2013

School

York University

Department

Administrative Studies

Course

ADMS 3510

Professor

Rebecca Jubis

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Document Summary

Cost accounting involves the measuring, recording, and reporting of product. From the data accumulated, both the total cost and unit cost of each product is determined. A cost accounting system consists of accounts for the various manufacturing costs. These accounts are fully integrated into the general ledger of a company. An important feature of a cost accounting system is the use of a perpetual inventory system. Such a system provides information immediately on the cost of a product. The two basic types of cost accounting systems are: Under a job-order cost system, costs are assigned to each job or to each batch of goods. A process cost system is used when a large volume of similar products are manufactured. Process costing accumulates product-related costs for a period of time instead of assigning coststo specific products or job-orders. Customized production of unique products specific to a client"s needs.

Related Questions

All of the following statements are true regarding cost accounting systems except

a. A company must use either a job order cost system for all of its products or services or a process cost system for all of its products or services - it cannot use both

b. A company may use a job order cost system for some of its products and a process cost system for other products.

c. Managers use product cost from the cost accounting system for setting product pricing, controlling operations, and developing financial statements.

d. A job order cost system provides product costs for each quantity of product that is manufactured.

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Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

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Listed below are seven technical accounting terms introduced oremphasized in this chapter.

Job Order costing

Overhead application rate

Overapplied overhead

Activity-based costing

Cost driver

Cost of finished goods manufactured

Job cost sheet

Each of the following statements may (or may not) describe thsestechinial terms. For each statment, indicate the term described, oramswer "None" if the statement does not correctly describe any ofthe terms.

a. An activity base that can b etraced directly to unitsproduced and can be used as a denominator in computing an overheadapplication rate.

b. The total of all direct lavor, direct materials andmanufacturing overhead transferred from work in process to finishedgoods.

c. A means of assigning indirect product costs to work inprocess during the period.

d. A debit balance remaining in the Manufacturing Overheadaccount at teh end of the period.

e. The type of cost accounting system likely to be used by aconstruction company.

f. The type of cost accounting method likely to be used foroverhead costs.

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ADMS 3510 Lecture Notes - Subledger, Cost Accounting, Perpetual Inventory

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