500485049 Cost Accounting and Control Output PDF

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INSTRUCTOR:MRS. JEANLYN DOMINGOSUBMITTED BY;APRIL JOY L. OBEDOZAW01 Exercise: Uses of Cost Accounting data What is the difference between financial accounting and managerial accounting? The difference between financial and managerial accounting is that financial accounting is the collection of accou...

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INSTRUCTOR: MRS. JEANLYN DOMINGO

SUBMITTED BY; APRIL JOY L. OBEDOZA W01 Exercise: Uses of Cost Accounting data 1. What is the difference between financial accounting and managerial accounting?

The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions. Financial accounting is focused on creating financial statements to be shared internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company. Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately. Financial accounting is concerned with knowing the proper value of a company’s assets and liabilities. Managerial accounting is only concerned with the value these items have on a company’s productivity. There are a number of differences between financial and managerial accounting, which fall into the following categories: Aggregation. Financial accounting reports on the results of an entire business.

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Managerial accounting almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region. Efficiency. Financial accounting reports on the profitability (and therefore the

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efficiency) of a business, whereas managerial accounting reports on specifically what is causing problems and how to fix them. Proven information. Financial accounting requires that records be kept with

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considerable precision, which is needed to prove that the financial statements are correct. Managerial accounting frequently deals with estimates, rather than proven and verifiable facts. 

Reporting focus. Financial accounting is oriented toward the creation of financial statements, which are distributed both within and outside of a company. Managerial accounting is more concerned with operational reports, which are only distributed within a company.

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Standards. Financial accounting must comply with various accounting standards, whereas managerial accounting does not have to comply with any standards when information is compiled for internal consumption.

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Systems. Financial accounting pays no attention to the overall system that a company has for generating a profit, only its outcome. Conversely, managerial accounting is interested in the location of bottleneck operations, and the various ways to enhance profits by resolving bottleneck issues.

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Time period. Financial accounting is concerned with the financial results that a business has already achieved, so it has a historical orientation. Managerial accounting may address budgets and forecasts, and so can have a future orientation.

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Timing. Financial accounting requires that financial statements be issued following the end of an accounting period. Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.

Valuation. Financial accounting addresses the proper valuation of assets and liabilities,

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and so is involved with impairments, revaluations, and so forth. Managerial accounting is not concerned with the value of these items, only their productivity.

2. What is the difference between job order costing from process costing? Job order costing involves the detailed accumulation of production costs attributable to specific units or groups of units. For example, the construction of a custom-designed piece of furniture would be accounted for with a job costing system. The costs of all labor worked on that specific item of furniture would be recorded on a time sheet and then compiled on a cost sheet for that job. Similarly, any wood or other parts used in the construction of the furniture would be charged to the production job linked to that piece of furniture. This information may then be used to bill the customer for work performed and materials used, or to track the extent of the company's profits on the production job associated with that specific item of furniture. While Process costing involves the accumulation of costs for lengthy production runs involving products that are indistinguishable from each other. For example, the production of 100,000 gallons of gasoline would require that all oil used in the process, as well as all labor in the refinery facility be accumulated into a cost account, and then divided by the number of units produced to arrive at the cost per unit. Costs are likely to be accumulated at the department level, and no lower within the organization.

Given these descriptions of job costing and process costing, we can arrive at the following differences between the two costing methodologies: 

Uniqueness of product. Job costing is used for unique products, and process costing is used for standardized products.

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Size of job. Job costing is used for very small production runs, and process costing is used for large production runs.

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Record keeping. Much more record keeping is required for job costing, since time and materials must be charged to specific jobs. Process costing aggregates costs, and so requires less record keeping.

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Customer billing. Job costing is more likely to be used for billings to customers, since it details the exact costs consumed by projects commissioned by customers.

3. What are the main characteristics of Job order costing? 

Each Job distinguishable

Each job can be clearly distinguishable from other jobs. Each job is given a unique Job number, which clearly distinguish that job from other jobs performed by the organization. 

Customer Specific

Job costing is used, where job is performed at the request of the customer. Each job is performed as per specific requirement of customer. 

Job Price

Job price is agreed with customer on the bases of cost estimation. An appropriate percentage is added to the cost for quoting a price to the customer. 

Separate Record

Separate record is kept for each job. This record is handy for calculating the profit from the job. 

Job Cost Sheet

All cost related to job are collected on jobs cost sheet or job card. These costs are then charged to job work in progress account. 

Job Account

All cost are transferred / recorded for job cost sheet to the job account, factor overheads are also charged to the job in job account. On completion selling and other administrative expenditure also charged to job account to calculate full cost of jobs.

4. What are the main characteristics of process costing? 

Controlled

One major characteristic of process costing is the fact that the process is controlled. This is why process costing is used--it is an industry where the process is clear-cut, which makes it possible to assign a price to it. This means that there are a wide range of industries where process costing will not work. For example, a law firm cannot use process costing to determine prices because the process to produce their product (legal expertise and advice) is not the same for every client. Indeed, its selling point is that it is different for every client. Therefore, the process cannot be streamlined and the costs cannot be kept the same for all lawyers. 

Cumulative

Process costing uses cumulative costs from every stage of production. So, if a factory makes ketchup bottles, the people in charge of process costing would find the cost of the glass, plus the cost of the labels, plus the cost of the workers in each department and maintenance of the necessary machines. By adding up the total cost of producing a set number of ketchup bottles, the accounting team can determine how much it costs to produce each ketchup bottle--and therefore determine what price each bottle should sell for. 

Continuity

The final characteristic of process costing is that the process has to be continuous. If a factory makes custom equipment for large clients, it is not possible to assign a fixed process cost because the process is not continuous. The factory may be making one kind of equipment for six months and a completely different kind for the next six months; the changing of inputs and outputs will change the process and therefore change its cost. However it is possible to process cost within each of these sixmonth periods. If a shop is making different things every day, though, then there are too many variables and process costing is not possible.

CHAPTER 2 PROBLEM 5 ASSIGNMENT

CHAPTER 2 PROBLEM 6 ASSIGNMENT

CHAPTER 2 PROBLEM 7 ASSIGNMENT

CHAPTER 2 PROBLEM 10 ASSIGNMENT

CHAPTER 3 PROBLEM 2 ASSIGNMENT

MARVIN MANUFACTURING COMPANY COST OF GOODS SOLD STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019

Direct material used Raw materials inventory Jan 1, 2019 Add: Purchases Total goods available for use Less: raw material inventory Dec.31, 2019

P 175,000 250,000 425,000 125,000

P300, 000

Direct labor

270,000

Factory overhead

324,000

Total manufacturing cost

894,000

Add: work in process, Jan. 1

90,000

Cost of goods put into process

984,000

Less: work in process, Dec 31

120,000

Cost of good manufactured

864,000

Add: finish goods inventory, Jan 1

100,000

Total goods available for sale

964,000

Less: finished goods, Dec 31

80,000

Cost of goods sold

884,000

CHAPTER 3 PROBLEM 3 ASSIGNMENT DONNA COMPANY COST OF GOOD SOLD STATEMENT FOR THE MONTH ENDED MAY 31, 2019

Direct material used Materials inventory May 1 Add: Purchases

P 124,000 0

Total goods available for use

124,000

Less: material inventory May 31

115,000

P 9,000

Direct labor

160,000

Factory overhead

240,000

Total manufacturing costs

409,000

Add: Work in process, May 1

129,200

Cost of goods put into process

538,200

Less: work in process, May 31

124,000

Cost of goods manufacturing

414,200

Add: finish goods, May 1

150,000

Total goods available for sale

564,200

Less: finished goods, May 31

122,000

Cost of goods sold

442,200

Chapter 3 Multiple Choice Question 1 Problem 1 1. In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, Crawford incurs 210,000 of factory labor costs, of which 200,000 is direct labor and 10,000 is indirect labor. Actual overhead incurred was 200,000. The amount of overhead debited to Work in Process Inventory should be: a). P 200,000 b). P 144,000 c). P 168,000 d). P 160,000 Answer: D D. Work in Process Inventory should be debited for (200,000 x 80%) = P 160,000 the amount of manufacturing overhead applied....