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Cost Accumulation and Measurement
Chapter 3
Managerial Accounting
Concepts and Empirical Evidence
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Dichotomy BetweenVariable / Fixed Costs and Direct / Indirect Costs
VariableCosts
FixedCosts
Direct Costs
Indirect Costs
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Manufacturing Vs.Non-manufacturing costs
- Direct Material- Direct Labor- Indirect Costs
Inventoriable Costs
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
- General & Administrative- Selling- Research & Developent
- Direct Material- Direct Labor- Indirect Costs
Manufacturing Vs. Non-manufacturing costs
Period Costs
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Work In Progress
Ren CorporationBasic Cost / Product Flow Chart for Manufacturing Firm
Finished Goods Cost of Goods Sold
Indirect Manufacturing Costs
Direct Manufacturing Costs
CuttingDepartment
Expanded View?
AssemblingDepartment
FinishedDepartment
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren CorporationExpanded Cost / Product Flow Chart for Manufacturing Firm
CuttingDepartment
Direct Manufacturing Costs•Materials•Labor
Indirect Manufacturing Costs•Supplies•Supervisor’s Salary•Depreciation•Utilities•Maintenance•Insurance
AssemblingDepartment
FinishingDepartment
FinishedGoods
Costs of Goods Sold
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
5/ 15/ 94
100
$5.00
$500.00$100.00
DM = Qty Unit Cost$2,000.00 = 100 $20.00
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
5/ 15/ 94
100
$5.00
$500.00$100.00
DL = Hours Rate$1,200 = 100 $12.00
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
$400.00 $100.00 $200.00 APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
5/ 15/ 94
100
$5.00
$500.00$100.00
App OH = Hours OH Rate$100 = 50 $2.00
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
$400.00 $100.00 $200.00 APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
$5,400.00 $450.00 $1,900.00
5/ 15/ 94
100
$5.00
$500.00$100.00
Departmental Cost ( Cutting) = DM + DL + AOH $5,400 = $2,000 + $ 3,000 + $ 400
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
$400.00 $100.00 $200.00 APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
$5,400.00
$5,400.00
$450.00
$5,850.00
$1,900.00
$7,750.00
5/ 15/ 94
100
$5.00
$500.00$100.00
Cum Tot (Finishing)= Dept Cost (Finsh) +Cum Tot (Asm) $7,750 = $ 1,900 +$5,850
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
$400.00 $100.00 $200.00 APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
$5,400.00
$5,400.00
$54.00
$450.00
$5,850.00
$58.50
$1,900.00
$7,750.00
$77.50
5/ 15/ 94
100
$5.00
$500.00$100.00
Cum Unit Cost = Cum Tot Qty$77.50 = $ 7,750 100
Managerial AccountingManagerial AccountingConcepts and Empirical EvidenceConcepts and Empirical Evidence
Ren Corporation Job Costing Sheet
J ob Started: COMPLETI ON DATE :
J ob # : J OB DESCRI PTI ON : Wooden Desk
QUANTI TY : 100
Cost f or 100 Desks
100
$20.00
$2,000.00
DI RECT MATERI ALS
FI NI SHI NG
Quantity
Unit Costs
100
$1.00
CUTTI NG ASSEMBLI NG
$3,000.00 $250.00 $1,200.00
100
$15.00 $5.00 $12.00
200 50
$400.00 $100.00 $200.00 APPLI ED OVERHEAD
4/ 15/ 94
22
CUMULATI VE TOTAL
CUMULATI VE UNI T TOTAL
DEPARTMENTAL COST
$ 2 Per Direct
Labor Hour
Cost f or 100 Desks
RateDI RECT LABOR
Hours
$5,400.00
$5,400.00
$54.00
$450.00
$5,850.00
$58.50
$1,900.00
$7,750.00
$77.50
5/ 15/ 94
100
$5.00
$500.00$100.00
