Tag: costing

Standard Costing System

See Also: Standard Costing Example Process Costing Activity Based Costing vs Traditional Costing Absorption vs Variable Costing Implementing Activity Based Costing Cost Driver Budgeting 101: Creating Successful Budgets Analyzing Your Return on Investment (ROI) Product Pricing Strategies Standard Costing System In accounting, a standard costing system is a tool for planning budgets, managing and controlling

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Standard Costing Example

See Also: Standard Costing System Standard Costing Example Here is a simple standard costing example. Let’s take a company that makes widgets. Based on historical data, a cost analyst determines that producing one widget typically requires 1 pound of raw material costing $2 dollars and 1 hour of labor costing $20 dollars. These are the

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Process Costing

See Also: Standard Costing System Activity Based Costing vs Traditional Costing Absorption vs Variable Costing Average Cost Cost Driver Process Costing Definition In accounting, process costing is a method of assigning production costs to units of output. In process costing systems, production costs are not traced to individual units of output. Costs are assigned first

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Predetermined Overhead Rate

Predetermined Overhead Rate Definition A company uses a predetermined overhead rate to allocate overhead costs to the costs of products. Indirect costs are estimated, a cost driver is selected, cost driver activity is estimated, and then indirect costs are applied to production output based on a formula using these data. Predetermined Overhead Rate Example For

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How to Manage Inventory

See Also: Days Inventory Outstanding Inventory Turnover Ratio Just In Time Inventory System Perpetual Inventory System Supply Chain and Logistics How to Manage Inventory Here are some ideas on how to manage inventory. 1. Consider the Costs of Storing Inventory There is cost in just storing inventory at your or an offsite location. Additionally, there

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Job Costing

See Also: Implementing Activity Based Costing Standard Costing System Process Costing Activity-based Costing (ABC) vs Traditional Costing Absorption vs Variable Costing Job Costing Definition Job costing is defined as a method of recording the costs of a manufacturing job, rather than process. With job costing systems, a project manager or accountant can keep track of

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Activity-based Costing (ABC) vs Traditional Costing

See Also: Activity Based Costing Standard Costing System Cost Driver Value Chain Implementing Activity Based Costing Absorption vs Variable Costing Activity Based Management Process Costing Overhead Job Costing Activity Based Costing Costing vs Traditional Costing In the field of accounting, activity-based costing and traditional costing are two different methods for allocating indirect (overhead) costs to products.

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Activity Based Costing

See Also: Activity-based Costing (ABC) vs Traditional Costing Activity Based Costing Activity based costing is a system that attempts to accurately trace indirect costs to products by allocating indirect costs to activities and then to products based on their usage of the activities. ABC is optimal when accuracy is very important and when indirect costs

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Absorption Cost Accounting

See Also: Semi Variable Costs Standard Costing System Variable vs Fixed Cost Absorption Cost Accounting Absorption cost accounting (also known as the “Cost-Plus” approach), is a method that is centered upon the allocation of Manufacturing Cost to the product. This method is important for situations when a company needs to decide if it can be

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Implementing Activity Based Costing

All of us have used cost allocation as part of our Financial Services offerings since it is required by GAAP. Cost allocation is the process of assigning common costs to ending inventory and cost of goods sold (COGS). Our goal has been to either reduce taxes or increase reported earnings, but this all depends on

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