Lecture 4CA
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Transcript of Lecture 4CA
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7/23/2019 Lecture 4CA
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FINANCIAL STATEMENTS :THE BASES FOR PLANNINGAND CONTROL
Lecture # 4
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7/23/2019 Lecture 4CA
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DETERMINING PRODUCT COSTS AND PRICING
Cost accounting is used to determineproducts costs and help ithmar!eting decisions"
#" Determining the selling price o$ aproduct"
%" Meeting competition"
&" 'idding on contracts"(" Anal)*ing pro+ta,ilit)"
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7/23/2019 Lecture 4CA
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P-ANNING AND CONTRO-
Planningis the process o$ esta,lishingo,.ecti/es or goals $or the +rm anddetermining the means ,) hich the +rmill attain them" E0ecti/e planning is$acilitated ,) the $olloing1
#" Clearl) de+ned o,.ecti/es o$ the manu$acturingoperation"
%" A production plan that ill assist and guide the
compan) in reaching its o,.ecti/es"
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P-ANNING AND CONTRO- 2CONT"3
Controlis the process o$ monitoring thecompan)4s operations and determininghether the o,.ecti/es identi+ed in the
planning process are ,eing accomplished"E0ecti/e control is achie/ed through the$olloing1
#" Assigning responsi,ilit)"
%" Periodicall) measuring and comparing results"&" Ta!ing necessar) correcti/e action"
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RESPONSI'I-IT5 ACCOUNTING
Responsibilit a!!o"ntingis theassignment o$ accounta,ilit) $or costs orproduction results to those indi/iduals ho
ha/e the most authorit) to in6uence them" A !ost !enteris a unit o$ acti/it) ithin the
$actor) to hich costs ma) ,e practicall) ande7uita,l) assigned" The manager o$ a cost
center is responsi,le $or those costs that themanager controls"
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REPORTING
Cost an# pro#"!tion reports$or a costcenter re6ect all cost and production dataidenti+ed ith that center"
The per$or%an!e reportill includeonl) those costs and production data thatthe center4s manager can control"
A /ariance is the $a&orableor
"n$a&orabledi0erence ,eteen actualcosts and ,udgeted costs"
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E8A-UATING ANNUA- RESU-TS TO ORIENTT9E OUTSIDERS
Current ratio Acid : test ratio
Income ,e$ore income ta; as a ED =ACTOR5 O8ER9EADS
Salaries o$ production e;ecuti/es Depreciation
Propert) ta;
Patent amorti*ation ?ages o$ securit) guards and +re
+ghters
Maintenance and repairs o$,uilding and grounds
Insurance@ propert) and lia,ilit)
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7/23/2019 Lecture 4CA
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8ARIA'-E =ACTOR5 O8ER9EADS
Supplies =uel Poer Small tools
Spoilage sal/age and reclamatione;penses
Recei/ing costs 9auling ithin plant Ro)alties Communication costs O/ertime premium
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SEMI 8ARIA'-E =ACTOR5O8ER9EADS Super/ision
Inspection Pa)roll department ser/ices
Personnel department ser/ices =actor) oBce ser/ices
Materials and in/entor) ser/ices Cost department ser/ices
Maintenance and repairs o$ machiner) ande7uipment
Compensation insurance
9ealth and accident insurance
Pa)roll ta;es
Industrial relations and emplo)ees4 el$are e;penses 9eat light and poer
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7/23/2019 Lecture 4CA
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CONTRO--A'-E AND UNCONTRO--A'-E COSTS
Controllable !osts: Costs that can ,e controlled or hea/il) in6uenced ,)
the manager"
'n!ontrollable !osts: Costs that a manager cannot in6uence signi+cantl)"
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7/23/2019 Lecture 4CA
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MANU=ACTURING OPERATIONSAND MANU=ACTURING COSTS
(ob S)op: -o production /olume little standardi*ation one o$
a !ind product"
Bat!): Multiple products lo /olume
Asse%bl line: A $e ma.or products higher /olume"
Mass customi*ation1
9igher production /olume man) standardi*edcomponents customi*ed components o$components"
Contin"o"s *o+1 9igher production /olume highl) standardi*ed
commodit) products"
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MORE COSTC-ASSI=ICATIONS
Opport"nit !osts: Is de+ned as a ,ene+t that is sacri+ced hen the choice o$
one action preludes ta!ing an alternati/e course o$ action"
O"t o$ po!,et !osts1 Costs that re7uire pa)ment o$ cash or other assets as a
result o$ their incurrence" S"n, !osts: Costs that ha/e ,een incurred in the past"
The) do not a0ect $uture costs and cannot ,e changed ,)an) current or $uture action"
Irrele/ant to all $uture decisions"
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MORE COSTC-ASSI=ICATIONS
Di-erential !osts: It is the amount ,) hich the cost di0ers under to
alternati/e actions"
In!re%ental !osts: The increase in cost $rom one alternati/e to another"
Marginal !osts: Additional costs incurred hen an additional unit is
produced"
A&erage !osts: It is the total cost $or hate/er 7uantit) is
manu$actured di/ided ,) the num,er o$ unitsmanu$actured"
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Standard costs1 Pre determined costs $or direct materials direct la,or
and $actor) o/erhead" The) are esta,lished ,) using in$ormation
accumulated $rom past e;perience and data secured$rom research studies"