Cost Accumulation Systems Explained
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ScribdTranslationsCost Accumulation Systems Explained
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ScribdTranslationsChapter 2
COST ACCUMULATION SYSTEM, STATEMENTS
FINANCIAL AND INTERNAL REPORTS
The accumulation of cost is nothing more than the organized collection of costs.
through a set of procedures or systems that aim to
satisfy the needs of the administration. The costs accumulate under
a periodic or perpetual system, meaning that it appears or occurs at certain intervals
frequency providing limited information about the cost of the product, due to this
limitation, only small manufacturing companies employ the
periodic cost accumulation systems.
There are 4 types of cost accumulation systems that are:
The periodic cost accumulation system, which is designed to
determinar el costo de los artículos producidos.
The perpetual cost accumulation system is designed to
provide relevant and timely information to management in order to assist in
decision making in planning and control.
The job order cost accumulation system, this system
it is more suitable than the previous ones since only one product is manufactured or
un grupo de productos según las especificaciones dadas por un cliente, es
to say, each job is tailor-made.
The cost accumulation system by processes, this system only
used when products are manufactured using production techniques
massive or continuous.
TYPES OF COSTS
Real Costs
The actual costs, also known as historical costs, are all
aquellos costos ya realizados, es decir, que ya han incurrido en el proceso de
production to ensure the manufacture of material goods and
services provided, in other words, they consist of all the expenses that
involves the manufacturing of these, which unlike the standard cost, this one
determining in advance for production is the complete opposite, since the
Actuals are historical costs that have been incurred in a previous period.
CostsStandards
They indicate what an item should cost based on
theefficiencyofworknormal ofa [Link] thesystemof the Cost
Standard are usedvaluespredetermined to register both thecostsof
thematerialsand direct labor such as those fromexpensesindirect of
manufacturing.
Comparisons of the differences between the are [Link]
Standardassigned for a specific level ofproductionand the actual costs,
in order to verify whether what has been incorporated into theproductionit has been used
efficiently, thisprocessis known as comparisonAnalysisof
variations. The Standard Costing technique is the most advanced of the
existing as it serves as an instrument ofmeasurementof efficiency.
Normal Costs
In normal costing, costs are accumulated as they are incurred,
with one exception: manufacturing overhead costs are applied to the
production based on the actual inputs (hours, units) multiplied by
a predetermined overhead application rate.
ALTERNATIVE SYSTEMS FOR PRODUCT COSTING
System: An ordered set of elements that are found
interrelated and interact with each other.
Costs: We can define it as the monetary value of the investment that it represented.
totality of the process of obtaining or putting into operation of a certain
product or service.
Absorption costing
It consists of assigning all manufacturing costs of direct materials,
direct labor and variable indirect costs and a share of the
fixed costs per unit of product.
Advantages:
The valuation of production and finished inventories is higher than that of
Direct Costing.
La fijación de los precios se determina costos fijos y [Link] universal,
usable in all cases.
Accepted by Mexican NIFS and LISR.
Three utility measures are calculated:
a) Gross Profit
Operational utility
c) Net Utility.
Although it also has its disadvantages:
It complicates the establishment of cost-volume-profit.
It complicates the provision of reliable fixed and variable cost budgets.
Financial information can provide different results in that
un mes fue mejor, aunque el desempeño sea idéntico en ventas.
Direct Costing
Assign only the variable manufacturing costs at the unit level of the product.
Only direct labor, direct labor indirect costs.
Advantages:
There are no fluctuations in unit cost.
Useful in short-term decision making.
Avoid the prorating.
Reduce factory costs that are subject to inventory.
Disadvantages:
Results in seasonal or temporary businesses are misleading.
The valuation of inventories is lower than the absorbent.
It makes one believe that the unit costs are lower.
It is not accepted by the NIFS or the LISR
FINANCIAL STATEMENTS AND INTERNAL REPORTS
Financial Statements
also referred to as financial statements, financial reports, or accounts
annual reports that institutions use to make known the
economic and financial situation and the changes it experiences
a specific date or period.
Internal reports
These can take many forms and are much less restricted than
the external financial statements, which essentially present the result of
costing of products according to a restrictive set of principles
generally accepted accounting.
Typically, financial statements should be prepared annually for the
shareholders, the nature of the reports and the content are determined by
the management forms the basis of the annual reports.