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Notes On Item Costs

Cost management supports four perpetual costing methods: standard costing, average costing, FIFO costing, and LIFO costing. Different costing methods can be used for different organizations. A cost structure is composed of organizations, cost elements, activities, basis types, and general ledger accounts. Product costs are the sum of elemental costs, which include material costs from bills of material as well as material overhead costs calculated as a percentage of total cost or as a fixed charge.

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25 views1 page

Notes On Item Costs

Cost management supports four perpetual costing methods: standard costing, average costing, FIFO costing, and LIFO costing. Different costing methods can be used for different organizations. A cost structure is composed of organizations, cost elements, activities, basis types, and general ledger accounts. Product costs are the sum of elemental costs, which include material costs from bills of material as well as material overhead costs calculated as a percentage of total cost or as a fixed charge.

Uploaded by

soiree
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Costing Methods

Cost Management supports four perpetual costing methods:

Standard Costing,
Average Costing,
FIFO Costing
LIFO Costing.

You can use Average Costing for one organization and Standard Costing for another
Organization,

Cost Structure
A cost structure is the collection of definitions and methods used to
cost inventory, bills of material, and work in process. The cost
structure is composed of:

Organizations
Cost organizations and shared costs
Cost elements
Subelements
Activities
Basis types
General Ledger accounts

Cost Elements
Product costs are the sum of their elemental costs. Cost elements are
defined as follows:
Material ----The raw material/component cost at the lowest level of the bill of
material determined
from the unit cost of the component item.

Material
Overhead

The overhead cost of material, calculated as a percentage of the total


cost, or as a fixed
charge per item, lot, or activity. You can use material overhead
for any costs attributed
to direct material costs. If you use Work in Process, you can also
apply material
overhead at the assembly level using a variety of allocation
charge methods.

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