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    CA1 Introduction To Cost Accounting and Control

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    The document defines cost accounting as focusing on techniques for determining costs for planning, controlling activities, and decision making. It distinguishes between merchandising and manufacturing operations, with the former buying ready products and the latter converting raw materials through production.

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    CA1 Introduction To Cost Accounting and Control

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    The document defines cost accounting as focusing on techniques for determining costs for planning, controlling activities, and decision making. It distinguishes between merchandising and manufacturing operations, with the former buying ready products and the latter converting raw materials through production.

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    CA1 Introduction to Cost Accounting and Control

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    The document defines cost accounting as focusing on techniques for determining costs for planning, controlling activities, and decision making. It distinguishes between merchandising and manufacturing operations, with the former buying ready products and the latter converting raw materials through production.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    58 views8 pages

    CA1 Introduction To Cost Accounting and Control

    Uploaded by

    hellokittysaranghae
    The document defines cost accounting as focusing on techniques for determining costs for planning, controlling activities, and decision making. It distinguishes between merchandising and manufacturing operations, with the former buying ready products and the latter converting raw materials through production.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    COST ACCOUNTING AND

    CONTROL
    INTRODUCTION TO COST ACCOUNTING

    Alexsander C. Ong, CPA


    Instructor
    Polytechnic University of the Philippines – Santa Rosa Campus
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING

    LEARNING OBJECTIVES
    After studying this chapter, you should be able to:
    • Define what is cost accounting
    • Explain the relationship of financial, cost, and management
    accounting
    • Distinguish between merchandising and manufacturing operations

    Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING

    COST ACCOUNTING
    ❖ It is a discipline that focuses on techniques or method for
    determining the cost of a project, process or services for the purpose
    of planning and controlling activities, improving quality and
    efficiency, and for making decisions.

    Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING
    RELATIONSHIP OF COST ACCOUNTING,
    FINANCIAL ACOUNTING AND MANAGEMENT
    ACCOUNTING

    Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING
    MERCHANDISING VS. MANUFACTURING
    OPERATIONS Merchandise companies buy products that
    are ready for resale to customers.

    Merchandise bought are debited to


    Purchases (under Periodic Method) or
    Merchandise Inventory (under Perpetual
    Method). The sum of the Beginning
    Inventory and Net Purchases is called the
    Cost of Goods Available for Sale.

    At the end of the accounting period, the


    cost of any unsold items are reported as
    Ending Inventory in the Balance Sheet.
    While the cost of sold items are expensed
    and reported as the Cost of Goods Sold in
    the Income Statement. Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING
    MERCHANDISING VS. MANUFACTURING
    OPERATIONS Manufacturing companies buy raw materials and convert
    it to finished products. These raw materials are
    converted through labor and by incurring factory
    overhead costs (indirect manufacturing costs).

    Materials bought are stored until they are ready for use
    in the production. When the production department
    requests for materials, the materials are then pulled out
    from the storage and put in production area for
    processing.

    The cost of direct materials used in the production along


    with the cost of direct labor and factory overhead applied
    are called the Total Manufacturing Cost. The cost of
    these three elements are debited to the Work in Process
    Inventory. The cost of any unused materials is reported
    as Materials Inventory in the Balance Sheet.
    Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING
    MERCHANDISING VS. MANUFACTURING
    OPERATIONS At the end of the period, items that are unfinished
    or are still in process are reported under the Work
    in Process Inventory in the Balance Sheet. The
    products that were finished processing during the
    period are then transferred to the Finished Goods
    storage. The cost of the finished products during the
    period is called the Cost of Goods Manufactured and
    are debited to the Finished Goods Inventory.

    At the end of the period, the cost of unsold finished


    goods is left under the Finished Goods Inventory
    account. The cost of the sold items is expensed and
    reported under the Cost of Goods Sold in the
    Income Statement.

    Ong. A.
    COST ACCOUNTING AND CONTROL
    INTRODUCTION TO COST ACCOUNTING

    REFERENCES
    De Leon Jr., Guillermo M. & De Leon, Norma D. Cost Accounting (2012
    Edition). GIC Enterprises & Co., Inc.

    Ong. A.

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