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needs of product costing system
Product cost accuracy is a term used in the accounting field. It essentially defines the amount of money it actually costs to produce a product.
variable costing
Standard costing is process of determining the standard price require to produce one unit of product while actual costing system uses the actual prices of manufacturing one unit of product.
Activity Based Costing (ABC) is one of several approaches to job costing. Traditionally, job costing has been measured by allocating all direct costs associated with a certain job as well as 'a fair share' (usually based on direct labour hours or volume) of the total indirect costs/overheads incurred across all product lines. This traditional approach was appropriate to production that was labour-intensive, attracted a low level of overheads and enjoyed a fairly uncompetitive market. In more modern times however, production is increasingly machine-driven, overheads are higher (due to more rapid depreciation of equipment, maintenance and electricity costs) and products compete in a global market. Activity Based Costing seeks to identify the causes (or drivers) of indirect costs and apply them more selectively to particular 'activities'. This means that product lines which are simple and quick to make in large quantities will be 'costed' more competitively, only including overhead costs 'caused' by that particular job; while smaller more specialised product lines will be costed at a higher rate. Under a traditional job costing approach which allocates overheads in proportion to volume, the simple product line producing large quanities would have attracted a far greater share of the indirect costs making it less competitive in the marketplace.
Job order costing is more appropriate than process costing when the product being produced is a custom product
needs of product costing system
marginal costing is also known as contribution costing. its a costing method that's includes only a variable cost of a product no attempt is made to allocate or appropriate fixed costs to cost centers. the setting of prices is basically based on the variable costs of making a product. if the prices are set above this unit cost then each item sold will make a condition to fixed costs. on the other hand absorption costing or full costing is an approach to the costing of products that allocated all costs of production to cost centers. The aim is to ensure that all business costs are covered.
Product cost accuracy is a term used in the accounting field. It essentially defines the amount of money it actually costs to produce a product.
variable costing
Standard costing is process of determining the standard price require to produce one unit of product while actual costing system uses the actual prices of manufacturing one unit of product.
Target costing refers to the design of a product and the processes used to produce it , so the ultimately the product can be manufactured at a cost that will enable the firm to make a profit when product is sold
Activity Based Costing (ABC) is one of several approaches to job costing. Traditionally, job costing has been measured by allocating all direct costs associated with a certain job as well as 'a fair share' (usually based on direct labour hours or volume) of the total indirect costs/overheads incurred across all product lines. This traditional approach was appropriate to production that was labour-intensive, attracted a low level of overheads and enjoyed a fairly uncompetitive market. In more modern times however, production is increasingly machine-driven, overheads are higher (due to more rapid depreciation of equipment, maintenance and electricity costs) and products compete in a global market. Activity Based Costing seeks to identify the causes (or drivers) of indirect costs and apply them more selectively to particular 'activities'. This means that product lines which are simple and quick to make in large quantities will be 'costed' more competitively, only including overhead costs 'caused' by that particular job; while smaller more specialised product lines will be costed at a higher rate. Under a traditional job costing approach which allocates overheads in proportion to volume, the simple product line producing large quanities would have attracted a far greater share of the indirect costs making it less competitive in the marketplace.
In Target costing system, comapnies tries to achieve target prices by reducing those parts of activity which are not increasing the value of product. Life cycle costing is a concept in which companies tries to read the overall process of development of product life cycle and tries to minimise the cost at area where it is not required or not increase the value of product.
An activity-based absorption costing system defines the cost by how many activities a product unit uses. A traditional absorption costing system defines the cost by how much money went into making the product unit.
All cost associated with a particular product.
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.