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Which is more important from the standpoint of inventories costing the flow of goods or the flow of costs?
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How do variable costing and absorption costing differ?
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.
Are selling and administrative expenses treated as product costs or as period costs under variable costing?
Period Costs.
Explain why overcosting and undercosting product occur with treditonal costing system?
Over costing and under costing of products occurs because it uses a single cost pool for all of the indirect costs. Amounts are estimated because they are determined at the beginning of the accounting period before actual amounts are known.
What are the advantages of using normal costing?
direct prod cost: you know what the real cost will be indirect costs: still and estimate on how to spread cost but real base of total indirect costs to start from
Why is it important to separate variable and fixed costs?
it is important to separate variable and fixed costs. Another reason it is important to separate these costs is because variable costs are used to determine the contribution margin, and the contribution margin is used to determine the break-even point.
What are dormant inventories?
The costs of dormant inventories--goods not immediately convertible into cash
Define cost explain different costing methods and techniques?
It is important to have your costs and costing methods in order. This will ensure that your money is being well spent.
Features of differential costing?
The features of differential costing include residual costs, variable costs, future costs, and making choices among alternative.
Does Activity Based Costing produce an accurate costing picture?
Hi Activity Based Costing could be seen as the 'Cause-and-Effect' realtionship in the costs. If we extend this logic then we can segregate all the costs in four sections. a) Product Costs b) Customer Costs c) Business Sustaining Costs d) Cost available to use In this sense the Activity Basedd Costing gives an accurate costing picture.
How do variable costing and absorption costing differ?
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.
What is cost as a verb?
costs, costing
Direct costing as a technique of costing?
direct costing is a technique in which costs are classified as direct cost or indirect cost.
What is the difference between over costing under costing?
Over costing means charging more costs to items than it's actual cost while under costing means charging less cost then actual costs.
Difference between absorption costing AND target costing?
Target costing is when you have a goal for the project and its costs. Absorption costing is when you need to fix the excess spending.
What are the stages of accounting for costs?
direct costs,indirect costs,sunk costs, Activity based costing.
Importance of standard costing?
A valuable management tool, standard costing is part of cost accounting. Rather than using actual costs for direct material, labor and manufacturing overhead, standard costs are used to easily track variances and estimate profit.Though actual costs are still paid, standard costing is often used for inventories and cost of goods sold. The difference between standard and actual costs are known as variances. These variances are what make standard costing such a valuable practice for management. Management can quickly become aware of changes in budgeted costs by tracking the variances.When standard costing is used, you will often hear the terms unfavorable or favorable variance. This refers to changes in actual costs in relation to planned or standard costs. A favorable variance takes place when actual costs dip below standard costs. Conversely, if actual costs rise above standards, the variance is unfavorable.In regards to manufacturing companies, standard costs would first be seen as individual parts or pieces of the finished product. This means that the final standard cost will be the sum of the standard costs of each of the individual pieces of the product.
What are the limitations of absorption costing?
Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing. Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.
