Entity needs to maintain inventory at appropriate level keeping balance in contrasting factors inventory levels e.g if large amount of inventory is ordered ordering cost is reduced but opportunity cost is much increased , money tied could be used for other profitable investments. So keeping all factors in mind entity needs appropriate models to be …
Inventory Control Models Read More »
Small businesses maintain accounts for individual job orders .Due to lack of huge manufacturing orders they find ease to maintain for cost accounts on basis of separate orders .this senarios is the main theme behind job order costing. Accounts for job orders help SMEz to trace separate material , labor and other costs and certain …
According to IAS2 inventory should be measured at lower of COST and NET PRESENT VALUE Net realizable value(NPV) is the estimated selling price(SP) in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. COST of inventories comprise all costs of purchase, costs of conversion …
Materials Purchase Cycle When a department stock level drops down , the particular department issues purchase request to purchase department in purchase requisition form stating stock item required with specific quantity and other specifications On receipt of requisition form , purchase department place ORDER with supplier in purchase order form. This form contains all …
Cost behavior Fixed cost Variable costs Semi variable costs Stepped fixed Fixed Cost This cost remains fixed over certain period of time irrespective of units produced. For example rent of building .It’s important to note that fixed cost remains fixed for certain level of activity , after which it increases Although total cost is …
Cost classification is arranged in groups on suitable basis. Costs can be classified on different basis: Element Function Nature Classification on basis of Element Material –materials purchase for production or non- production purpose, direct or in direct material Labor – all salaries and wages paid to workforce whether work specifically for materials as direct labor …
Management Accounting Management also known as cost accounting is system of identifying, recording, analyzing and presenting data relating to organization’s own products/services, with main focus on entity’s internal system, cost accounting helps the helps at three namely planning, control and decision making: Management accounting gathers cost information and relates it to cost objects, cost centers, …
Differences between FINANCIAL and MANAGEMENT ACCOUNTING Read More »
Operational Planning Planning by supervisors of Information need for daily tasks Tasks specific information Short term requirement Day to day planning Tactical Planning Short term planning by juniors managers of resource allocation decisions both short term and long term by managers of departments less detailed than strategic planning Strategic Planning long term planning …
At planning level management accounting helps to entity in making budgets relating to materials, labor, and other costs. It helps entity to set target costs in manufacturing and target selling prices keeping in mind market factors like laws, economic conditions and competitors. Data gathered by cost accounting helps entity to make important decisions. These …
Data vs Information “Raw facts and figures constitute DATA”. As the data in not arranged in some standard form so it doesn’t give any meaning to its user. For proper understanding, data needs to be arranged in some meaning full form so that it can be useful to users. Arranged data is called information. …