Manufacturing Cost Accounting http:www'managementsupport'com

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Manufacturing Cost Accounting
http//www.managementsupport.com
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Outline

• Cost Terms, Concepts, and Classifications
• Job Order Costing
• Cost Behavior
• Cost Volume Profit
• Activity Based Costing
• Profit Planning
• Standard Costs
• Flexible Budgets and Overhead Analysis
• Relevant Costs for Decision-Making

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Product Costs - A Closer Look
Costs associated with the goods that are
completed during the period are transferred to
finished goods inventory.
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The Contribution Format
The contribution margin format emphasizes cost
behavior. Contribution margin covers fixed
costsand provides for income.
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Calculating Breakeven in Units

• Here is the information from Wind Bicycle Co.

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The Master Budget
Ending Inventory Budget
Selling and Administrative Budget
Production Budget
Direct Materials Budget
Direct Labor Budget
Manufacturing Overhead Budget
Cash Budget
Budgeted Financial Statements
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The Direct Materials Budget
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Labor Variances Summary
Actual Hours Actual Hours
Standard Hours

Actual Rate Standard Rate
Standard Rate
1,550 hours 1,550 hours
1,500 hours

6.20 per hour 6.00 per
hour 6.00 per hour 9,610
9,300
9,000
Rate variance310 unfavorable
Efficiency variance300 unfavorable
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Flexible BudgetPerformance Report
CheeseCo
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Utilization of a Constrained Resource

• Lets calculate the contribution margin per unit
  of the scarce resource, machine A1.

If there are no other considerations, the best
plan would be to produce to meet current demand
for Product 2 and then use remaining capacity to
make Product 1.