Cost accounting

Author: Cheng Jian
Publisher:
Publish Date: 2004-08-01
Features: [Excerpt:]
Thought Questions
1. How is the actual cost of materials received by a company constituted in different ways?
2. When valuing materials at actual cost, how is the value of issued materials determined? What impact do different determination methods have on product costs and the valuation of ending materials?
3. When valuing materials at planned cost, how is the planned cost of issued materials adjusted to actual cost?
4. How is the allocation and accounting of material costs performed?
5. What are the special characteristics of the allocation and accounting of power costs?
Practice Questions
1. Multiple Choice
1) Which of the following does not constitute the actual cost of materials?
A. Tariffs
B. Freight
C. Transit losses
D. In-transit
2) A credit balance in the material cost variance account indicates:
A. Savings variance
B. Excess variance
C. Net savings variance
D. Net excess variance
3) When valuing materials at actual cost, which method makes the value of ending inventory materials closer to the market price?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted average
D. Specific identification
4) When valuing materials at actual cost, which method makes the value of ending inventory materials deviate from the market price?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted average
D. Specific identification
2. Multiple Answers
1) The actual cost of self-manufactured materials includes:
A. Consumed material costs
B. Processing fees paid
C. Labor costs paid
D. Round-trip freight paid
E. Manufacturing overhead allocated
2) Factors to consider when setting material planned costs include:
A. Average actual cost in the base period
B. Price trends in the planned period
C. Freight cost trends in the planned period
D. Actual cost in the planned period
E. Convenience of calculation
3) Standards for allocating purchased power costs include:
A. Meter records
B. Actual working hours
C. Planned working hours
D. Machine power hours
E. Power consumption quotas
4) Methods for amortizing low-value consumables include:
A. Immediate amortization
B. Amortization in installments
C. Periodic amortization
D. 50/50 amortization
E. Scrap amortization
3. True or False
1) The actual cost of purchased materials includes all expenses incurred during the purchasing process. ( )
2) The material cost variance account is a contra-asset adjustment account for the raw materials account. ( )
3) The cost variance of issued materials is always recorded on the credit side of the material cost variance account. ( )
4) The material cost variance for processed materials is calculated based on the material cost variance rate of the previous month. ( )
5) Purchased power costs are typically allocated to relevant cost centers before payment. ( )
In job-order production, since products are organized based on customer orders or batches, the order or batch can be used as the cost calculation object.
2) Impact of production type on the cost accounting period.
In mass production, products are produced continuously or repeatedly. To meet the needs of financial reporting, costs are calculated monthly. In job-order production, production cycles for different batches vary, and production is infrequent or non-repetitive. Costs can be calculated based on each batch's production cycle, making the cost accounting period inconsistent with the accounting reporting period.
3) Impact of production type on the process of allocating production costs to product costs.
The process of allocating production costs to product costs refers to how material, labor, and manufacturing overhead costs incurred during production are accumulated and distributed to form product costs. Different production types have distinct processes.
- In mass production of a single product or job-order production, the cost calculation object is the product itself. All production costs can be directly allocated to the product.
- In mass production of multiple products, the cost calculation object remains the product type. Costs directly attributable to a product are allocated to it, while unattributable costs are distributed based on certain standards.
- In batch production, the cost calculation object is the production batch. If product types or batches are numerous, costs directly attributable to a batch are allocated to it, while unattributable costs are distributed based on standards.
- In multi-step mass production, the cost calculation object is typically the production step. Costs are allocated to each step's semi-finished product cost and progressively transferred as semi-finished products move. For companies calculating semi-finished product costs, costs accumulate like a snowball to form finished product costs. For those not calculating semi-finished product costs, costs are aggregated like a "salad" to form finished product costs.
4) Impact of production type on allocating production costs between finished products and work-in-progress.
In single-step production, the production process is continuous, with short cycles and minimal work-in-progress. Costs are typically fully allocated to finished products, with no need for allocation between finished products and work-in-progress.