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Cost Accounting: © 2013 Prof. Dr. Dr. Herbert Nosko 32-016

industrial business management

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50 views16 pages

Cost Accounting: © 2013 Prof. Dr. Dr. Herbert Nosko 32-016

industrial business management

Uploaded by

khang np
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Cost Accounting

Fixed Costs: They remain unchanged in total for a given time period despite wide
changes in the related level of output. They become progressively
smaller per unit if production increaseds.
Examples: Depreciations; interests; etc.

Variable Costs:They change in total in proportion to changes in the related level of


output. In this case the variable costs per unit remain the same.
Examples: Direct material costs; piecework labor costs; etc.

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Cost Accounting
Direct Costs: They are related to a specific cost object.

Indirect Costs: Also called: Overhead


They are not related to a prticular unit of product.

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Cost Accounting
I. Cost Element Accounting

Cost Element Accounting registers all the different cost elements


within a period.

Personal Costs
Material Costs
Depreciations

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Cost Accounting
Depreciations:

Straigt-Line-Depreciation:

The depreciation expense during each year of estimated service life of an asset
is an equal fraction of the depreciable costs of the asset.

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016epreciation


Cost Accounting
II. Cost Center Accounting

Cost Center Accounting gives information about the costs occuring


in a cost center.
Only overhead excpenses are taken into account.
There are Supporting Departements and Operating Departements.
The costs of the supporting departements have to be transferred to
the operating departements.

Cost Allocation Method.

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Cost Accounting
III. Product Cost Accounting

Product Costing Scheme:

Direct material costs


+ Material overhead
+ Proporional manufactoring costs
+ Manufactoring overhead expenses
+ Special direct manufactoring costs
= Costs of production

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Cost Accounting
III. Product Cost Accounting

Costs of Production
+ Administrative costs
+ Sales and distribution costs
+ Special direct sales costs
= Cost price

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Capital Investment Decisions

Methods that ignore the time value of money

Payback Method
Accounting Rate of Return

Discounted Cash-Flow Methods

Net-Present-Value (NPV)
Internal Rate of Return (IRR)

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Capital Investment Decisions

Methods that ignore the time value of money

Payback Method
Payback Period = Net Initial Inverstment : Annuity

Accounting Rate of Return


Accounting Rate of Return = Average annual pofits :
Average Investment

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Capital Investment Decisions

Discounted Cash Flow Methods

NPV Net Present Value

IRR Internal Rate of Return

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Economic Order Quantity

Total annual demand


Cost per purchase order
Purchase price per unit
Annual holding costs (per cent rate)

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Economic Order Quantity

Annual Costs over Order Quantity

Annual ordingering costs


Annual holding costs

= Total relevant costs

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Re-order Point

Re-order point The point in time at which an order for materials should be placed
in order to obtain additional stocks in time

Lead time the time that elapses between placing an order and the delivery
of the ordered goods

Safety stock Stock maintained in order to protect a company from conditions


of uncertainty

Re-order point Safety stock + (lead time x daily usage)

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


Ratios

Turnover Rate: Total annual demand : Average stock (in units)

Average time of storage: 360 days : Rate of turnover

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


ABC Classification Method

Item Usage per year (units) Unit price

I 3.000 6.-
II 11.000 0,10
III 2.000 1,05
IV 20.000 0,04
V 4.000 0,75

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016


ABC Classification Method

Item based on rank Total annual purchase cost Category

I
V
III
II
IV

© 2013 Prof. Dr. Dr. Herbert Nosko www.nosko.cc 32-016

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