Introduction
Accounting and finance are two different things and most of the people have been regarded them as similar things. Accounting is the name to record the day to day transaction of a company, while finance is the name of utilizing the funds of an organization at a place from where the likelihood of earning would be on a higher place. The concept of accounting and finance is totally different with each other but most of the people regarded both of them as single and identical one. Accounting is the name of to record the day to day transaction of a company, while finance is the name of utilizing the funds of a company at a place from where the stance of using the funds would be great. Both of these departments are essential for a company. The financial impact of an organization tells and reveals numerous things regarding a company in total (Drury, 2008, pp. 67-88). The main perspective of this assignment is to analyze the importance of costing. There are three different tasks which have to be completed accordingly and all of the tasks pertain to cost accounting.
Job costing is mainly a cost accounting tool or technique which is applied on such process where every job is contradictory to each other and all are in line to meet the customer’s requirement. More specifically, it is the method, where the time, goods and expenses are incurred in particular project. Job Costing is usually performed through software to underline certain provisions like financial resources, forecasting, income and work related expenditure that are associated to carry out specific task (Vanderbeck, 2012, pp. 116-129). Job order costing is deemed to be a significant instrument for the ones who are committed in jobs like construction or the entire phenomenon of manufacturing goods tracking in separate batches. On the other hand, Process costing is another model that is used in cost accounting for the allotment and accumulation of funds in manufacturing process in terms of direct and indirect cost for each unit produced. It is totally differ from job order costing as the organizations are usually employed it when the mass identical units are produced significantly through multiple processes while, the reverse approach would be applied in job costing scenario (Vanderbeck, 2012, pp. 116-129). As each unit is substantially the same so as a result, each unit will get same amount of cost that is incurred in every manufacturing unit. Oil refineries, paper mills and food processing enterprises are some of the businesses where process costing technique is implemented. Service costing may also be termed as operation or function based costing. It is a costing methodology whose key purpose is to track the cost regarding services provided that is associated with manufacturing process. It is another tool of accounting for establishing services cost. The service may be any manner such as maintenance, cafeteria, consultancy and others. Generally, it has a part in nearly every process costing and is utilized by every organization who is engaged in providing services rather manufacturing of goods (Hansen and Mowen et al., 2007, pp. 118-137). In order to find out the allocation of funds over each service, it is important to note down all the expenditures integrated to concerned service. The usage of service costing is comprised under two categories, external services consist of such services offered by company in service sector encompasses with transport services, express service. Whereas, internal services are usually referred to services acquire by departments of an organization for instance Lorries or containers used in distribution section, company’s canteen etc.
Cost accounting is one of the most important provisions which come under the umbrella of accounting and finance and its concepts could be extremely worthwhile. In this particular section of the report, it is required to analyze different costing technique of Slippers Inc.
- It is clearly mentioned that Before Work in Process (BWIP) slippers were 50,000, while went to a level of 700,000 which is Ending Work in Process (EWIP)
- Equivalent number of Slippers produced is 700,000 + 50,000 = 750,000
- Cost per slipper is (700,000 / 900,000) = 0.77
- Production Cost of the Slippers transferred out is 900,000 which is for 700,000 units, while 140,000 are still in the hands in the company as EWIP
- Weighted Average Units Slippers are (700,000 + 50,000) / 2 = 375,000
- Cost Per Slipper = 375,000 / 900,000 = 0.42
- The total inventory of the company is 140,000 and it is found that the financial position of the company is perfect
- Reconcile cost of slippers is ( 0.77 + 0.42) / 2 = 0.595
Manufacturing cost analysis could be some of the major ones from the standpoint of an organization. Organizations always try to minimize the level of cost accordingly in order to increase the financial belongings effectively (Matz, 2014, pp. 385-411). Manufacturing cost requires including every cost like material, labor and overhead. In this particular analysis, it is found that Bedroom Inc, which is in the business of manufacturing of bedroom furniture, has two different clients, which particularly are regular and Executive. For Regular Clients, the company is intending to produce 5,000 units, while for Executive Class, they are manufacturing around 100 units. There are number of questions, which have to be consumed accordingly and effectively at the same time. There are four different questions which have to be analyzed in this particular analysis
- The direct manufacturing cost has been divided into two different sections which particularly are regular and executive and the total Direct Manufacturing cost would be 600,000 + 25,000 = $ 625,000
- Indirect Manufacturing cost of the three activities are, For Material Handling (100,000 * 0.25) = 25,000, Cutting, 100,000 + 2.5 = 250,000, Assembly (7,500 * 25) = 187,500
Total Indirect Cost of the three activities are
= 200,000 + 25,000 = 225,000
= 2,000,000 + 250,000 = 2250,000
= 2,000,000 + 187, 500 = 2187500
- It is found that the cost of executive unit is more than that of the cost of Regular bedroom.
Conclusion
Organization is referred to a place wherein people belong to different demographics work together for the achievement of a single and pre-specified goal. Among number of things which plays an integral role as far as generating net income for an organization is concerned, operational asset is one of them. The main perspective of this assignment is to analyze the importance of costing. From the analysis, it is found that costing things are important and from this angle, it is found that this thing could be effective. All of the tasks have been completed accordingly.
Reference List
Vanderbeck, E. 2012. Principles of Cost Accounting. 2nd ed. New York: Cengage Learning.
Matz, A. 2014. Cost Accounting: A Managerial Emphasis. 13th ed. London: routledge.
Drury, C. 2008. Management and Cost Accounting. 3rd ed. Miami: Cengage Learning EMEA
Hansen, D., Mowen, M. and Guan, L. 2007. Cost Management: Accounting and Control. Perth: Cengage Learning.
