Month: September 2018

What is cost?

Cost Definition Cost is the sacrifice made, usually measured by the resources given up, to achieve a particular purpose. A sacrifice made in order to obtain some goods or services Costs are not always Expenses. Some costs are Assets, other costs are Expenses Expenses are Expired (Used up) Costs Eventually, costs will become expenses. Explanation …

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Income statement

Definition of the Income Statement The basic objective of the income statement is to describe the income achieved by the reporting entity during a specific accounting period. Objectives of the income statement Experience has shown that the rules for measuring the amount of income are complex and far from unanimously accepted among users and preparers. …

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Job Costing

What is Job Costing? – Definition Job costing is a system in which costs are assigned to batches or job order of production. Job cost sheet has to be made under this costing system. Job costing is the method of costing which applied to ascertain the costs of specific jobs or work -orders which are treated …

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Job cost sheet

Definition and explanation Job cost sheet is a complete sheet, which is prepared by the factory accountant for every job started in the factory. It is a primary document for accumulating all costs related to a particular job. In a job order costing system, we maintain a job cost sheet for each job. It tells …

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Computation of unit cost under activity-based costing

Activity-Based Costing Activity Based Costing uses cost drivers to assign the costs of resources to activities and unit cost as a way of measuring output. Steps to implement Activity-based Costing (ABC) The four steps to activity-based costing ABC implementation 1. Identify activities of activity-based costing Perform an in-depth analysis of the operating processes of each …

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Difference between actual costing and normal costing

Normal Costing: Normal costing refers to a product costing system where actual direct material, actual direct labor and applied manufacturing overhead costs are added to work in process inventory. Actual Costing: Actuar costing system refers to a product costing system where actual direct material and actual direct labor and actual manufacturing overhead costs are added …

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Joint product costing

Joint products are produced simultaneously by a common process or series of processes, with each product possessing more than a nominal value in the form in which it is produced. The definition emphasizes the point that the manufacturing process creates products in a definite quantitative relationship. An increase in one product’s output will bring about …

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By-products

Definition and Explanation The term by-products is generally used to denote one or more products of relatively small total value that are produced simultaneously with a product of greater total value. The product with the greater value, commonly called the “main product”, is usually produced in greater quantities than the by-products. Ordinarily, the manufacturer has …

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