Cost of production report (CPR) questions and answers

Question No. 1 The MST Manufacturing Company produces a single product that goes through one process only. The manufacturing cycle usually takes 18 days. This means that there will generally be some work in process inventories at the end of each month. The company started its manufacturing operations on 1st January and the cost of …

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Classification of Cost

Cost accounting involves collecting, classifying, recording and appropriate allocation of expenditure for determining the costs of products or services. After costs have been collected, these are properly classified for their identification with cost centers or cost units. Costs have different features or characteristics. Costs are grouped or classified according to their common characteristics. The process …

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Difference between controllable and uncontrollable costs

All costs are controllable by someone in the organization, so the difference between controllable and uncontrollable costs depends upon a point of reference. Time also plays a part in controllability. Those costs which can be easily made easily and effectively controlled by someone made responsible for the same are called Controllable Costs whereas those which …

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Difference between direct costs and indirect costs

Direct Costs Definition Direct costs are the costs that can be conveniently and economically identified with some cost objectives or can be associated with some particular segments under consideration. Indirect Costs Definition Indirect costs are the costs that cannot be conveniently and economically identified with cost objectives and must be apportioned to the cost objectives …

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Difference between product costs and period costs

In a manufacturing organization, a distinction is made Between product costs and period costs. Product Costs Product costs (also known as inventoriable costs) are costs assigned to products. These costs are identified as being either direct materials, direct labor or factory overheads and are traceable or assignable to products. They become an expense only when the …

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Committed and Discretionary Fixed Costs

Fixed costs can be classified as “committed costs” or “discretionary costs” depending on their immediate impact on the organization. Committed Costs Committed fixed costs (also known as capacity costs) are costs that the company is required to incur, to maintain the current production capacity. These costs result from long-range decisions made by top management about …

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What is Process costing?

Process Costing – Definition A process costing system accumulates the costs of a production process and assigns them to the products that comprise the organization’s output. Production report has to be made under process costing system. The method of process costing is applied to ascertain the cost of production in those industries, where a product …

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