Mamagerial Accounting Chacpter 3 Ppt

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Chapter 3
Costing and

© 2010 McGraw-Hill Ryerson Ltd.


Learning Objectives
1. Discuss the role of product and service
costing in manufacturing and
nonmanufacturing firms.
2. Diagram and explain the flow of costs
through the manufacturing accounts
used in product costing.
3. Distinguish between job-order costing and
process costing.
© 2010 McGraw-Hill Ryerson Ltd.


Learning Objectives (con’d)
4. Compute a predetermined overhead rate, and
explain its use in job-order costing for job-shop
and batch-production environments.
5. Prepare journal entries to record the costs of
direct material, direct labor, and manufacturing
overhead in a job-order costing system.
6. Prepare a schedule of cost of goods
manufactured, a schedule of cost of goods sold,
and an income statement for a manufacturer
using a normal costing system.
© 2010 McGraw-Hill Ryerson Ltd.


Learning Objectives (con’d)
7. Demonstrate the process of project
costing used in service industry firms
and nonprofit organizations.
8. Apply the two-stage allocation process
used to compute departmental overhead
rates (Appendix).

© 2010 McGraw-Hill Ryerson Ltd.


Learning Objective 1
Product and Service Costing
Our focus ranges from financial statement costs
to cost for operations.

Product costs are
used to value
inventory and to
compute cost of
goods sold.

Accounting and
Cost Management
Product costs are
used for planning,
control, directing,
and management
decision making.
© 2010 McGraw-Hill Ryerson Ltd.


Product and Service Costing
There is a growing need also for product
costing information in relationships between
firms and various outside organizations
e.g. utilities, hospitals.

© 2010 McGraw-Hill Ryerson Ltd.


Learning Objective 2
Flow of Costs in a Manufacturing Firm
ork-in-Process Inventory

Direct m
aterial cost...
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