20. GARMENT COSTING
Cost accounting is a structure of determining the costs of services or products. It has fundamentally created to address the issues of administration. It gives exhaustive information about the cost to various levels of administration for proficient execution of their operations. Finance accounting gives data about profit, loss etc., of the combined activities of the business. It doesn't give the information with respect to expenses by departments, products and processes so on. Financial accounting does not completely consider the losses because of idle time, idle plant capacity, labour inefficiency, poor raw materials, etc. Cost accounting deals with the determination of past, present and future expenses of products produced
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Costing includes Determination of variable and non-variable costs of materials and labor required to manufacture a product Over- head required to operate the industry and General operating cost.
For efficient costing, information related cost must be specific and accurate. Inaccurate costing could lead to cancellation of an order having good profit potential. Management in an organization utilizes costing to estimate The producibility of a style within an established price range, The profit potential in a style, and To decide whether a style could be added to the line or not.
Costing could also be used to defend the procurement of new machinery or the extension of production facilities. The method of costing indicates the systems and processes involved in the estimation of costs and it depends on the type and nature of manufacturing activity (Chuter 1995). The two basic methods of costing are
1. Job costing - This is the cost estimation for a particular work order where the estimation of cost was carried out
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So increase in width by 100% increases the cost by 80%. Further, the MOQ will also influence the cost (Pareek, 2015, Cooklin 2006; Jacob 1998). Trims charges are normally determined as for the various kinds of sourcing and mode of transportation. If shipment is by air then the trim cost + 15-25% is quoted to buyer, depending on the freight charges. If shipment is by sea then trim cost + 10-15% is quoted to buyer based on freight charges. If it is domestic, then the local taxes are added. Other charges included during the costing by merchandiser are shown in Table 20.2. An example of material cost sheet has been shown in Table
Since historical cost method is the dominant method used in my undergraduate accounting classes, I am not as familiar to fair value model as to historical cost. As far as I know, both historical cost method and fair value model have its merits and demerits, and users of financial reports hold different purposes. Thus, debates on using fair value accounting or historical cost method have lasted over a long time, and it seems like it is not possible to end. Historical cost method is criticized for
Accounting concepts and conventions as used in accountancy are the rules and guidelines by which the accountant lives. The historical cost accounting convention is an accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition. The historical cost accounting is the situation in which accountants record revenue, expenditure and asset acquisition and disposal at historical cost: that is, the actual amounts of money, or money's
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine
Introduction Management accounting is a branch of accounting, it is apply accounting and financial management principles to establish, protect, save and raise value in order to deliver this value to stakeholders of private and public enterprises (Bhimani, 2012). The aim of management accounting is to improve enterprise economic revenue, using a series of methods and processing, sorting and reporting the information of financial accounting to make the enterprise management personnel at all levels
Accounting is the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results; (Merriam-Dictionary, 2012). Cost accounting is described as the evaluating approach to the overall cost of when the business evaluates the cost that is associated with the business. Cost accounting consists of the identification, measurement, collection, analysis, preparation, and communication of financial information (Khan, 2010). In this paper, I will
Accounting Analysis Accounting analysis refers to the accounting information provided by accounting, the application of certain analytical methods, the business process and its business results of quantitative and qualitative analysis. The result of accounting analysis is the main basis for accounting forecasting and accounting examination. Note on Accounting policy (From the Emirates Airline Annual report):- -Inventory Valuation: Inventory Valuation gives the company's inventory item a monetary
Accounting is the language of economic information. Users of accounting can get economic information appropriate and effective. In this essay, there are some discussions about roles of financial and management account, then this essay will talk about relevance management accounting information for organization decision making. There are two branches of accounting, one branch is financial accounting and the other one is management accounting. All of them are useful to help users to make decision
Historical cost accounting is the accounting practice that measures a value of an asset on the balance sheet based on its acquisition cost or original cost when it is acquired by the business. For example, a building purchased twenty year ago cost RM 300,000 and is still owned by the business is still reported at RM 300,000 in the balance sheet even though the value of the building had increased. The main principle in historical cost accounting is that the asset should be report at its cost when purchased
differences can be quite large Job-order costing and process costing are two common methods for determining unit product costs Ordinarily, variable costing and absorption costing produce different net operating income figures, and the difference can be quite large. absorption costing is the most common approach to product costing throughout the world. absorption costing—the most widely used method of determining product costs—can artificially increase profits when managers choose to increase the quantity
“Academicians as well as practitioners have long debated the issue of historical cost accounting versus current value accounting. It seems like this is a never-ending story.” (Abu Bakar & Mohd.Said, 2007, p.20) Historical cost accounting The simple explanation of historical cost is assets and liabilities are required to be measured and reported at their acquisition price. While on the other hand, current cost accounting requires that assets and liabilities be measured and reported at their current
Introduction: The basic objective of accounting is to provide information that is useful in making business and economic decisions. What makes accounting information useful for decision-making? The answer is however the accounting information confirms to the qualities that should be possessed by the financial and cost & Managerial reporting. In view and addition to this, the importance of strategic cost management and costing techniques like Activity based costing should not be underestimated. This
Cost Accounting: Its role and ethical considerations Introduction: Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost Accounting and Auditing- Public Accounting Managerial accounting is concerned with the use of economic and financial information to plan and control the activities
Question 2 Apart from the accounting policies identified in this chapter, what are likely to be policies that should closely be watched by auditors and analysts for a company in the airline industry? Why have you chosen each of them? 1. Inventory accounting method. Different inventory accounting method may have different impacts on Airline company like Qantas. Due to the complexity of the aircraft system and also to ensure the airline operation safety, airlines need to devote a great deal of manpower
business, management, accounting techniques, high technologies and science. Management accounting destined to produce useful information about product cost, budgeting and performance report. There was significant influence in management accounting system because of changes, such as import tariffs reduction, employment practices and implementation of new practices. In order to succeed each company chooses its own way of guiding business through different ways of management accounting techniques. In the
Analyze the cash method described in the case As a paving company Jim Turin & Sons, Inc. purchases asphalt from its supplier. Jim has worked it out with the manufacturing company to deliver the material hours before the job since the properties of the asphalt may render it useless if delivered too soon. “Once a job is completed, [Jim Turin & Sons, Inc.] is generally paid within 10 to 30 days of billing” (Justia, 2000). Jim Turin & Sons, Inc. used the cash method of accounting which means it took