Lecture Industrial Costing SS 20162017 Prof Dr Olga
- Slides: 26
Lecture „Industrial Costing“ SS 2016/2017 Prof. Dr. Olga Popova, OVGU Prof. Dr. Jörg Jablinski, OWL Sämtliche Folien sind urheberrechtlich geschützt und dürfen nur zum internen Gebrauch an der Hochschule OWL verwendet werden. Eine Weitergabe an Dritte, egal in welcher Form, oder eine Vervielfältigung wird untersagt. 1
Chapter 4 „Cost center accounting“ (Part 1) 2
Cost center accounting 3
Cost center accounting within financial accounting Financial accounting 1. Cost-type accounting 2. Cost center accounting 3. Cost unit accounting Calculation Statement of operating result 4
Distribution of costs to cost units Overhead costs Direct costs Cost centers Primary cost distribution Service cost center Internal cost allocation secondary cost distribution Primary cost distribution Main cost center Overhead rates Cost units 5
Tasks of cost center accounting Distribution of costs to cost centers Determining of overhead rates Allocation of cost centers between cost units Control of profitability 6
Hierarchy levels of cost centers 7
Classification criteria for cost centers According to functional area The same or similar work processes belong to one cost center According to the type of allocation According to spheres of responsibility Division into preliminary cost center (indirect accounting for services) and final cost center (direct accounting for services) takes place Classification of cost centers corresponds to clearly delimited spheres of responsibility According to spatial aspect Spatial delimited operating sectors belong to one cost center 8
Classification according to functional areas Cost centers General Recourse centers Production centers Distribution center Administration center Researching- and development center Description and Examples for example canteen, electricity supply, house equipment, company doctor services connected with purchasing, reception, control, storage, maintenance, issue of materials (for example purchasing department, testing center, storehouse) operating output of goods (for example grindery, turnery, milling, painting point, installation) distribution of goods and services: finished goods stock, sell and sending of finished goods and spare parts, customer services, commercials administrative activities for example management and it’s stuff sections, accounting, controlling, personal types of costs, serving for innovations (construction, experiment, laboratory) 9
Classification according to type of allocation 10
Important: Remember! Final cost centers provide activities; that are directly incorporated to a product. However preliminary cost centers pass activities to another cost centers, it means its activities will be allocated to final cost centers indirectly, using assessments. 11
Description of cost centers 12
Allocation of overhead costs 13
Principles of cost center formation 14
Cost allocation sheet 15
Example: Primary distribution of overhead costs The starting point for distribution of overhead costs in the example company “Feuer” is following simple cost center classification: material, production, distribution and administration. Nonproductive labor costs and salaries will be separated in accord to job description of employees and activity reports. Cost centers Material Production Administration Distribution Cost types Nonproductive labour costs 8. 400, - € 106. 800, - € Salaries 24. 000, - € 69. 600, - € 104. 400, - € 48. 000, - € Non-wage labor costs must be considered accepting social cost rates, which amounts to 65 % for nonproductive labor costs and 40 % for salaries. 16
Example: Primary distribution of overhead costs Value of auxiliary and operating materials will be determined using purchase invoice and fixed valuation method, it amounts to 28. 800, - € and belongs to the cost center “Production”. Electricity- and heating fuel costs amount to 115. 000, - € will be distributed between different sectors, for one thing according to cubic meter (m³) of space, for another thing according to electrical connected values. Distribution formula is: 3 : 100 : 6 (Material, Production, Administration, Distribution). The sum from formula amounts to 115. To the distribution cost center will be assessed for example (115. 000, - € : 115) x 6= 6. 000, - €. Imputed depreciations: The buildings will be depreciated over 50 years and the machines over 10 years. 17
Example: Primary distribution of overhead costs Acquisition values of buildings 512. 000, - € 3. 297. 600, - € 577. 600, - € 252. 800, - € Material Production Administration Distribution Acquisition values of machines 416. 000, - € 7. 260. 800, - € 100. 800, - € 222. 400, - € Imputed interest will be prorated to different cost centers on base of average committed operating capital. Discount rate amounts to 8 % per year. Operating capital Sum Material Cost centers Production Administration Distribution 13. 900, - T€ 2. 700, - T€ 8. 500, - T€ 800, - T€ 1. 900, - T€ 18
Example: Primary distribution of overhead costs Area of activity of entrepreneur is connected with following two departments: 80 % of his work is connected with administration and 20 % with distribution (this corresponds to the relation 4: 1). Imputed entrepreneurial profit amounts to 110. 000, - € per year. Distribution of other costs leads us to following results: Cost types Material Production Administration Distribution Sum Other overhead costs 17. 800, - € 59. 600, - € 50. 300, - € 23. 300, - € 151. 000, - € Cost centers Trips, commercials 5. 000, - € 2. 000, - € 126. 000, - € 128. 000, - € 261. 000, - € Insurance, taxes 24. 000, - € 91. 000, - € 95. 000, - € 15. 000, - € 225. 000, - € Overhead costs of company “Feuer” will be distributed between four main cost centers in the following way: 19
Example: Primary distribution of overhead costs 20
Example: Primary distribution of overhead costs Imputed depreciations and imputed interest will be calculated for cost allocation sheet in the following way: 21
Types of internal activities 22
Methods of internal cost allocation 23
One-sided exchange of activities according to direct method 24
One-sided exchange of activities according to step ladder method 25
Mutual exchange of activities 26
- Job costing vs process costing
- Difference between job costing and contract costing
- Marginal costing and absorption costing
- Job costing and process costing
- Definition of standard cost
- Marginal costing meaning
- Activity based costing vs job costing
- Wip control account
- Job order costing process costing
- Variable costing vs absorption costing
- Perbedaan full costing dan variable costing
- Job order costing and process costing
- Abc costing vs traditional costing
- Process vs job costing
- Standard cost accounting
- Hybrid costing system examples
- Marginal costing vs variable costing
- Objectives of job costing
- Process costing vs job order costing
- Difference between kaizen costing and standard costing
- Distinguish between job costing and process costing
- Contoh full costing dan variable costing
- Cost of production report
- Activity based costing formula
- Target costing and activity based costing
- Difference between service costing and product costing
- Process costing and hybrid product-costing systems