CONTROL DE GESTION

Session 1
Average cost method
Average cost= (Stock in $ + Purchases in $) / (Stock in units + Purchases in units)
We use the average cost as the unit cost of OUT and for the end of AT HAND.
In AT HAND, we only calculate the units, to valuate at the end at the average cost.
COGS computation
Cost of raw materials used in production

Raw material beginning inventory
Raw material purchased
(Raw material ending inventory)
= Raw material used in production

Cost of good manufactured (finished)

Work in process (WIP) beginning inventory
Raw materials used in production
Direct labor
Manufacturing overhead (MOH)
(WIP ending inventory)
= COG manufactured

Cost of good sold (COGS)

Finished goods beginning inventory
COG manufactured
(FG ending inventory)
=COGS

Traditional income statement

Sales
(COGS)
=Gross Margin
(Administrative and selling expenses)
=Net income

Full costing

Allocation table
We have to distribute the secondary cost centers to the primary ones.
Total primary allocation
A
B
Centre 1 cost allocation
(x)
% x
Centre 2 cost allocation
% y
(y)
Total secondary allocation
0
0

X= A + (% y)
Y= B + (% x)

Number of cost driver: data given that depends on the nature of the cost driver. If it’s $ of sales, it’s the total sales in $ / $.
Unit cost of cost driver= Total secondary allocation / Number of cost driver

Tables
Raw Material Purchase (Month)
Purchase Price (Quantity x unit cost)
Purchasing cost (Quantity x unit cost of cost driver –purchasing-)
= Purchase cost (the unit cost is average –AC1- . Quantity is always the same)

Raw Material Inventory (Month)
Beginning inventory (Quantity x unit cost) Outflow – RM used- (Quantity x AC2)
Inflow – RM purchased- (Quantity x AC1) Ending inventory (Quantity x AC2)
= Total (unit cost is average –AC2-) = Total (Quantity x AC2)

Totals are the same.
Inflow= Purchase cost
Ending inventory= Total – outflow

Production of Intermediary