AACE International Recommended Practice No. 34R-05 BASIS OF ESTIMATE TCM Framework: 7.3 – Cost Estimating and Budgeting Acknowledgments: Todd Pickett‚ CCC (Author) Peter R. Bredehoeft‚ Jr. Ted A. Downen Larry R. Dysert‚ CCC Bruce G. Elliott‚ CCC John K. Hollmann‚ PE CCE Copyright 2010 AACE International‚ Inc. Stephen M. Jacobson CCC Carlton W. Karlik‚ PE Christopher L. Kinney Donald F. McDonald‚ Jr. PE CCE PSP Bernard A. Pietlock CCC Richard A. Selg‚ CCE AACE International Recommended Practices
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in which they are used. Following this summary of the different types of costs are some examples of how costs are used in different business applications. The two basic types of costs incurred by businesses are fixed and variable costs. Variable costs and fixed costs represent the total amount of costs for the company. This is important to know because the variable costs are going to determine how much we spend to make our company work as opposed to fixed costs which we have to pay anyway. *
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PROCESS COSTING DR. ALOK DIXIT INDIAN INSTITUTE OF MANAGEMENT LUCKNOW COSTING SYSTEMS USED TO DETERMINE PRODUCT COSTS Costing Systems Process Costing Job-order Costing Mass production of identical or similar products (at process-level). For example‚ Sugar‚ food‚ chemical industry. Many units of a single‚ homogeneous product flow evenly through continuous production process(s). One unit of product is indistinguishable (at process-level) from any other unit of product. Each unit
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basis adopts the accepted cost concept of what the product can bear while the physical measurement basis is based on physical measures as weight‚ volume etc. Literature survey has highlighted certain other methods as techno commercial factor evaluation basis and input based cost driver basis. Robert Kaplan and Antony Atkinson have given an illustration as how the joint and by-products costing method can be used as a tool in the resource allocation process. The paper aims to generate further discussion
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PROCESS COSTING-SINGLE DEPARTMENT INTRODUCTION In process costing system‚ a large number of homogenous products passed through several production departments where each department is responsible for one or more operations that bring a product one step closer to completion. In each department‚ materials‚ labor and overhead inputs may be needed and upon completion of a particular process‚ the partially completed goods are transferred to another process. SIMILARITIES AND DIFFERENCES OF JOB ORDER
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Introduction * Meaning of Standard Costing: Standard costing is simply the name given to a technique whereby standard costs are computed and subsequently compared with the actual costs to find out the differences between the two. These differences are then analyzed to know the causes thereof so as to provide a basis of control. * Standard Costing: According to BROWN and HOWARD “Standard costing is a technique of cost accounting which compares the standard cost of each product or service
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required. This can help in reducing the inventory costs. This method will be most useful when the management is able to accurately forecast the demand. JIT stands for just in time‚ and this is an approach which is used in inventory valuation. It is a system which ensures the quantity of raw material to receive and the time duration. For this purpose the supplier should be selected‚ who agrees to supply the requisite quantity at the scheduled time. JIT is a company specific concept. The managers should
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Advantages and disadvantages of variable costing Many managers use variable costing for internal reporting and decision making since it has number of advantages (Myers par. 1). First‚ on variable costing reports costs are organized by behavior which makes it easier to understand. Also‚ variable costing statements facilitate cost volume profit (CVP) analysis because it separates cost behavior by fixed and variable. Under variable costing‚ changes in inventory or production do not affect the
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Two general approaches are used for costing products for the purpose of valuing inventories and cost of goods sold. One approach is called absorption costing. Absorption costing is generally used for external financial reports. The other approach called variable costing is preferred by some companies for internal decision making and must be used when an income statement is prepared in the contribution format. Ordinarily absorption costing and variable costing produce different figures for net income
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of cost‚ the following divisions of cost are obtained: (1) Prime Cost = Direct Materials + Direct Labour + Direct Expenses (2) Works Cost (Factory) = Prime Cost + Factory Overhead 31/ Cost Sheet (or) Statement 01 Cost (3) Cost of Production (4) Cost of Sales (or) Total Cost = = Factory Cost + Office and Administrative Overhead Cost of Production + Selling and Distribution Overhead (I) Materials Cost Materials Costs refer to cost of materials which
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