Accounting Tools

OCTOBER 11, 2023

Total manufacturing cost is the aggregate amount of cost incurred by a business on its production operations within a reporting period. It includes all possible costs incurred by the production function, including direct materials , direct labor , and factory overhead. Assign a standard direct labor cost to each unit produced.

Payroll 75

Payroll Cost Accounting Budgeting Tax 75

Accounting Tools

JANUARY 26, 2024

In some cases, it will be necessary to conduct a systematic allocation of a cost across multiple reporting periods, such as when the purchase cost of a fixed asset is depreciated over several years. Matching Principle for Depreciation A company acquires production equipment for $100,000 that has a projected useful life of 10 years.

Accruals 75

Accruals Bookkeeping Financial Statements Invoicing 75

Accounting Tools

DECEMBER 23, 2023

If the underlying asset is to be used over a long period of time, the expense takes the form of depreciation , and is charged ratably over the useful life of the asset. Examples of Expenses Common expenses are the cost of goods sold , rent expense, wages expense, fixed asset depreciation, and utilities expense. Reflects a cash payment.

Accruals 75

Accruals Bookkeeping Accounts Payable Accounts Payable 75

Accounting Tools

NOVEMBER 5, 2023

Related Courses Fixed Asset Accounting How to Audit Fixed Assets Depreciation cost is the amount of a fixed asset that has been charged to expense through a periodic depreciation charge. Before determining whether depreciation is a direct cost or indirect cost, we must first clarify the related terms, which are noted below.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

MAY 13, 2024

The total of all costs in this budget are converted into a per-unit overhead allocation , which is used to derive the cost of ending finished goods inventory , and which in turn is listed on the budgeted balance sheet. The information in this budget becomes part of the cost of goods sold line item in the master budget.

Budgeting 40

Budgeting Payroll Tax 40

Accounting Tools

JULY 30, 2023

One should always be aware of the total amount of fixed overhead costs that a business incurs, so that management can plan to generate a sufficient amount of contribution margin from the sale of products and services to at least offset the amount of fixed overhead. These costs are needed in order to operate a business.

Cost Accounting 75

Cost Accounting Budgeting Accounting Accounting 75

Accounting Tools

JULY 31, 2023

Manufacturing support costs are the overhead costs associated with the production process. These costs are relatively fixed, with no direct relationship to the volume of units produced. Manufacturing support costs are allocated to the number of units produced, and then charged to expense as these units are sold.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

APRIL 6, 2024

This contains a calculation of the direct labor costs to be incurred during the budget period, based on estimates of which products will be manufactured and what labor rates will be paid. Production budget. What is a Master Budget? There may also be a discussion of the headcount changes that are required to achieve the budget.

Budgeting 74

Budgeting Accounts Receivable Accounts Receivable Account Receivables 74

Accounting Tools

JULY 12, 2023

Factory burden is those costs incurred in the production process, other than direct costs. These costs are accumulated into cost pools at the end of each reporting period, and then allocated to units of production. The allocated costs are eventually charged to expense when the associated units of production are sold.

Accruals 40

Accruals Financial Statements Cost Accounting Tax 40

Accounting Tools

OCTOBER 6, 2023

Related Courses Fixed Asset Accounting How to Audit Fixed Assets What is Depreciation? Depreciation is a planned, gradual reduction in the recorded value of an asset over its useful life by charging it to expense. Depreciation is applied to fixed assets , which generally experience a loss in their utility over multiple years.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

AUGUST 8, 2023

Manufacturing costs are the costs incurred during the production of a product. An entity incurs these costs during the production process. Direct material is the materials used in the construction of a product. These costs include the costs of direct material , direct labor , and manufacturing overhead.

Cost Accounting 40

Cost Accounting Tax Accounting Accounting 40

Accounting Tools

OCTOBER 11, 2023

Examples of actual overhead are the salaries of production supervisors, depreciation on production equipment, and the upkeep of manufacturing facilities and equipment. Based on these estimates, the budgeting team establishes a standard overhead rate of $10 per unit produced. What is Applied Overhead?

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

SEPTEMBER 25, 2023

Economic life can also refer to the number of units produced; for example, the economic life of a vehicle may be 100,000 miles, rather than three years. The concept is used as the basis for the time period over which depreciation is charged against an asset. Doing so makes it easier to calculate the depreciation expense.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

NOVEMBER 2, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service. When the units are sold, the allocated overhead is charged to the cost of goods sold.

Cost Accounting 40

Cost Accounting Accounting Accounting Tax 40

Accounting Tools

JANUARY 13, 2024

What is Depreciation? Depreciation is the systematic reduction of the recorded cost of a fixed asset. Examples of fixed assets that can be depreciated are buildings, furniture, and office equipment. The net effect of depreciation is a gradual decline in the reported carrying amount of fixed assets on the balance sheet.

Accounting 40

Accounting Accounting Auditing Tax 40

Accounting Tools

JUNE 7, 2023

Examples of fixed costs are rent, insurance, depreciation , salaries, and utilities. A variable cost is a cost that varies in relation to either production volume or the amount of services provided. If no production or services are provided, then there should be no variable costs. What are Variable Costs?

Cost Accounting 75

Cost Accounting Accounting Accounting 75

Accounting Tools

SEPTEMBER 9, 2023

Depreciation. This is the gradual charging to expense of the cost of a tangible asset (such as production equipment) over the useful life of the asset. A business is sometimes deliberately structured to have a higher proportion of fixed costs than variable costs, so that it generates more profit per unit produced.

Cost Accounting 75

Cost Accounting Tax Accounting Accounting 75

Accounting Tools

JULY 17, 2023

This can result in changes in the order fulfillment rate for customers, as well as variations in the production process flow. These costs are typically included in an overhead cost pool and allocated to the number of units produced in each period. More specifically, holding costs include the items noted below.

Payroll 70

Payroll Cost Accounting Auditing Tax 70

Accounting Tools

OCTOBER 22, 2023

Indirect expenses are those expenses that are incurred to operate a business as a whole or a segment of a business, and so cannot be directly associated with a cost object , such as a product, service, or customer. A cost object is any item for which you are separately measuring costs.

Cost Accounting 40

Cost Accounting Auditing Accounting Accounting 40

Accounting Tools

SEPTEMBER 6, 2023

A cost object is something for which a cost is compiled, such as a product, service, customer , project, or activity. These costs are usually only classified as direct or indirect costs if they are for production activities, not for administrative activities (which are considered period costs ).

Financial Analysis 40

Financial Analysis Cost Accounting Accounting Accounting 40

Accounting Tools

NOVEMBER 1, 2023

For example, a company may operate a production line on three shifts in order to provide goods to its customers in a timely manner. The exact amount of capacity to maintain can be planned for using capacity requirements planning, which calculates required capacity levels at different sales levels and product mixes.

Cost Accounting 40

Cost Accounting Tax Accounting Accounting 40

Accounting Tools

OCTOBER 24, 2023

Typical contents of the cost of goods sold figure in the gross margin are direct materials , direct labor , variable overhead costs (such as production supplies), and fixed overhead costs (such as equipment depreciation and supervisory salaries). Related Articles Gross Margin Ratio How to Calculate Contribution Margin

Financial Statements 40

Financial Statements 40

Accounting Tools

NOVEMBER 6, 2023

Segment reporting is intended to give information to investors and creditors regarding the financial results and position of the most important operating units of a company, which they can use as the basis for decisions related to the company. Related Articles Segment Margin

Financial Statements 40

Financial Statements Financial Reporting Tax Accounting 40

Accounting Tools

OCTOBER 24, 2023

The formula for this relationship is: Y = a + bx Y = Total cost a = Total fixed cost b = Variable cost per unit of activity x = Number of units of activity The accounting standards do not require that the fixed or variable nature of a cost be identified in a firm’s financial statements.

Financial Analysis 40

Financial Analysis Financial Statements Cost Accounting Budgeting 40

Accounting Tools

AUGUST 2, 2023

Pay close attention to product margins , and push sales of the highest-margin items, thereby reducing the breakeven point. If an activity involves a fixed cost, consider outsourcing it in order to turn it into a per-unit variable cost, which reduces the breakeven point. All sales above that level directly contribute to profits.

Financial Analysis 40

Financial Analysis Financial Statements 40

Accounting Tools

JULY 9, 2023

The concept is used in financial analysis to find the breakeven point of a business, as well as to determine product pricing. Examples of other fixed costs are insurance, depreciation , and property taxes. Conversely, if a company has low fixed costs, it probably has a high variable cost per unit.

Accruals 40

Accruals Financial Analysis Cost Accounting Tax 40

Accounting Tools

JUNE 9, 2023

Administrative overhead includes those costs not involved in the development or production of goods or services, such as the costs of front office administration and sales; this is essentially all overhead that is not included in manufacturing overhead. The amount of allocation charged per unit is known as the overhead rate.

Cost Accounting 40

Cost Accounting Tax Accounting Accounting 40

Accounting Tools

AUGUST 24, 2023

Depreciation Cost The company incurs a depreciation charge in each period for all storage space, racks, and equipment that it owns in order to store and handle inventory. This can be a substantial cost, especially in businesses where new products appear on a regular basis. Holding costs are the costs incurred to store inventory.

Payroll 40

Payroll Tax Accounting Accounting 40

Accounting Tools

JUNE 18, 2023

Yet another possibility is to determine the change in profits if product prices are altered. Margin Analysis Pay close attention to product margins, and push sales of the highest-margin items, to reduce the breakeven point. The breakeven point is the sales volume at which a business earns exactly no money.

Financial Analysis 40

Financial Analysis Financial Statements 40

Accounting Tools

SEPTEMBER 3, 2023

When the amount to be written off is quite large, this encourages managers to keep projects running over a longer period of time, so that the expense recognition can be spread out over a longer period of time, in the form of depreciation. Once created, the market is indifferent, and no one buys any units.

Computation 75

Computation Financial Analysis Cost Accounting Accounting 75

Accounting Tools

JULY 13, 2023

A cost object is anything about which cost information is collected, such as a customer, product, service, store, geographic region, product line , and so on. Direct Materials Direct materials include all raw materials , components, and sub-assemblies used in the production of finished goods. An example is production supplies.

Financial Reporting 40

Financial Reporting Cost Accounting Financial Statements Collections 40

Accounting Tools

MAY 9, 2024

This may include the initial and subsequent investment of funds, as well as the tax effects of depreciation , maintenance costs, and projected price points. The analysis is used to decide whether to proceed with a course of action or not. Cost-benefit analysis can include both quantitative factors and qualitative factors.

Financial Analysis 40

Financial Analysis Tax 40

Accounting Tools

MAY 19, 2023

Thus, the inventory turnover formula is: Annual cost of goods sold ÷ Inventory = Inventory turnover There are many ways to achieve a high turnover ratio, including selling only a small number of stock keeping units , using a just-in-time production system, and rapidly selling off unused raw materials and finished goods at discounted prices.

Accounts Payable 40

Accounts Payable Accounts Payable Financial Statements Collections 40

Accounting Tools

AUGUST 6, 2023

This can indicate that its products are popular with customers, are being sold at a competitive price, or are being bolstered by a strong marketing campaign. Related Courses Accounting for Inventory Business Ratios Guidebook Inventory Management What is Inventory Turnover?

Purchase Order 40

Purchase Order Budgeting Collections Accounting 40

Accounting Tools

OCTOBER 27, 2023

Related Courses Fixed Asset Accounting How to Audit Fixed Assets What is Composite Depreciation? Composite depreciation is the application of a single straight-line depreciation rate and average useful life to the calculation of depreciation for a group of disparate fixed assets.

Record Keeping 40

Record Keeping Accounting Software Auditing Accounting 40

Nanonets

FEBRUARY 6, 2024

This article provides the most comprehensive guide to intercompany reconciliation and how automation can help you save time & cost! Resolve discrepancies by verifying the details using supporting documents in coordination with affected business units. Match the documents using document ID or amount/date combo.

General Ledger 52

General Ledger Financial Statements Reconciling Collections 52

Cloud Accounting Podcast

JUNE 28, 2020

Stay tuned to hear more from our sponsor, ADP Accountant Connect, later in the episode. Blake Oliver: [00:00:20] One of the questions I had immediately was where did all the money go? What happened to the $100 million? Because there's no way, with 100 employees, that they burned through $100 million in a year. Not possible. So, you could.

Bookkeeping 40

Bookkeeping QuickBooks Payroll Auditing 40