Perhaps one of the more inscrutable concepts of finance & accounting course is the idea of cost and how it is determined. Hence MyAssignmenthelp.com has introduced proficient cost accounting assignment help by experts. Your teachers might have told you to brush up your mathematics skills and tune up your knowledge of basic accounting, but we insist that all that is not obligatory. This article takes you through the myriad concepts related to cost accounting and explains them in simple terms using examples that are relatable. For detailed information, of course, you can refer to our cost accounting assignment help.
- First, we shall look at the concept of cost and how exactly is cost determined?
- Secondly, we shall ponder over the various types of accounting methods as our cost accounting assignment help experts put in.
What is Cost?
According to our cost accounting help experts, an intriguing concept in economics, cost has elided any short-cut methods to understand it. In accounting, a cost is the monetary value of the total amount of expenditure for supplies, services, labor, products and equipments and other items purchased for use by a business or any other item purchased for use by the business. However, this is just one of the many definitions of cost. For all the definitions, refer to our cost accounting assignment help.
Remember that the definition of cost depends much on how it is incurred as referred to in our cost accounting assignment help material.
Types of cost with examples
A more or less exhaustive list of cost is given below:
Type of Cost | Definition | Example |
Actual Cost | The cost that is involved in actually manufacturing a good or giving a service is called the actual cost to company. For detailed information, buy our cost accounting assignment help material. | Cost of raw materials and wage bill. |
Opportunity Cost | Opportunity cost is the cost of the economic endeavor that was not undertaken in order to produce the current goods and services. In other words, an opportunity cost is the value of the best possible alternative or the value of the opportunities lost. This is elaborately explained in our cost accounting assignment help material. | According to our cost accounting assignment help experts, suppose a company has a certain amount of land at its disposal which it is currently not using. The factory could have rent the land out and earned some money. But since the company is not doing that, the cost of that unutilized chance is called opportunity cost. |
Sunk Cost | Those costs which do not vary or alter because of level or nature of business activity are called sunk costs. According to our cost accounting assignment help experts, they are also known as inescapable or unavoidable cost. | Depreciation cost is a good example of sunk costs. |
Incremental Cost | Incremental costs are exactly opposite of sunk costs. The costs which vary or increase according to the changes in the business activity are called incremental costs. Find more in our cost accounting assignment help material. | Costs incurred due to changes in the distribution network or the costs incurred due to product recall. For more examples, refer to our cost accounting assignment help material.
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Explicit Cost | Also called paid out costs, explicit costs are those costs which are actually paid by the firm. Get our cost accounting assignment help to know more. | Interest payment on borrowed capital, rent payment etc. Know them more through our cost accounting assignment help. |
Implicit Cost | Implicit costs are those which are not shown on the account books of the company but nonetheless can influence a major business decision of the company. For more information, buy our cost accounting assignment help. | Rent on idle land, depreciation cost on property still in use and interest paid on equity capital. Our cost accounting service can clear your doubts in this regard. |
Book Cost | Book costs are those costs which are not paid directly but a provision is made for those costs in the profit and loss statements that are made. Avail our cost accounting assignment help material to know more. | Provision for depreciation and the unpaid amount on owner’s capital are examples of book cost, mentioned in our cost accounting assignment help material. |
Accounting Cost | Accounting costs are the outlay costs that are already incurred on a particular process or production. | According to our cost accounting assignment help experts, all sunk costs are also called accounting costs. |
Economic Cost | Future costs that are not yet incurred but nonetheless play a major part in business decisions are called economic decisions. Our cost accounting assignment help experts can tell you more in this regard. | Economic costs are similar to opportunity and implicit costs. |
Direct Cost | Those costs which have direct relation with the unit of operation/manufacture are called direct costs. For detailed information, refer to our cost accounting assignment help. | Costs of raw materials are direct costs. |
Indirect Cost | Those costs which are related to the production process but cannot be said to be directly accountable to the cost object. Know more as you buy our cost accounting assignment help material. | Costs of machinery and land used are called indirect costs. |
Elements of cost
According to our cost accounting assignment help experts, one of the most important exercises of costing is to fix what is called COGS or costs of goods sold. In order to determine costs of goods sold, we must understand the three basic elements of costing. Our experienced cost accounting help experts have put down the elements accordingly:
- Direct material cost
Direct material cost refers to the sum total of the costs of the raw materials which are directly involved in manufacturing a particular product. Refer to our cost accounting service to know more.
- Direct labor cost
The total costs of the work done by the workers who actually make the product are called direct labor costs. Our cost accounting assignment help experts can provide a deeper insight in this regard.
- Manufacturing overhead costs
MOH or Manufacturing Overhead Cost is the sum total of all costs that are related to the cost object but cannot be directly traced back to the cost object in an economically feasible way. Nonetheless, it must be added to the final cost in order to make profit as told by our cost accounting assignment help experts.
Sill confused by the MOH cost? Follow the example below provided by our cost accounting assignment help writers to grasp the concept completely.
How to Determine Costs of Goods Sold (COGS)?
Costs of goods sold is an interesting concept in accounting and as accounting or MBA students you are expected to solve complicated problems on COGS in jiffy. Our cost accounting help service can assist you to solve them. COGS refer to the carrying value of the products sold in the market. In order to calculate the costs of goods sold of a particular product, you will need to mug a few simple steps as our cost accounting assignment help experts put in:
Step 1
You will need to find out the number of units manufactured and the costs of those items per unit.
Step 2
In order to compute the number of units manufactured, start with the number of units at the beginning of the work in process. Add them to the number of units produced and subtract the total number of units at the end of the work in process from the previous sum. This is the simplest method according to our cost accounting assignment help experts.
Number of units at the beginning of the work in process + Number of units manufactured - number of units ending in the process = number of units manufactured. |
Step 3
Cost of beginning work in process + Production Cost – Cost of ending work in process = Costs of goods manufactured.
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Step 4
Now that you have the total number of units and total costs of the goods manufactured. Divide them to get the COGS per unit.
Example:
The example provided by our cost accounting assignment help experts is:
Mr. Vonka has a chocolate factory which produces milk shakes. He had 200 gallons of unmixed ingredients which were put in blenders. During the year, another 4000 gallons were taken out of the storage and put in blenders. At the end of the year, 300 gallons still remained to be blended next year.
So according to step 2, the number of units is equal to
200 + 4000 – 300 = 3900 gallons
Next consider the cost of goods manufactured. Your beginning inventory cost was 200 dollars. The cost of direct materials was 10000 dollars. Direct labor cost was 5000. Overhead cost was 4000 dollars. Ending inventory worth was 3000 dollars. Then the manufacturing costs were:
2000 + 10000 + 5000 + 4000 – 3000= 1000 dollars
So the cost per gallon unit is
18000 / 3900 = 4.6 dollars
You can get more examples if you avail the best cost accounting assignment help from MyAssignmenthelp.com.
What is cost accounting?
Now that you have mastered the basics of costing through our cost accounting assignment help, the time seems perfect to progress to the next level: cost accounting.
According to our cost accounting assignment help experts, cost accounting is the process that aims to capture a company’s cost of production by assessing the input costs of each step of production as well as fixed costs such as depreciation costs of capital equipments.
Types of cost accounting
Types of Cost Accounting | Definition with examples |
Standard or Standardized cost accounting | According to our cost accounting assignment help experts, standard accounting practices are historically derived and they are in accordance with the GAAP or the Generally Accepted Accounting Principles. In standard, cost accounting fixed costs are calculated along with variable costs. For instance, railway coach factory produces 40 coaches a month and with 1000 dollars as fixed costs and 300 dollars as variable costs per unit of production then the standard accounting cost of the coaches will be 1000/40 = 25 dollars + 300 dollars = 325 dollars per unit of production. Refer to our cost accounting assignment help for more examples. |
Lean accounting | Lean accounting is an accounting practice associated with lean businesses. A lean enterprise originated in post-war Japan in order to do away with wastage associated with the manufacturing process. According to our cost accounting assignment help experts, the purpose of lean accounting is to support a lean enterprise. Suppose, cost of manufacturing a good is 15 dollars and according to standard cost accounting 15% is added to get the COGS which brings it to 31.05 dollars. But if the company gets an order of 10,000 pieces of that good at 29 dollar per unit, is it profitable to accept the offer. Traditional accounting principles do not tell us. But lean accounting takes into consideration the incremental cost that the company has to undertake in order to produce 10,000 units of that good. You can buy our cost accounting assignment help for detailed examples. |
Activity based accounting | According to our cost accounting assignment help experts, activity based accounting, also called ABC, is another accounting practice that assigns the cost of each activity with resources to all products and services according to the actual consumption by each. It therefore helps to separate three types of cost: fixed cost, variable cost and overhead cost. Procure our cost accounting assignment help to know more. |
Target costing | Target costing is a pricing method used by firm. It can be defined as the maximum amount of cost that can be incurred on a product with the firm earning the profit margin required. Get the best cost accounting assignment help on target costing from us. |
Resource Consumption accounting | A German based accounting practice that gives managers information support for optimization of the business enterprise. Get expert cost accounting assignment help from us. |
Life cycle assessment | LCA is another specialized type of environmental accounting that takes into account the potential increase in the environmental costs that may occur through the life cycle of a product. To know more, take cost accounting assignment help. |
Environmental accounting | Environmental accounting takes into consideration both economic and environmental information while formulating the cost of a good. It is a new concept and you can have our expert assistance through our cost accounting assignment help. |
What are the Benefits of Cost Accounting?
According to our cost accounting assignment help experts, cost accounting helps companies in various ways:
- Standard cost accounting is the basic that takes into account the different parts of the cost of a product be it indirect, indirect or overhead costs. Refer to our cost accounting assignment help to get detailed knowledge.
- Marginal and incremental costs can be taken into account if there is any change in the production process. Know more through our cost accounting assignment help.
- Some accounting principles like environmental accounting and life cycle assessment help companies in the long run. Avail our cost accounting assignment help to get details.
- Finally all the elements of accounting are separately dealt with like cost of labor, land and raw materials, thereby helping companies to develop their financial policies. It is explained in our cost accounting assignment help.
How Online Assignment Help Service Assist Students in their Accounting Assignments?
According to our cost accounting assignment help experts, accounting or accountancy is the measurement, processing and communication of financial information about economic entities i.e. any business organization or a person. Accounting can be divided into several subfields. They are financial accounting, managerial accounting, auditing and tax accounting. So subscribe to our cost accounting assignment help.
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