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Cost Accounting - Final Review

Chapter 17     Process Costing (W/A Method and FIFO Method)

Chapter 18     Spoilage, Rework, and Scrap (W-A, FIFO, and Transferred-In)

Chapter 6       Master Budget (Revenue budget, Production budget)

Chapter 7, 8   Flexible Budgets, Variances (Material, Labor, VFO, FFO)


Cost accounting – FIFO method


Chapter 18  Spoilage, Rework, and Scrap


Just follow Chapter 17.  In Step 2 and Step 5 and two lines - Normal Spoilage

                                                                                                -Abnormal Spoilage


Others are the same.


Chapter 6 Master Budget


1. Revenue Budget

            Units * Price = Revenue          


2. Production Budget

            Budgeted          Budgeted                      Target Ending                           Beginning         

            Production =     Sales                +          Inventory                      -           Inventory


3. Direct Material usage budget and direct material purchase budget


            Purchase of                  Usage of                       Target Ending               Beginning         

            Direct Materials    =      Direct Material    +          Inventory          -           Inventory



Chapter 7,8 Flexible Budgets, Variances and Management Control

1. Flexible Budgets

 Cost accounting – flexible budgets


2. Variances

A*A                                                                           A*S                                                                     S*S

Cost accounting variances

                                        Flexible Budget Variance


                                       First item: Quantity

                                       Second item: Price

                                       A: Actual

                                       S: Standard