Koneksie Finance Training covers topics related to inventory, revenue recognition, and periodic close. The inventory section defines key terms like raw materials, work in process, finished goods inventory and discusses costing methods like standard costing and full absorption costing. It also covers inventory processes like periodic stock counts and valuation adjustments. The document provides inventory journal entries samples and explains how to account for intercompany transactions and apply labor and overhead costs to finished goods inventory.
Resentation for PeopleSoft SCM users group comparing and Standard and Actual Costing for Production Inventories using PeopleSoft Cost Managment functionality.
This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
Overhead refers to indirect costs that cannot be traced to a specific product or service. There are various types of overheads that must be classified. The major steps in overhead accounting are to collect overhead details, distribute overhead to cost centers, and reapportion service department costs to production departments. Common bases for apportioning overhead include direct allocation, direct labor hours, and direct wages. Methods of reapportionment include the direct redistribution and step methods. Absorbing overheads involves allocating overhead expenses to cost centers or cost units using absorption rates. Under or over absorption of overhead can occur depending on actual overhead costs versus absorbed costs.
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
The document provides guidelines for submitting a cost report for a competition. It outlines the structure and content required for the report, including an overview of the scoring and penalties. Teams must submit a cost report that includes a bill of materials, cost tables for individual systems, and a cost summary. The report must reference provided cost tables for standard materials, processes, fasteners, and tooling. An example is provided to demonstrate how to fill out the cost tables for an A-arm assembly by calculating costs from the raw materials to the finished part.
This document discusses cost measurement and different costing methods, including absorption costing and variable/direct costing. It provides examples to illustrate the calculation of product costs under absorption costing and variable costing. Absorption costing includes both variable and fixed manufacturing costs in product costs, while variable costing treats fixed costs as period costs not included in product costs. The document compares the two methods and discusses their treatment of inventory costs and reported profit.
This document discusses different costing methods used in management accounting including job costing, process costing, batch costing, contract costing, and service costing. It provides examples and explanations of key concepts in job costing like job cost sheets, predetermined overhead rates, and manufacturing overhead. Process costing is explained as a method used for mass production of nearly identical units where costs are accumulated and assigned to units produced. Batch costing is defined as identifying and assigning costs to a set amount of similar goods produced in a batch. Contract costing applies especially to long-term construction projects performed over multiple periods. Finally, service costing calculates the full costs of services an entity provides using direct and indirect costs.
This document discusses job order costing systems, including how they track costs by individual jobs rather than in batches like process costing, how the job order cost sheet accumulates actual direct and overhead costs for each job, and how standard costing compares actual costs to budgeted standards to evaluate performance and set prices.
Resentation for PeopleSoft SCM users group comparing and Standard and Actual Costing for Production Inventories using PeopleSoft Cost Managment functionality.
This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
Overhead refers to indirect costs that cannot be traced to a specific product or service. There are various types of overheads that must be classified. The major steps in overhead accounting are to collect overhead details, distribute overhead to cost centers, and reapportion service department costs to production departments. Common bases for apportioning overhead include direct allocation, direct labor hours, and direct wages. Methods of reapportionment include the direct redistribution and step methods. Absorbing overheads involves allocating overhead expenses to cost centers or cost units using absorption rates. Under or over absorption of overhead can occur depending on actual overhead costs versus absorbed costs.
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
The document provides guidelines for submitting a cost report for a competition. It outlines the structure and content required for the report, including an overview of the scoring and penalties. Teams must submit a cost report that includes a bill of materials, cost tables for individual systems, and a cost summary. The report must reference provided cost tables for standard materials, processes, fasteners, and tooling. An example is provided to demonstrate how to fill out the cost tables for an A-arm assembly by calculating costs from the raw materials to the finished part.
This document discusses cost measurement and different costing methods, including absorption costing and variable/direct costing. It provides examples to illustrate the calculation of product costs under absorption costing and variable costing. Absorption costing includes both variable and fixed manufacturing costs in product costs, while variable costing treats fixed costs as period costs not included in product costs. The document compares the two methods and discusses their treatment of inventory costs and reported profit.
This document discusses different costing methods used in management accounting including job costing, process costing, batch costing, contract costing, and service costing. It provides examples and explanations of key concepts in job costing like job cost sheets, predetermined overhead rates, and manufacturing overhead. Process costing is explained as a method used for mass production of nearly identical units where costs are accumulated and assigned to units produced. Batch costing is defined as identifying and assigning costs to a set amount of similar goods produced in a batch. Contract costing applies especially to long-term construction projects performed over multiple periods. Finally, service costing calculates the full costs of services an entity provides using direct and indirect costs.
This document discusses job order costing systems, including how they track costs by individual jobs rather than in batches like process costing, how the job order cost sheet accumulates actual direct and overhead costs for each job, and how standard costing compares actual costs to budgeted standards to evaluate performance and set prices.
This chapter discusses inventory costing methods for manufacturing companies and concepts for measuring production capacity. It describes two main inventory costing methods: variable costing, which expenses fixed manufacturing costs, and absorption costing, which includes fixed costs as inventoriable costs. Absorption costing follows GAAP but variable costing is useful for internal analysis. The chapter also examines four capacity measurement concepts and how the choice of denominator level affects income under absorption costing.
The document discusses several concepts related to just-in-time (JIT) production systems including:
- JIT aims to reduce inventory levels which exposes problems and inefficiencies that may otherwise go undetected.
- JIT fosters automation and reduced inventory levels, which may result in combining cost pools.
- A JIT manufacturer limits suppliers and requires top quality, small frequent deliveries with little raw material storage.
- Geographical proximity of suppliers is important to minimize shipping costs and facilitate communication.
1.1 identify the elements of costs
1.2 understand various classification of costs
1.3 identify the cost unit
1.4 identify the cost center
1.5 exercise regarding costs concepts
Chapter 11 cost methods, techniques of cost accounting and classification o...Kanav Sood
This document discusses different methods and techniques of cost accounting, including:
1) Job costing and process costing as the two broad categories of costing methods. Job costing accumulates costs by job while process costing is used for continuous production.
2) Techniques of costing include uniform costing, marginal costing, standard costing, historical costing, and absorption costing.
3) Costs can be classified in various ways, including by nature (material, labor, expenses), function (production, administration, selling), variability (fixed, variable, semi-variable), and normality (normal vs. abnormal costs).
Process costing is a costing method used when homogeneous units are produced continuously in large quantities. It assigns costs equally over the units produced in a period. There are five steps to process costing: 1) analyze physical flows, 2) calculate equivalent units, 3) determine total costs, 4) calculate unit costs, and 5) assign costs to completed and ending work-in-process units. Process costing uses journal entries to record raw material costs, conversion costs, and transfers between departments. The weighted average and first-in, first-out (FIFO) methods are two approaches to assign costs in process costing.
This document provides an introduction to cost accounting, including its purpose and key concepts. It discusses the limitations of financial accounting and how cost accounting addresses these. The main objectives of cost accounting are to ascertain costs, determine selling prices, set efficiency standards, value inventory, and provide information for decision making. Key cost accounting concepts covered include cost elements, cost classifications, cost sheets, costing methods, and the installation of cost accounting systems. The relationship between cost and financial accounting is also explained.
Process costing is a method used to calculate production costs for industries that produce standardized, homogeneous goods continuously through multiple processes. Costs are accumulated for each stage of production and divided by normal output to determine the cost per unit at each stage. Key terms include work-in-progress, normal and abnormal losses/gains, equivalent units, and features like continuous production and accumulation of direct and indirect costs by process. Process costing allows for periodic cost calculations and allocation of expenses to processes for accurate costs. It is simpler than job costing but provides only historical costs and average costs that are less useful for control.
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
The document discusses process costing methods used in manufacturing. It covers key steps in process costing which include summarizing output flow, computing equivalent units, computing equivalent unit costs, summarizing total costs, and assigning costs to completed and ending work in process units. The document also discusses weighted average, FIFO, and standard costing inventory methods associated with process costing and provides examples to illustrate related concepts and calculations.
JOB COSTING Nature and Purpose Job costing may be defined as a system of costing in which the elements of cost are accumulated separately for each job or works order undertaken by an organisation. Industries which manufacture products or renders service against specific orders use job costing or job order method of cost accounting. In the job costing system, an order or a unit, lot or batch of product may be taken as a cost unit, i.e., a job
Accounting Formulas, Chart of Accounts, Dr/Cr RuleAbrar Malik
This document contains formulas for various types of costing and accounting calculations including:
- Breakeven analysis formulas for calculating breakeven point by quantity, value, and contribution sales ratio.
- Overhead costing formulas for calculating cost unit rates, direct material/labor cost percentage rates, predetermined absorption rates, and more.
- Materials, labor, contract, process, and standard costing formulas for calculating economic order quantity, stock turnover, labor turnover rate, profit on a contract, equivalent production, and variances for materials, labor, overhead, and sales.
- Formulas are also provided for standard marginal costing techniques with no volume variance for fixed overhead and a sales margin volume variance.
The document discusses unit based costing (UBC) implemented at Hindustan Petroleum Corporation Ltd. UBC accumulates overhead costs for different organizational units and then assigns costs to products/services based on their use of activities in each unit. The key units considered are Fuel Refinery, Lube Refinery, and Captive Power Plant. UBC aims to provide more accurate product cost estimates for management decision making compared to traditional cost accounting. It involves identifying overhead costs like utilities, employee costs, maintenance etc. and allocating them to units based on cost drivers.
This document discusses various methods, techniques, and systems of costing. It describes job costing, contract costing, batch costing, process costing, operation costing, and others. It also covers techniques like marginal costing, direct costing, and absorption costing. For systems of costing, it explains historical costing using post-costing and continuous costing, as well as standard costing.
Understand the various aspects of maintain inventory records, that handles your two principal financial statements ie Income Statement and Balance Sheet.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc
This document is a project report submitted by Kavitake Chhaya Laxman for their M.Com program. The report focuses on process costing and includes the following sections:
1. An introduction to process costing, including its meaning, applicability, advantages, and differences from job costing.
2. The accounting procedure for a simple process costing system including a sample process account worksheet.
3. A discussion of waste and losses in process costing, how they are accounted for, and includes sample calculations and journal entries.
4. Methods for valuing work-in-process inventory including equivalent units and illustrative examples.
5. A case study of process
This document provides an introduction to accounting concepts related to cost. It defines cost accounting as recording and summarizing financial transactions and events in terms of money. It also discusses the different types of accounting, including financial accounting which publishes reports for external users, and management accounting which provides information to managers for decision making. Finally, it outlines the key steps in calculating cost of goods manufactured and cost of goods sold.
hybrid Costing process costing contract costing hMitikaAnjel
This document discusses different types of costing methods: job costing, process costing, hybrid costing, and contract costing. Job costing tracks costs for individual jobs or orders. Process costing is used for continuous production where materials pass through multiple processes. Hybrid costing combines elements of job and process costing. Contract costing determines costs for larger jobs or assignments by tracking costs to completion over time according to certification milestones.
This document provides an overview of a job order cost system. It describes job order costing as a method used when production is done according to customer orders rather than for stock. Each job has a unique cost that is tracked from start to finish using a job cost sheet. The objectives are to determine the accurate cost of each job and identify profitable versus unprofitable jobs to aid future estimates. The key aspects of job order costing include distinct work orders for each job, tracking direct and overhead costs accumulated to each job, and comparing estimated versus actual costs for process improvement and pricing future jobs.
This document discusses job-order costing, which accumulates manufacturing costs by job. Costs include direct materials, direct labor, and overhead applied using a predetermined overhead rate. Materials and labor costs are recorded on job cost sheets. Actual overhead costs are recorded in an Overhead Control account, while applied overhead credits Work in Process. Overhead can be applied functionally using a single or multiple rates, or through activity-based costing using multiple rates tied to specific activities. Variances may occur when actual overhead differs from applied overhead.
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB CO...Hardik Shah
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB COSTING AN AVERAGING PROCESS IS USED TO COMPUTE THE UNIT COSTS OF PRODUCTS OR SERVICES. - JUSTIFICATION
Technology is perhaps the greatest agent of change in the modern world. While never without risk, technological breakthroughs promise innovative solutions to the most pressing global challenges of our time. From batteries that can provide power to whole villages to microchips that could take the place of organs in medical research, this year’s 10 emerging technologies offer a vivid glimpse of the power of innovation to improve lives, transform industries and safeguard our planet.
To compile this list, the World Economic Forum’s Meta-Council on Emerging Technologies, a panel of global experts, draws on the collective expertise of the Forum’s communities to identify the most important recent technological trends. By doing so, the Meta-Council aims to raise awareness of their potential and contribute to closing the gaps in investment, regulation and public understanding that so often thwart progress.
This chapter discusses inventory costing methods for manufacturing companies and concepts for measuring production capacity. It describes two main inventory costing methods: variable costing, which expenses fixed manufacturing costs, and absorption costing, which includes fixed costs as inventoriable costs. Absorption costing follows GAAP but variable costing is useful for internal analysis. The chapter also examines four capacity measurement concepts and how the choice of denominator level affects income under absorption costing.
The document discusses several concepts related to just-in-time (JIT) production systems including:
- JIT aims to reduce inventory levels which exposes problems and inefficiencies that may otherwise go undetected.
- JIT fosters automation and reduced inventory levels, which may result in combining cost pools.
- A JIT manufacturer limits suppliers and requires top quality, small frequent deliveries with little raw material storage.
- Geographical proximity of suppliers is important to minimize shipping costs and facilitate communication.
1.1 identify the elements of costs
1.2 understand various classification of costs
1.3 identify the cost unit
1.4 identify the cost center
1.5 exercise regarding costs concepts
Chapter 11 cost methods, techniques of cost accounting and classification o...Kanav Sood
This document discusses different methods and techniques of cost accounting, including:
1) Job costing and process costing as the two broad categories of costing methods. Job costing accumulates costs by job while process costing is used for continuous production.
2) Techniques of costing include uniform costing, marginal costing, standard costing, historical costing, and absorption costing.
3) Costs can be classified in various ways, including by nature (material, labor, expenses), function (production, administration, selling), variability (fixed, variable, semi-variable), and normality (normal vs. abnormal costs).
Process costing is a costing method used when homogeneous units are produced continuously in large quantities. It assigns costs equally over the units produced in a period. There are five steps to process costing: 1) analyze physical flows, 2) calculate equivalent units, 3) determine total costs, 4) calculate unit costs, and 5) assign costs to completed and ending work-in-process units. Process costing uses journal entries to record raw material costs, conversion costs, and transfers between departments. The weighted average and first-in, first-out (FIFO) methods are two approaches to assign costs in process costing.
This document provides an introduction to cost accounting, including its purpose and key concepts. It discusses the limitations of financial accounting and how cost accounting addresses these. The main objectives of cost accounting are to ascertain costs, determine selling prices, set efficiency standards, value inventory, and provide information for decision making. Key cost accounting concepts covered include cost elements, cost classifications, cost sheets, costing methods, and the installation of cost accounting systems. The relationship between cost and financial accounting is also explained.
Process costing is a method used to calculate production costs for industries that produce standardized, homogeneous goods continuously through multiple processes. Costs are accumulated for each stage of production and divided by normal output to determine the cost per unit at each stage. Key terms include work-in-progress, normal and abnormal losses/gains, equivalent units, and features like continuous production and accumulation of direct and indirect costs by process. Process costing allows for periodic cost calculations and allocation of expenses to processes for accurate costs. It is simpler than job costing but provides only historical costs and average costs that are less useful for control.
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
The document discusses process costing methods used in manufacturing. It covers key steps in process costing which include summarizing output flow, computing equivalent units, computing equivalent unit costs, summarizing total costs, and assigning costs to completed and ending work in process units. The document also discusses weighted average, FIFO, and standard costing inventory methods associated with process costing and provides examples to illustrate related concepts and calculations.
JOB COSTING Nature and Purpose Job costing may be defined as a system of costing in which the elements of cost are accumulated separately for each job or works order undertaken by an organisation. Industries which manufacture products or renders service against specific orders use job costing or job order method of cost accounting. In the job costing system, an order or a unit, lot or batch of product may be taken as a cost unit, i.e., a job
Accounting Formulas, Chart of Accounts, Dr/Cr RuleAbrar Malik
This document contains formulas for various types of costing and accounting calculations including:
- Breakeven analysis formulas for calculating breakeven point by quantity, value, and contribution sales ratio.
- Overhead costing formulas for calculating cost unit rates, direct material/labor cost percentage rates, predetermined absorption rates, and more.
- Materials, labor, contract, process, and standard costing formulas for calculating economic order quantity, stock turnover, labor turnover rate, profit on a contract, equivalent production, and variances for materials, labor, overhead, and sales.
- Formulas are also provided for standard marginal costing techniques with no volume variance for fixed overhead and a sales margin volume variance.
The document discusses unit based costing (UBC) implemented at Hindustan Petroleum Corporation Ltd. UBC accumulates overhead costs for different organizational units and then assigns costs to products/services based on their use of activities in each unit. The key units considered are Fuel Refinery, Lube Refinery, and Captive Power Plant. UBC aims to provide more accurate product cost estimates for management decision making compared to traditional cost accounting. It involves identifying overhead costs like utilities, employee costs, maintenance etc. and allocating them to units based on cost drivers.
This document discusses various methods, techniques, and systems of costing. It describes job costing, contract costing, batch costing, process costing, operation costing, and others. It also covers techniques like marginal costing, direct costing, and absorption costing. For systems of costing, it explains historical costing using post-costing and continuous costing, as well as standard costing.
Understand the various aspects of maintain inventory records, that handles your two principal financial statements ie Income Statement and Balance Sheet.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc
This document is a project report submitted by Kavitake Chhaya Laxman for their M.Com program. The report focuses on process costing and includes the following sections:
1. An introduction to process costing, including its meaning, applicability, advantages, and differences from job costing.
2. The accounting procedure for a simple process costing system including a sample process account worksheet.
3. A discussion of waste and losses in process costing, how they are accounted for, and includes sample calculations and journal entries.
4. Methods for valuing work-in-process inventory including equivalent units and illustrative examples.
5. A case study of process
This document provides an introduction to accounting concepts related to cost. It defines cost accounting as recording and summarizing financial transactions and events in terms of money. It also discusses the different types of accounting, including financial accounting which publishes reports for external users, and management accounting which provides information to managers for decision making. Finally, it outlines the key steps in calculating cost of goods manufactured and cost of goods sold.
hybrid Costing process costing contract costing hMitikaAnjel
This document discusses different types of costing methods: job costing, process costing, hybrid costing, and contract costing. Job costing tracks costs for individual jobs or orders. Process costing is used for continuous production where materials pass through multiple processes. Hybrid costing combines elements of job and process costing. Contract costing determines costs for larger jobs or assignments by tracking costs to completion over time according to certification milestones.
This document provides an overview of a job order cost system. It describes job order costing as a method used when production is done according to customer orders rather than for stock. Each job has a unique cost that is tracked from start to finish using a job cost sheet. The objectives are to determine the accurate cost of each job and identify profitable versus unprofitable jobs to aid future estimates. The key aspects of job order costing include distinct work orders for each job, tracking direct and overhead costs accumulated to each job, and comparing estimated versus actual costs for process improvement and pricing future jobs.
This document discusses job-order costing, which accumulates manufacturing costs by job. Costs include direct materials, direct labor, and overhead applied using a predetermined overhead rate. Materials and labor costs are recorded on job cost sheets. Actual overhead costs are recorded in an Overhead Control account, while applied overhead credits Work in Process. Overhead can be applied functionally using a single or multiple rates, or through activity-based costing using multiple rates tied to specific activities. Variances may occur when actual overhead differs from applied overhead.
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB CO...Hardik Shah
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB COSTING AN AVERAGING PROCESS IS USED TO COMPUTE THE UNIT COSTS OF PRODUCTS OR SERVICES. - JUSTIFICATION
Technology is perhaps the greatest agent of change in the modern world. While never without risk, technological breakthroughs promise innovative solutions to the most pressing global challenges of our time. From batteries that can provide power to whole villages to microchips that could take the place of organs in medical research, this year’s 10 emerging technologies offer a vivid glimpse of the power of innovation to improve lives, transform industries and safeguard our planet.
To compile this list, the World Economic Forum’s Meta-Council on Emerging Technologies, a panel of global experts, draws on the collective expertise of the Forum’s communities to identify the most important recent technological trends. By doing so, the Meta-Council aims to raise awareness of their potential and contribute to closing the gaps in investment, regulation and public understanding that so often thwart progress.
This document discusses an exploding gum that is dangerous and not intended for children under zero years old. It cautions that the gum can hurt others and recommends seeing a doctor if gum bleeding is heavy or friends notice strange talking after use. Exploding gum allows blowing large red bubbles that explode out of the mouth, whereas regular bubble gum bubbles are smaller and less suitable for pranks.
Australia in Transition: Disruption breeds new infrastructure investment oppo...Turlough Guerin GAICD FGIA
Technological disruption is creating new opportunities for infrastructure investment in Australia. Driverless vehicles, renewable energy, and other disruptive technologies will impact demand for Australian infrastructure and may challenge existing regulations. While this creates uncertainty, it also provides opportunities to develop innovative infrastructure solutions through private sector investment to support Australia's growing population. Maintaining stable economic policies will be important to attract global investors seeking opportunities in new infrastructure.
This document outlines the academic calendar for Mekelle University for the 2015/2016 academic year (2008 EC). It provides the dates for semester start and end dates, breaks, exams, graduations and other key events. Semester I runs from September to January, followed by a two week break and Semester II from February to June. The summer program then runs from July to September. The calendar provides both Gregorian and Ethiopian calendar dates for each event and action.
A empresa ABC é do ramo de serviços há 8 anos. Ela depende de um único fornecedor para 70% de suas matérias-primas e opera com apenas 60% de sua capacidade máxima. Além disso, tem alta rotatividade de funcionários. O documento analisa esses fatos e a alocação do lucro líquido da empresa para identificar pontos de melhoria.
El documento discute la diferencia entre los derechos humanos y los derechos fundamentales. Explica que los avances tecnológicos están cambiando las categorías jurídicas tradicionales y que el acceso a Internet debe ser considerado un derecho humano fundamental. También aborda la brecha digital y la importancia de garantizar el acceso universal a Internet según los sistemas jurídicos de cada país.
This document discusses font and graphic design choices for marketing teen drama films. It notes that teen drama film titles typically use bright colors and all capital letters to draw attention. The document then describes the design process for a film trailer, where an initial "Suffragette"-inspired font was deemed too serious and not representative of the teen drama genre. Further research on dafont.com led to selecting the "TEEN" font, which was bold yet still youthful and appropriate for their teen drama film.
Este documento analiza la graduación universitaria en Argentina entre 2003 y 2013. Muestra que la graduación total aumentó un 50%, liderado por las Ciencias Sociales. Sin embargo, la graduación sigue siendo baja, con solo 32 graduados por cada 100 ingresantes. Además, la graduación en carreras científicas y tecnológicas como ingeniería es especialmente escasa. Finalmente, señala que la eficacia en la graduación aumentó en universidades estatales pero disminuyó en las privadas en ese período.
SHRM Poll on Personality Tests for the Hiring and Promotion of Employeesshrm
The majority (82%) of organizations do not use personality tests for hiring or promoting employees. Of the organizations that do use them, they are most commonly used for mid-level managers (56%), executives (45%), and entry-level exempt jobs (43%). Most HR professionals (71%) believe personality tests can be useful for predicting job-related behavior or organizational fit. The majority (56%) of organizations administer personality tests online.
What is job costing? What are its main characteristics?
Characteristics
Features
procedure involve in job order costing.
Applicability
What is BEP? List out the assumption of breakeven analysis
Assumption of BEP analysis
What is Profit Volume (P/V) Ratio
What is CVP analysis? How does it help the management?
What is process costing? What are its main characteristics? Name the industries where process costing can be applied.
Normal Loss
Abnormal Loss
Abnormal Gain
Job Costing & Process Costing
Accounting for losses in process costing
What do you mean by operating costing? Draw a specimen cost sheet for transport costing.
INDUSTRY AND CORRESPONDING COST UNIT
RECONCILIATION STATEMENT
- The document discusses key aspects of job-order costing, including tracking the flow of costs through raw materials, work in process, finished goods, and cost of goods sold accounts.
- It explains how to record transactions like purchasing raw materials, applying labor costs, applying manufacturing overhead, and transferring completed jobs to finished goods inventory.
- Journal entries are provided as examples to record these transactions and show the flow of costs through a job-order costing system.
This document discusses Accounting Standard AS-2 regarding the valuation of inventories. It outlines the objectives of accounting standards and AS-2, which are to standardize the computation of inventory costs and the valuation of closing stock. The standard applies to inventories held for sale, in production, or as materials/supplies. Inventories must be valued at the lower of cost or net realizable value. Cost includes purchase costs, conversion costs, and other costs to bring inventory to its present condition/location. Net realizable value is estimated selling price less completion/selling costs. Common costing methods like FIFO, LIFO, and weighted average are also described.
Cost accounting is the process of identifying, measuring, and communicating the financial information of a company's costs. It involves recording, classifying, and summarizing costs to determine the costs of products, services, or processes. This allows management to control costs, reduce costs, and make informed decisions. A cost sheet is an important cost accounting tool that analyzes and shows the per-unit costs to produce a product by including components like direct material, direct labor, factory overheads, and administration overheads. Management uses cost sheets to determine costs, set selling prices, compare costs over time, and aid in decision making.
This document provides information about process costing. It defines process costing as a method used to allocate manufacturing costs to products in industries that continuously convert raw materials into finished products through multiple steps or processes. It discusses key features of process costing like defining process cost centers and tracking units and costs through each process. The document also compares process costing to job costing, outlines the process costing procedure, and defines important process costing concepts like normal and abnormal losses/gains, work-in-progress, equivalent production, joint products, and by-products.
The document discusses job costing and batch costing. It defines job costing as a method where cost is compiled for specific jobs or work orders, rather than for stock. Cost is charged directly to jobs for materials, labor, and expenses. Overhead is apportioned to jobs based on department rates. Batch costing determines cost per unit by dividing total batch costs by the number of units in a batch. The document also discusses determining economic batch quantity to minimize setup and carrying costs, and provides examples of job and batch costing applications.
process costing valuation of work in progress cost accountingSWATI SAXENA
Process costing is a method of accounting where costs are charged to processes or operations and averaged over units produced. It is used for mass produced, homogeneous products made through continuous production processes that may involve different stages. Work-in-progress (WIP) represents the costs incurred to partially complete products as they flow through the production process. WIP can be valued using different methods, such as FIFO, which assumes opening units are completed first, average cost, or LIFO, which assumes most recently started units are finished first.
Cost accounting measures and reports on the costs of acquiring and using resources. It provides information for management and financial accounting to aid in planning and control decisions. Standard costing involves setting cost standards for materials, labor, and overhead and comparing actual costs to the standards to analyze variances and maintain efficiency. Standards can be either ideal, allowing for no inefficiencies, or practical, allowing for normal production inefficiencies. The standard costing process involves gathering information to set standards and then comparing actual performance to the standards to prepare performance reports.
The document discusses cost accounting concepts including cost of goods sold, manufacturing costs, and inventory. It provides examples to illustrate:
1) Cost of goods sold is calculated as beginning inventory + purchases - ending inventory and represents the direct costs to produce goods sold.
2) Manufacturing costs like materials, labor, and overhead flow through inventory accounts for raw materials, work in process, and finished goods.
3) A cost of goods sold statement details the direct material, direct labor, factory overhead, and inventory components to calculate the total cost of goods sold for a period.
Process costing is a method of accounting used in manufacturing to determine the cost per unit of production for mass-produced goods. It tracks costs through each production stage and assigns costs to units produced based on materials, labor, and overhead in each stage. Costs are accumulated by department, a unit cost is determined for each department, and then costs are transferred between departments and to finished goods inventory. Accurate costing requires that costs are identified with units produced in the same period.
This document discusses concepts related to cost analysis and production functions. It defines different types of costs such as fixed costs, variable costs, total costs, average costs and marginal costs. It also discusses the cost-output relationship in the short run and how total cost is composed of total fixed cost and total variable cost. The document then defines different types of revenue such as total revenue, average revenue and marginal revenue. It also explains the production function and how it shows the relationship between inputs and maximum possible output. Finally, it discusses the law of variable proportions, economies of scale, diseconomies of scale and what an isoquant is.
Here is the income statement for Zen Ltd under absorption costing:
Sales Rs. 1,25,000
Cost of Production:
Direct Material Rs. 48,000
Direct Wages Rs. 22,000
Variable Overheads:
Factory Rs. 13,000
Adm and Selling Rs. 2,000
Fixed Overheads:
Factory Rs. 20,000
Adm and Selling Rs. 8,000
Total Cost of Production Rs. 1,13,000
Profit Rs. 12,000
The document defines overheads as the total indirect costs that cannot be directly associated with a specific product, including indirect materials, labor, and expenses. It discusses the classification of overheads by function, behavior, and element. The key steps in overhead accounting are collecting overhead details, distributing overhead to cost centers, and reapportioning service department costs. Overheads can be apportioned to departments or cost centers using various bases such as direct allocation, direct labor hours, direct wages, or number of workers. Methods of absorbing overheads include rate per unit of production, direct wages, production hours, machine hours, direct material cost, prime cost, and sales price methods.
- Just-in-Time (JIT) and Total Quality Control (TQC) aim to improve efficiency and quality by reducing waste. JIT exposes problems while TQC eliminates constraints.
- JIT uses a pull system, small batch sizes, continuous flow, and kanban cards to minimize inventory and response times. TQC follows the plan-do-check-act cycle to continuously improve processes.
- The seven types of waste include overproduction, waiting time, transportation, inventory, unnecessary motion, defects, and excess processing. JIT and TQC work together to maximize customer value while using resources efficiently.
Unit 4 materialsmanagement 140105053839 phpapp01RASHMIPANWAR10
The document discusses various concepts related to materials management. It defines materials management and provides an integrated approach covering areas like materials planning, purchasing, inventory control, and waste management. The objectives of materials management are outlined as minimizing costs, ensuring continuous supply of materials, and cutting costs through standardization. Key functions discussed include purchasing, inventory control, storing, and disposing of scrap materials. The document also covers topics like economic order quantity, ABC analysis, material requirements planning, and enterprise resource planning.
This document provides an overview of standard costing and variance analysis. It defines standard costs as realistic estimates of costs used to set performance targets. Standard costs are developed for direct materials, direct labor, and manufacturing overhead. Variance analysis compares standard costs to actual costs to identify differences known as variances. Managers use variance analysis to control costs by investigating significant variances and taking corrective actions. The document demonstrates how to calculate variances for direct materials costs.
Job-order costing is used for unique products or services built to customer specifications. Costs are accumulated by individual job on a job order cost sheet. This allows the profitability of each job to be determined. Important documents include material requisitions, job order cost sheets, and employee timecards. Manufacturing overhead includes indirect costs like depreciation, utilities, and supervision. Overhead is allocated to jobs using a predetermined overhead rate based on an allocation base like direct labor hours.
Cost accounting involves recording, classifying, and summarizing costs to determine product or service costs. It assists management with decision making through cost analysis, determination, and reporting. The document outlines key cost accounting concepts like cost sheet elements, inventory control techniques like ABC analysis, and cost accounting objectives of planning, controlling, and reducing costs. It also discusses the differences between cost, financial, and management accounting and covers cost accounting principles.
3. TOPICS – PART 1
INVENTORY
• Definitions
• Presumed title transfer
• BoM: inventory vs expense
• Costing method
• Full Absorption Costing
• Transfer pricing; apply, do not charge
• Interco booking @ Kibo
• Labor costing: wip and fgi
• Plant overhead
• Procurement overhead
• FGI to COGS
• Overview of costing, flow, process
• Periodic stock count, valuation, and adjustment
• Inventory Journal Entries
4. Inventory Definitions
• Assets which (1) are held for sale in the ordinary course of business (2)
are in the process of production for such sale, or (3) in the form of
materials or supplies to be consumed in the production process or in the
rendering of services
Inventory
• Costs of Good Sold. Under a full absorption costing method this would
include direct materials, direct labor, production overhead, and
procurement overhead costs.COGS
• Raw materials inventory. Materials that are in stock that have not been
put into any conversion process. Essentially, raw materials are available
on stock as delivered by the vendor.Raw
• Work In Process. Materials that have been issued or kitted from stores or
the warehouse, and are in process in the production area. Materials in
WIP may lie in various stages of completion.WIP
• Finished Goods Inventory. Units that are completed and available for sale
or other disposition.FGI
• A part number (often abbreviated PN, P/N, part no., or part #) is an
identifier of a particular part design used in a particular industry. Its
purpose is to simplify reference to that part. A part number
unambiguously identifies a part design within a single corporation, and
sometimes across several corporations.
P/N
5. Inventory Definitions, continued
• Bill of Materials: a list of the raw materials, sub-assemblies, intermediate
assemblies, sub-components, parts and the quantities of each needed to
manufacture an end product.
BoM
• Direct Material Cost file. A spreadsheet created containing non-fastener
part numbers on the BoM with procurement unit prices and qty per
indicated. Extending the unit prices and qty per provides an estimated
standard cost for the BoM excluding fasteners.
DMC File
• Abbreviation for Quantity. Identifies the quantity of a sub-component
required to manufacture the end product.Qty
• Performance against standard.
• i.e. job standard is 1.0 hours, actual work of 1.0 hour is 100% efficiency
• if the job is 90% done in an hour, the efficiency is 90%
• 2 standard hours @ 90% efficiency takes 2 / 90% = 2.22 hours
Efficiency
• Actual productive time versus available time
• Working 8 hours in an 8 shift = 100%
• Working 6.5 hours in an 8 hour shift [breaks, training other] = 6.5 / 8.0
= 81.25%
Productivity
• Efficiency x Productivity = Utilization
• Efficiency = 90%, a 1 hour job takes 1.11 Hours
• Productivity = 90%; of an 8 hour shift Direct Labor is available 7.2 hours
• Utilization = 90% x 90% = 81%
• An 1 hour job takes 1 / 81% = 1.2345 hours
Utilization
6. Inventory Definitions, continued
• Hours per Unit. The standard number of hours to manufacture a product.
• HPU is the standard at 100% efficiency / productivity / utilization.
• At the time of writing of this policy, there are not technical/industrial
time studies done for the assembly of the motor vehicles, and 12 hours
per unit is deemed to be an accurate estimation.
HPU
• Equivalent Units. An equivalent unit of production is an indication of the
amount of work done by manufacturers who have partially completed
units on hand at the end of an accounting period.
• Fully completed units and the partially completed units are expressed in
terms of fully completed units. i.e. % of completion.
EU
• Intercompany. Transactions between related parties within the Group.
Interco
FOB
• Free On Board. Indicating "FOB port" means that the seller pays for
transportation of the goods to the port of shipment, plus loading costs.
• The passing of risks occurs when the goods are loaded on board at the
port of shipment.
7. Inventory Title transfer, control, risk
FOB with suppliers is
supplier location
Consolidated
shipments, FOB = closed
container [locally]
Transfer of title, control,
& risk
Kibo has access to a
“case by case” insurance
policy
Simultaneous transfer
to Kibo
Goods in Transit = Kibo
title
8. Inventory BoM: Inventory vs. Expense
•Assets which (1) are held for sale in the ordinary course of
business (2) are in the process of production for such sale, or
(3) in the form of materials or supplies to be consumed in the
production process or in the rendering of services
Definition
•Cost/benefit of inventory control
•Material Requirements Planning [MRP] management?
•Flow through the operations
In Practice
•Low value, small in size
•Fast moving, shorter lead times
•Min/Max or safety stock procurement management
•Treat as Expense [charge Plant cost center]
Fasteners
•body parts, brakes, electric parts, engine, exhaust, frame,
front fork, front wheel, handle bars, lighting, rear wheel, and
swing arms
•BoM and production scheduling drive purchase requirements
•Treat as Inventory
All other part groups
What is inventory?
9. Inventory Costing Method: Standard, Weighted Avg Act, or…?
Topic Dynamics Effecting Cost per Unit Current Policy Costing
Method
Direct Materials • Stabilization/finalization of BoM, minimizing
obsolescence and optimizing lead times
• Price changes based on volume leverage, sourcing, and
negotiations
Standard cost from DMC
file estimate of $1608.02
will be used for EU and
COGS units.
Direct Labor • Reduced rework
• New hiring and training stabilizes which minimizes
learning curve effects
• Effective direct labor per unit reduction, since production
assembly staff are effectively paid on a fixed monthly
salary basis
• Continuous improvement, Lean, Six Sigma
implementation
Actual costs: Total
variable direct labor costs
per hour will be used on
WIP and FGI EU.
Production
Overhead
• Reduced overhead per unit based on increased volume
throughput
Actual overhead costs
based on standard
theoretical capacity.
Procurement
Overhead
• Sourcing
• Reduced frequency of expedited orders
Actual costs: Procurement
cost center as % of
inventory received,
applied to ending material
inventory value.
10. Inventory Full Absorption Costing
Concept Explanations
What is Full
Absorption
Costing?
• All of the manufacturing costs are absorbed by the units produced
• cost of a finished unit in inventory includes direct materials, direct labor
• variable and fixed manufacturing overhead
• COGS reflects all direct and indirect costs of production
Direct vs.
Indirect
• Direct
• Identifiable to products or services
• The process included in the HPU
• Indirect
• Not specifically identifiable to an end-unit/FGI
• Administrative, supervision, management
Production
Overhead
• Plant cost center
• Indirect employee costs, depreciation, facilities, supplies, etc…
Procurement
Overhead
• Transport
• Duties/import fees that are not-reclaimable
• Typically procurement, warehouse, handling staff
Applying Full
Absorption
Costing
• Production Overhead per unit
• Theoretical capacity basis [10 units / week / 50 weeks per year]
• Procurement overhead
• Procurement overhead % [procurement CC / inventory purchases]
• Applied to ending gross materials /inventory value
11. Inventory Interco and proper cost objectives
Concept Explanations
IntraGroup is not
“trade”
• Interco transactions should not be presented as part of trade creditors or
debtors
• Separate as intercompany
• Facilitate intercompany consolidation [elimination]
• Proper consolidation to external parties [assets, liabilities, ratios]
Manual work
flows
• PO administration
• Invoice administration [transport/commercial and interco]
Identification • Excel administration
• Important to identify and align on proper cost objectives
• international transport costs, tools as expense, capitalized tooling for
production, product development, GASS, spare parts
12. Inventory EU in WIP and FGI, Direct Labor Costing
Concept Explanation
Proper
presentation of
Raw, WIP, FGI
• Present inventory status in ledgers and management reporting
• Control, accountability
• Observation of status at period close
• Materials vs. labor vs. % of completion of units
Full Absorption
Costing
• Direct labor and overhead as part of inventory valuation
• Direct labor: total variable cost per hour
• Gross wages, medical, social security, lunch, unused vacation days
Revenue &
Expense
recognition
• Full absorption model also results in concurrent recognition
• Revenues, COGS
Other • Cumulative YTD basis, for units on hand in inventory
• Not the same as “units produced”
Example • Beg EU FGI: 20
• Units produced 30
• Units sold 40
• End EU FGI: ?
• What’s the number of units for the WIP/FGI labor & overhead analysis?
10
13. Inventory EU in WIP and FGI, Direct Labor Costing [the model]
a b c d e f g f + g
a x b c x d c x e
DMC File/Standard Cost
63 total units issued to product @ $1608,02
14. Inventory Overview – inventory account movements
Account type Increments Decrements
Goods in transit Based on Interco invoices from Koneksie BV,
when goods are shipped from Vendors and
have not yet arrived in Kenya.
Goods are received and
transferred to Raw Materials.
Raw / parts in
stock
Interco invoices for shipments received by
Kibo.
Period ending WIP/FGI
analysis, based on % of
completion and EU’s, and
applying Standard cost BoM.
WIP Period ending WIP/FGI analysis, based on %
of completion and EU’s, and applying
Standard cost BoM.
Changes in WIP/FGI balance
from period ending analysis
based on EU.
FGI Period ending WIP/FGI analysis, based on %
of completion and EU’s, and applying
Standard cost BoM.
Also, any purchased/transferred completed
units from outside Kibo.
Recognition of sold units, @
standard cost of direct
material file.
15. Inventory Periodic GL Inventory Adjustment to Stock Count
Steps Comments
Suggested
timings
• Minimum 1x / year, with auditor observation
• Aligned to significant period result reportings/presentations
• Inherent risks or weaknesses in inventory control & process
1. Stock count • Qty of Part numbers of inventory parts [not fasteners]
• Unless there are specific provisions/reserves, obsolete/cancelled
part numbers should not be included
2. Apply Unit
Prices
• USD Unit prices [latest PURCHASE cost-prices, not future/new
contracts]
• Historical cost perspective
3. Weighted
AVG FX
[Eur/USD]
• Based on timing, amount, and effective purchases reflected in
ending inventory [not of Exact, OANDA, or other]
4. Post
Adjustment
• Compare the valuation from steps 1-3 to the Exact GL balance
and adjust accordingly using
17. Inventory Sample Journal Entries [KIBO]
Description Month 1 Month 2
Beginning FGI 0 5
Produced 10 15
Sold 5 10
Ending FGI 5 10
List Price KES 295.000 KES 295.000
Standard BoM KES 160.800 KES 160.800
HPU 12 10,8
DL / hour KES 216 KES 216
Plant Ovhd / unit KES 38.036 KES 38.036
Procure % 49,38% 40,00%
Plant CC Runrate [IndirectCosts] KES 1.834.528 KES 1.834.528
Inventory:
Kits Procured 60 10
Inventory Procured KES 9.648.000 KES 1.608.000
Raw KES 8.040.000 KES 7.236.000
WIP KES 0 KES 0
FGI KES 804.000 KES 1.608.000
Total KES 8.844.000 KES 8.844.000
P&L
Revenue KES 1.475.000 KES 2.950.000
COGS:
* Materials -804.000 -1.608.000
* Plant -1.834.528 -1.834.528
* Procurement -4.764.447 -643.200
Plant Reversal - 203.166
ProcurementReversal - 4.367.410
New Plant overhead Adjustment -203.166 -403.735
New Procurement overhead Adjustment -4.367.410 -3.537.600
Gross Profit -10.498.551 -506.487
Gross Margin -711,8% -17,2%
Cost / Unit KES 2.394.710 KES 345.649
B/S
Materials:
Raw KES 8.040.000 KES 7.236.000
WIP KES 0 KES 0
FGI KES 804.000 KES 1.608.000
Labor & Overhead KES 203.166 KES 403.735
ProcurementOverhead KES 4.367.410 KES 3.537.600
Total KES 13.414.576 KES 12.785.335
Month 1 Debit Credit Month 2 Debit Credit
1. Inventory Procured from Koneksie BV 1. Inventory Procured from Koneksie BV
60 kits @ Standard BoM 10 kits @ Standard BoM
30000 Parts in stock KES 9.648.000 30000 Parts in stock KES 1.608.000
Interco Pay to Koneksie BV KES 9.648.000 Interco Pay to Koneksie BV KES 1.608.000
2. Inventory movement to FGI 2. Inventory movement to FGI
10 for units produced @ Standard BoM 15 for units produced @ Standard BoM
30200 FGI KES 1.608.000 30200 FGI KES 2.412.000
30000 Parts in stock KES 1.608.000 30000 Parts in stock KES 2.412.000
3. Units Sold 5 @ List Price 3. Units Sold 10 @ List Price
80009 Revenue KES 1.475.000 80009 Revenue KES 2.950.000
13000 Trade AR [or 16700 Prepayments] KES 1.475.000 13000 Trade AR [or 16700 Prepayments] KES 2.950.000
47XXX COGS KES 804.000 47XXX COGS KES 1.608.000
30200 FGI KES 804.000 30200 FGI KES 1.608.000
4. Ongoing Plant Cost Center Costs 4. Ongoing Plant Cost Center Costs
4XXXX Various KES 1.834.528 4XXXX Various KES 1.834.528
16XXX or 17XXX KES 1.834.528 16XXX or 17XXX KES 1.834.528
5. Apply Labor and Overhead to FGI 5a. Reverse Month 1 Labor and Overhead
5 Units @12 HPU @ KES/HR and Ovhd/unit
30250 Production Overhead Applied KES 203.166 30250 Production Overhead Applied KES 203.166
49500 Production Overhead Adjustment KES 203.166 49500 Production Overhead Adjustment KES 203.166
5. Apply Labor and Overhead to FGI
10 Units @10,8 HPU @ KES/HR and Ovhd/unit
30250Production Overhead Applied KES 403.735
49500Production Overhead Adjustment KES 403.735
6. Monthly Procurement Cost Center Costs 6. Monthly Procurement Cost Center Costs
4XXXX Various KES 4.764.447 4XXXX Various KES 643.200
17XXX KES 4.764.447 17XXX KES 643.200
7. Apply Procurement Overhead to Inventory Balance 7a. Reverse Month1 Procurement Overhead
30260 Procurement Overhead Applied KES 4.367.410 30260 Procurement Overhead Applied KES 4.367.410
49600 Procurement Overhead Adjustment KES 4.367.410 49600 Procurement Overhead Adjustment KES 4.367.410
7. Apply Procurement Overhead to Inventory Balance
30260Procurement Overhead Applied KES 3.537.600
49600 Procurement Overhead Adjustment KES 3.537.600
20. TOPICS – PART 2
REVENUE RECOGNITION
• Definitions
• Revenue or Cost?
• The Sales Menu
• GL Dimensions
• Gross vs. Net revenues
• Vehicles: additional charges
• Vehicle payment/sales process
• After Sales: Repair vs. Maintenance
• Service contracts
• Standard warranty
• Multiple elements
• Franchise Revenue Streams
• Intercompany elimination
21. Revenue Recognition Definitions
•Revenue arises in the course of an entity’s ordinary activities.
It is referred to by a variety of terms including sales, fees,
interest, dividends, royalties and storage.
•Koneksie Group records revenues using the Group
international chart of accounts as net revenue. (net price after
discounts from sales deals)
Revenue
•In addition, revenue from the sale of goods is recognised
when:
•the entity has transferred to the buyer the significant risks
and rewards of ownership of goods; and
•the entity retains neither continuing managerial involvement
nor effective control over the goods sold.
Sale of Goods
•The amount by which the Standard sales price has been
adjusted.Discount
•Terms and Conditions for sale of KIBO motorcylesT’s & C’s
22. Revenue Recognition Definitions
•Two or more transactions need to be grouped together if they
are linked in a way that the whole commercial effect cannot
be understood without reference to the series of transactions
as a whole.
•i.e. combine vehicle sales with service and accessories,
potentially as “bundled sale” with a total discount applied.
Multiple Element
Arrangements
•Royalties are recognised on an accruals basis in accordance
with the substance of the relevant agreement.Royalties
•Business model of organizations or companies selling direct to
other organizations or companies. Abbreviation for “Business
to Business”
B2B
•Business model of organizations or companies selling direct to
consumers. Abbreviation for “Business to Consumer”.B2C
23. Revenue Recognition Revenue or Cost / the Sales Menu
Company Sales Menu
KFC • Various types of chicken
• Drinks
• Side dishes
• Menu’s
KA • Provides procurement services to BV
• Intercompany
KO • Provides strategic direction and access to IP of design of motorcycles
• Controls the Franchise strategy model.
• Sells materials to Kibo which may be at a higher transfer price than acquired
from KA, and sells franchise products and services.
Kibo • Assembles and sells vehicles
• Provides after sales services, training, gear and accessories
• No “upstream” intercompany sales expected
24. Revenue Recognition Dimensions
• GL account
• Type: Vehicles, GASS, After Sales,
Training, Services, Franchise, Interco
• Cost Center
• Cost Unit
Current
• Country
• Model
• Configuration
• GASS specifics
• Business models [B2B, B2C]
• Sales channels [direct, indirect,
franchise*]
Future Potential
25. Revenue Recognition Gross vs Net Revenues, Additional Charges
Gross /
List Price
Discounts Net Price
Vehicle
Revenue
Motorcycles
FX rate
changes
Storage
Delivery
Sales taxes
Duties
Interest
• Revenues are recognized at Net • Vehicles revenues include
additional charges
26. Revenue Recognition When is Revenue recognized?
the gross inflow of economic
benefits (cash, receivables, other
assets) arising from the ordinary
operating activities of an entity
• Sales Menu
such as sales of goods, sales of
services, interest, and royalties
it is probable that any future
economic benefit associated with
the item of revenue will flow to the
entity
• Payment in advance
• Credit standing of B2B customers
the amount of revenue can be
measured with reliability
• List price
• Agreed “deal”
• Invoice
Revenue
27. Revenue Recognition When is Revenue recognized?
Rendering
of
Services
amount of revenue
can be measured
reliably
probable that the
economic benefits
will flow to the
seller
stage of completion
at the balance sheet
date can be
measured reliably
costs incurred, or to
be incurred, in
respect of the
transaction can be
measured reliably
Sales of
Goods
Seller transfer to
buyer risks and
rewards of
ownership
Seller has no
managerial
involvement nor
effective control
amount of revenue
can be measured
reliably
probable that the
economic benefits
associated with the
transaction will flow
to the seller
costs incurred or to
be incurred in
respect of the
transaction can be
measured reliably
28. Revenue Recognition When is Revenue recognized?
Payment
• In advance, and
cleared
Actual risks
• Not to buyer until
delivery
Kibo
responsibility
• Maintains until
delivery
Vehicle
delivery
• Sale of goods
completed
• Revenue can be
recognized
• COGS recognition
Per 2015 Kibo T’s and C’s
Sections 4.7, 5.2, and 5.3
29. Revenue Recognition After Sales: Repair or Maintenance?
The After Sales Revenue category includes the following:
Repair services, Maintenance services, Service contracts, Spare parts
Revenue accounting is driven by conditions of After Sales being Contract or non-contract
Maintenance
•Routine, perhaps scheduled
•Oil/fluids
•Tire pressure check
•Brakes pads/discs/system
•Chain
•Tires
•Lubrication
•Filters
•Battery
•In the process of maintance, you may find items
needing repair or replacement
Repair
•Is it broken?
•Malfunction
•Replacement
•Can the vehicle safely be operated?
•Warranty vs out-of-warranty
30. Revenue Recognition Service Contracts
Included in
sales price
Future
obligation
• Recognize in
the future
Defer
Revenue
Not Standard Warranty. These are service agreements to conduct maintenance, and
potentially include repairs
Assign revenue
•Based on relative
list prices or
Benchmark study
Balance sheet
provision
•Part of current
liabilities
Recognize
•Over time or
activity-based
•Costs recognized
as incurred
31. Revenue Recognition Standard Warranty
What is
Warranty?
• Promise that the product complies
with the specifications in the contract
• Materials free from defect
• Workmanship
• Properly constructed of
proper materials
• the customer does not have the option
to purchase a warranty from the entity
separately
• Recognize revenue and
concurrently accrue any expected
warranty cost when the product
is sold.
• Revenue from separately priced
extended warranty contracts is
deferred and recognized over the
expected life of the contract.
GL Accounts Non-current / recall liability
Non-current expense
Standard product liability [current liability]
% of revenue or COGS?
Standard product expense
07080
44225
19500
44220
32. Revenue Recognition Multiple Elements
• Discounted
by 10%
Vehicle
Intro price
295k KES
• 10% of bikes
will require
5k of
materials
Standard
Warranty
• Available for
Sale @ 10k
1 year
Service
Contract
• Helmet list
price: 2k
• Boots list
price: 3k
Helmet
and boots
included
• Fair value 1k
Rider
Training
course
Sample Deal
Sales Price 90% KES 265.500
Description List Price % of Total Allocation
Vehicle KES 295.000 94,9% KES 251.841
Standard Warranty - KES 0
1 Year service contract KES 10.000 3,2% KES 8.537
Helmet KES 2.000 0,6% KES 1.707
Boots KES 3.000 1,0% KES 2.561
Rider Training KES 1.000 0,3% KES 854
Total KES 311.000 KES 265.500
G/L Description GL Account Debit Credit
Vehicle Revenue 80009 KES 251.841
Standard Warranty Expense 44220 KES 500
Standard Warranty Liability 16600 KES 500
Deferred Service Contracts 16250 KES 8.537
Revenue GASS Helmets 80080 KES 1.707
Revenue GASS Boots 80095 KES 2.561
Training Revenue 80130 KES 854
Trade AR 13000 KES 265.500
Totals KES 266.000 KES 266.000
Deferred Service Contracts 16250 KES 711
Revenue - Service Contracts
[1/12]
80120
KES 711
* Monthly Amortization
Standard Warranty Liability KES 495
Inventory KES 495
* Actual warranty claim, materials used
Totals KES 1.206 KES 1.206
33. Revenue Recognition Franchise Models
License
Rights to particular
market
Usually covers several
years
Payment upfront =
deferred revenue
recognized over the
contract period
Accounts:
•Unamortized Licenses:
07060
•AR: 13050
•Uncollectible accounts:
13150
•Revenue: 80155
Equipment
Sales
“Koneksie” approved
production equipment
Where will franchisees
get the equipment?
•This revenue stream in
case Koneksie sells to
Frachisees
Accounts:
•Prepaid Equipment for
Sale: 30910
•Equipment for Sale:
30500
•Equipment Revenue:
80160
•Equipment COGS: 47160
Parts/Inventor
y Sales
Will franchisees buy
“start-up” inventory
from Koneksie?
Will Franchisees buy
directly from Suppliers
or via Koneksie?
Accounts:
•Inventory: 30450
•Revenue: 80165
•COGS: 47165
Royalties
Ongoing % of
franchisee revenues
Accounts:
•Revenue: 80170
•COGS: 47170 (potentially
none)
The Franchise “Sales Menu” is unique compared to the 3 other Group companies
34. Revenue Recognition Intercompany Elimination
Description KA KO Kibo
Cost Plus
Mark-up % on
Operating
Expense
80180 Revenue Interco
Services
* Leaves a small taxable
residual in Asia
47180 COGS
Interco Services
Royalties [IP] 80190 Interco
Royalty Revenue
47190 Interco
COGS Royalty
Head Office
Charge
80195 Interco
Head office Charge
47195 Interco
COGS Head Office
Charge
Part Sales w/
Mark-up
80175 Interco Part
Sales
47175 Interco
COGS Part Sales
Interco Profit Kibo’s inventory will include the interco mark-up, which needs to be
eliminated. Use the mark-up% and inventory value to determine
the amount of interco gross profit to eliminate in Consolidation.
35. TOPICS – PART 3
PERIODIC CLOSES
•Definitions
•Accounting basis: IFRS, DAS, HK?
•Close days
•Check lists
•Status on chart of accounts
•Cost structure
•Staff costs
•Expense recognition: Bonus/variable, vacation days, employer wage costs
•Rent
•Insurance
•Deposits for property leases
•Prepaid expenses
•Prepayments to vendors for tooling
•Prepayments to vendors for inventory materials
•Marketing expenses
•Allowances: bad debts, warranty, inventory
•Exact close procedures
•Quality Control
•Management package overview
36. Periodic Closes Definitions
•Costs of Goods Sold. This includes the prime costs – direct
materials and direct labor – and related overhead for Plant and
Procurement cost centers. These are specifically production
costs related to the manufacture of goods to be sold.
COGS
•Chart of AccountsCoA
•Koneksie AsiaKA
•Koneksie BV in the NetherlandsKO
•Journal Entry. A procedure at the general ledger of the financial
system represented in debits and corresponding credits that
net to zero.
JE
•Dutch Accounting StandardsDAS
•International Financial Reporting StandardsIFRS
37. Periodic Closes Accounting Standards
KA KO Kibo
Standard • HKFRS
• Converged with IFRS
• Dutch Accounting Standards
[DAS] for small companies
• Minimal presentation
required
• IFRS applicable for large and
publicly traded companies
• IFRS
• IFRS for SME’s
Notable
Comparisons
• Chart of Accounts
• Revenue / Costs
placement
• Mostly alike for Revenue
• LIFO inventory not allowed
by IFRS
Group Policy • Potential investors will not be just Dutch, not just Kenya
• IFRS:
• Chart of accounts structure
• Leads to financial reporting structure
• Mapping for Statutory Accounts 1x per year
• General features: Fair presentation, Going Concern, Accrual basis, Materiality and
aggregation, Offsetting [forbidden], Comparability, Consistency
• Qualitative characteristics: Relevance, Faithful presentation, Verifiability, Timeliness,
Understandability
• Recognition of Elements in the financial statement
38. Periodic Closes Close Days
-
5
-
4
-
3
-
2
-
1
Periods
• Fiscal months & years
• Prior months to be closed once
completed
• Only current month opened?
• Prior years closed once Statutory
Accounts completed
Close Days
• Reference last and first business
days in the month
• + and - concerning the
current/close month
• Close doesn’t not always start on
the same day
+
1
+
2
+
3
+
4
+
5
-
5
-
4
-
3
-
2
-
1
+
1
+
2
+
3
+
4
+
5
-
1
-
2
39. Periodic Closes Check Lists
Close May 2016
Company Topic Action Who When Done Approved Follow up
BV Salary journal Make Salary journal RW -7 x
BV On charge Gotektsi for DvS TH RW -7 x
BV Cash USD Book them RW -5 x
BV Cash CNY Book them RW -5 x
BV Cash TWD Book them RW -5 x
BV Cash HKD Book them RW -5 x
BV Cash DKK Book them RW -5 x
BV ABN Amro Euro Book them RW 1 x
BV ABN Amro Euro Book them RW 1 x
BV ABN Amro USD Book them RW 1 x
BV Cash EUR Book them RW 1 x
BV Niet toegewezen bank 23000 Must run on "0" RW 1 x Input Huib/thami/Pauline
BV Salary journal Make Bonnus journal RW 1 x
BV Make vacation payment journal RW 1 x
BV Intangible assets Book the investments from the period to the specifications RW 1 x Input from Pieter
BV Adjust depreciation for period in speccifications RW 1 x
BV Book depreciation for period in Exact Online RW 1 x
BV Check general ledger with Specification RW 1 x
BV Tangible assets Book the investments from the period to the specifications RW 1 x Discuss tooling with Pieter
Common Format
• Excel
• Filter & Sort
All items
• JE’s
• Reports
• Exact tasks, etc
Focus
•Completed
•Challenges
Timing
•Chronological flow best
•When is in “close days”
Perpetual updates
40. Periodic Closes Chart of Accounts, Status
•Attempt to maintain current
groupings
•All 3 companies
•Done in week 23 / 2016
•Maintain GL Account
transactional history
•Fully implement with new
ERP
•IFRS structure
•Balance sheet liquidity
•Revenue at top of P&L
•Flexibility
•Future business models
•Single language
•Element/type
•322 accounts
•30 Revenue accounts
New 6-
Character
IFRS
Version
Current
Version
Mapped
Gaps
added
Uploaded
to Exact
41. Periodic Closes Cost Structure
Plant
•Activites
related to
production /
assembly of
vehicles
•Mfg Ovhd CC
Procurement
•Supply chain
•Transport
•Duties
•Overhead CC
•Materials
Management
?
R&D / Product
Development
Sales
•Vehicles
•Profit Center
After Sales
•Services
•Profit Center
GASS
•Profit Center
Training
•Profit Center
M&A
•Management
•Finance
Cost Center Focus
Overhead pools
• What does it cost to
make a unit?
• Production / Assembly
• Materials
Management
Accountability
• Financial
responsibility
Revenue / Profit
Center Management
• Gross Profit at Product
category
42. Periodic Closes Staff Costs – Guiding Principles
Reflect Local Labor Laws
•What happens when an employee leaves?
•Vacation days carryover / balances
•Bonus payments
•Additional months
Local Company Policy
•Vacation days carryover / balances
•Bonus Payments
Payroll at Gross
•Actual costs to Koneksie Group
•Employee taxes are withheld and remitted
•So far, KO and Kibo employees are “monthly
salaried” and paid before month end
•Month end wage accruals not necessary
•NL holiday pay paid each month
Use of proper GL accounts
•Employee
•Casual Labor
•Interim / Temporary
•Agency
•Management fee
•Payroll added costs
•Employer wage tax/social costs/Benefits
Cost Center Focus Applied
Timing / Recognition
•Accruals -
•When earned, not when paid
•Vacation days
•Bonus
•Sales Quotas
•Management Objectives
•Productivity
Minimize “Trend Blips”
43. Periodic Closes Other Items Affected by Accruals & Recognition
• Period prepayments
• Carry on the balance sheet
• Free rent periods
• Amortize net total payments over entire lease period
Rent
• Match premiums to coverage periods
• When no invoice, accrual estimates
Insurance
• Carry on balance sheet
• Charge to Expense as Landlord applies to rent
Deposits for Leases
• Recognize over appropriate periods
• Ongoing review
• T’s & C’s [rights to return/adjust]
Prepaid Expenses
• Often paid in phases
• Trigger for capitalized & depreciate:
• When Tooling is completed
Prepayments to vendors:
Tooling
• Vendor invoices booked effectively at net
• No liability once prepayment is paid
• Are current assets
• Transfer to inventory when vendor “Sale of Goods” per FOB terms are met
Prepayments to vendors:
Inventory
• Fixed amount for current period
• Actual costs for past periods
• Potential for accruals
Subscriptions / mixed
contracts
• Deadlines and Products can be different than Supplier Invoicing timing
• Watch T’s and C’s of projectsMarketing Expenses
44. Periodic Closes Allowances and Write-offs
Bad Debts
• Provision for AR that becomes
uncollectible
• Establish Allowances:
• DR 45600 CC ?
• CR 13100 / 13150 Franchise
• Write-offs
• DR 13100 / 13150
• CR 1300 / 13050 Franchise
• VAT Payable?
Warranty
• Provision of costs to meet
warranty obligations
• Establish Allowances:
• Short-term / Recall
• DR 44220 / 44225
• CR 16600 / 07080
• Write-offs
• DR 16600 / 07080
• CR 30000 / 30460
Inventory
• Provision for
obsolete/excess/impaired
stock
• Establish Allowances
• DR 47220
• CR 30700
• Write-offs
• DR 30700
• CR 30000
Historical /
Expected %
Establish
allowances
• Asset
valuation
• During the
Close
Write-offs
• Against
allowances
Update
Historical
%’s
Repeat
45. Periodic Closes Exact Close Procedures: Process and Revaluation
1. Process all entries
2. Set journal type to “90”
3. Set financial year
4. Select “to be processed” entries
5. “Process”
46. Periodic Closes Exact Close Procedures: Process and Revaluation
6. Update FX RATES
OANDA +4% [2015]
Avg, KCB / Oanda 0% [2016]
47. Periodic Closes Exact Close Procedures: Process and Revaluation
7. Revaluation
8. Select currencies
9. Select journal type “90”
10. “Process”
48. Periodic Closes Exact Close Procedures: Others
Year End Close
Menu selection
Process the Final P&L
• Roll results to Retained
Earnings
G/L Account
Upload
Menu selection
File layout
Mandatory fields
Field criteria and
selections
49. Periodic Closes Quality Control
Quality
Financial
Reporting
Policies &
Procedures
•Standards
•Accounting
treatment
Accounting
period control
•Right place, right
time
Schedule and
Task
Management
•Checklists
JE review &
approvals
• Peer Reviews?
Trend analysis
•Financial Statements
•GL Account
•Cost Center
•Cost Unit
Balance Sheet
Reviews
•Specifications
Management
Reporting
50. Periodic Closes Management Package Overview
Accounting
basis
Accounting basis is IFRS.
Generally IFRS and DAS
theories are aligned.
Kenya adopted IFRS in
1999.
Differences: presentation
formats, inventory costing
methods allowed, audit
requirements for small
companies, practical Chart
of Accounts structure.
Transfer
Pricing
Current policy is "apply but
do not charge". Effectively
transfers are at cost-price.
No Royalties. No Head
Office charges. No mark-
up on inventory.
Revenue
Recognition
Transfer of title, control,
and risk: Delivery of
vehicles.
Prepayments from
customers are not
recognized as revenue
until vehicles are
delivered.
Currently no revenue
deferral for included
services on vehicle sales.
Profit
Centers
Kibo in total treated as a
single Profit Center
Cost
Centers
P&L costs have been
assigned to departments
via "cost centers" for all
types of expenses
Cost Centers: Plant, Sales,
After Sales, GASS, Training,
Product Development,
Procurement, M&A
Excise Tax assigned to Sales
cost center
Standard Levy Tax to Plant
CC
No cross-department
allocations/splits are
reflected [staff are 100%
assigned to a single cost
center]
51. Periodic Closes Management Package Overview
COGS
Costs of goods sold are
aligned to revenue
recognition of vehicles
delivered.
Includes direct
materials, and PLANT
cost center; production
and warehouse
Direct and indirect
wages, facilities,
depreciation, supplies;
"production overhead"
Adjusted for estimates
of WIP & FGI [estimate
added to inventory
valuation]
Expense
recognition
Expenses are matched
to corresponding
periods.
Depreciation of IP and
fixed assets
Prepayments for rent,
insurance, services are
amortized to associated
periods
Staff costs
Classifications between
FTE payroll / external /
casual labor
Provisions for vacation
days, variable
compensation
Other
Currently no
provisions/estimates
for standard warranty
costs
No Allocation for
Service Contracts and
Deferred Revenue
Budget P&L focus on
cash spending and
funding; no
comparative basis P&L
Future
enhancements
Split profit centers
within KIBO: Sales, After
Sales, GASS, Training
Revenue and COGS at
profit center level
Allocation keys for
OPEX: staff, facilities,
depreciation, supplies,
etc…
Standard warranty
provisions
Deferred revenue for
included Services
Current Month and YTD
results
52. Periodic Closes Management Package Overview
Functional P&L
•COGS, Gross Profit, Cost Center Costs, Operating Income
•Sales Variance Analysis
Cost type P&L:
•COGS [DM only]
•Focus on Expense categories
COGS Breakdown
•Present the various cost elements of COGS/unit
B/S & Metrics
•Return on Sales
•Inventory Turns
YTD Cash usage
Headcount
•Cost center level vs. Budget
Benchmarking
•Financials vs. Global Public Motorcycle Makers
• ROA
• ROE
• Factors driving ROE [3 ratios]