costs

costs

1. Cost Accounting

   • related to
     • - The accumulation - The analysis - interpretation of the cost
       • by means of
         • The acquisition, production, distribution and administration
           • For the internal use of the management and development of the decision making process
       • costs

2. Management Accounting

   • Accounting information for internal purposes
   • This being the most used for information, on issues of direction
   • Allows to know the result of the company in each of their areas.

3. History of costs

   • It is estimated that began in 1775 through the industrial revolution; but until 1880 leads to the conclusion that the criteria used in the industry were not correct.
     • industrial revolution
     • In 1910 are connected with the management of costs, by means of the evolution of the raw material
       • Two types of industrial activities
       • In 1920, there was a substantial progress, to be the costs used by managers.
         • for this reason
           • Between 1930-1935, standard costs appear to be perfected in the second world war, finding an alternative way of maximising profits
             • Second World War
             • Between 1940-1950, focused on how to manage the costs and controlling the demand
               • In 1953, American AC.LITTELTON, in view of the growth in fixed assets, saw the need to amortize by means of rates of consumption the CIF.
                 • In the 80 years highlighted the importance of the accounting and costing systems, and how these were a fundamental part of the process of management.
                   • management
       • Evolution of the raw material
   • Customer orders and continuous production
   • From 1985 onwards has been improved the management of costs and how these influence in companies

4. Cost System

   • Work Orders
     • It is a method of accumulation and distribution of costs by orders used by manufacturing companies according to the customer request
   • Costing Process
     • It is a system of accumulation by cost of production by department or cost center
       • When in a department is made more than two processes, this already can be divided into cost center

5. Classification of costs

   • According to the area where it is consumed
     • Production Costs: is the process of transforming the raw material to finished product ( MP to PT) ; are classified in direct material (MD), direct labor (MOD),indirect costs of manufacture (CIF)
     • Distribution Costs: are the ones that are generated for the product or service to the end consumer.
     • Administration costs: are those generated in the administrative areas of the company (Expense)
     • Financing Costs: are those that are generated by the use of capital resources.
   • According to their identification
     • Direct: are the costs that can be easily identified with the product
     • Indirect: It is difficult to associate them with a specific product or service
   • Time is calculated
     • Historical: are costs that are past, which were generated in a previous period.
     • Default: are costs that are calculated based on statistical methods
   • Time that is reflected
     • costs of the period are the costs that are identified with time periods and not with the product
     • Costs of the product: it is the cost of goods sold
   • According to the degree of control
     • Controllable costs: are those costs over which the direction of the organization has the authority to generate or not
     • Non-controllable costs: are those costs on the which there is no authority for its control.
   • Importance on the decision making process
     • Relevant costs: the relevant costs are those that are modified to take one or the other decision
     • Costs not relevant: are those costs that independent of the decision taken by the company to remain constant
   • With relation to the volume of activity
     • Fixed costs: Are those costs that remain constant over a period of time, no matter of the volume of production.
     • Variable costs: are those that are modified in accordance with the volume of production, that is to say, if there is no production there is no variable costs and if there are many units the variable cost is high. uniformly variable cost is considered fixed, while in full is considered variable
     • Semi-variable costs are those costs that are composed of a fixed part and a variable part that is changed in accordance with the volume of production
       • Mixed: are the costs that have a fixed component and from this begin to increase
       • Staggered: are those costs that remain constant up to a certain point, then grow up to a certain level, and so on.

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