PART ONE:FUNDAMENTALS 2
CHAP． 2
Ⅰ．The theory of costing 2
Why cost? 2
Preface to the second edition 5
Basic costing concepts 5
CONTENTS 5
The classification of costs 9
Costing methods and techniques 12
LIST OF FIGURES 13
1．Costing methods and techniques 13
FIG． 13
Purchasing 20
Ⅱ．Materials:purchasing and storekeeping 20
PART TWO:COST DATA 20
Storekeeping 24
Stores control 31
Ⅲ．Materials:control and pricing 31
Pricing stores issues 36
2．Issue price methods 37
Comparison of the common methods of pricing stores issues 41
3．Stores records card 41
Methods of remuneration 45
Ⅳ．Labour 45
4．Labour remuneration:(a)Earnings per hour;(b)Cost per 100 units 51
Related labour techniques 53
Gate timekeeping 56
Recording labour times 57
Wages office procedure 59
Ⅴ．Direct expenses 63
Ⅵ．Overheads 65
What are overheads? 65
Collection and classification of overheads 66
Overheads requiring special consideration 67
Depreciation and obsolescence 69
Introduction 78
Ⅶ．Allocation,apportionment and absorption of overheads 78
PART THREE:COST ASCERTAINMENT 78
Overhead analysis 79
CHAP． 79
5．Overhead analysis 80
Overhead absorption methods 86
Overhead absorption:general considerations 90
Absorption of non-production overheads 95
Factory job costing 99
Ⅷ．Job costing 99
6．Exampie ofa job cost preparation 100
7．Job card design 101
Contract costing 102
Integral accounts 108
Ⅸ．Cost accounts 108
8．Chart ofaccounting flow in an integral accounts system 109
Accounting for material costs 111
9．Material accounting flow chart 112
Cost control account 114
Accounting for labour costs 114
10．Wage accounting flow chart 115
11．Effect of inocluding a Cost Control Account in an integral accounts system 117
12．Chart of accounting flow in an interlocking accounts system 118
Interlocking accounts 119
Cost accounts code 121
Ⅹ．Unit costing 126
Output and operating costing 126
13．Output cost statement 127
Simple process costing 128
Normal losses in process 132
Abnormal losses in process 134
Other considerations in process costing 136
14．Process cost computations:units lost part-way through the process 139
Process cost book-keeping 140
Ⅺ．Waste,scrap,by-and joint products 144
Waste and scrap 144
By-and joint products 145
Subsequent processes and costs 147
15．Joint and subsequent processes and costs 147
PART FOUR:MARGINAL COSTING 150
Ⅻ．Break-even charts 150
Theory of break-even charts 150
16．Traditional break-even chart 151
Segregation of fixed and variable costs 153
17．Segregation of fixed and variable costs by scattergraph 154
Break-even chart variants 155
18．Break-even chart with variable costs at base 156
19．Cash break-even chart 157
Validity of break-even charts 157
20．Break-even chart with profit appropriation 158
21．Profit graph 159
22．Actual cost curves:(a)Total cost curve;(b)Fixed cost curve 160
Marginal costs and break-even chart theory 162
ⅩⅢ．Marginal costing 162
Marginal cost statements and accounts 167
Marginal costing and decision-making 171
23．Chart of marginal cost accounting 172
Marginal costing versus total absorption costing 175
Differential costing 177
ⅩⅣ．Prioing 186
PART FIVE:COST PLANNING AND CONTROL 192
Fixed budgets 192
CHAP． 192
ⅩⅤ．Planning for objectives 192
24．Inter-relationship of functional budgets 196
Budget administration 199
ⅩⅥ．Introduction to cost control 204
Theory of cost control 204
Variances 208
ⅩⅦ．Planning for control 211
Flexible budgets 211
Standard costs 214
25．Main steps in flexible budgeting 215
Control profit budget 220
Standard total absorption costing 222
26．Preparation of control plans from a fixed budget:(a)Fixed budget;(b)Flexible budgets;(c)Standard cost;(d)Control profitbudget 222
27．Control profit budget for single control period 224
28．Standard total absorption cost 224
Introduction 227
ⅩⅧ．Variance analysis 227
29．Chart of common cost variances 228
Direct materials variances 230
Direct wages variances 233
Overhead variances 234
Sales margin variances 237
Revision and other variances 241
Causes of variances 243
Standard total absorption costing variances 245
ⅩⅨ．Standard cost accounts 254
30．Flow chart for standard marginal cost book-keeping 255
31．Standard cost accounts 258
32．Flow chart for standard absorption cost book-keeping 261
ⅩⅩ．Operating a cost control system 264
Operating statements 264
33．Departmental operating statement 266
Cost control and the manager 268
Uniform costing 274
ⅩⅪ．Thepractice of costing 274
PART SIX:THE PRACTICE OF COSTING 274
Cost audit 275
Other matters 277
Ⅰ．Suggested answers 286
APPENDIXES 286
Ⅱ．Examination technique 326
Ⅲ．Examination questions 329
INDEX 391