MANAGEMENT INFORMATION

Chapter 1: The fundamentals of costing

- What is cost accounting?

Video: FA (financial accounting) vs MA (management accounting)

Whats different? FA MA

Objective Provide financial information Management inside ->

to outsiders planning
Users External Internal
Report Past transation Stategic inf
Specified By “IAS” (IFAS) No
Published? Must be and audited Not nessecary
Discuss Only financial inf Both financial and non
financial inf
Prepared At the end of accounting Only when its needed and
period required
Compulsory them in company? Must have one financial Not compulsory
accountant

Cost accountant provider answers to questions about cost and revenue, enable management:

- Assess the profitability

- Detemine appropriate selling prices
- Put a value on inventory

The cost accaountant also needs to provide information to help provide forecasts or estimates for
the future

Manufacture Merchiandisers
INVENTORY - Good in transit GOODS
- Raw materiors
- Work in process
- Finished goods
- Consgianment

Basic cost accounting concepts

- Cost object: A cost is anything for which we are trying to ascertain the cost
- Cost unit: Is the basic measure ò product of service for which costs are determined
- Composite: cost unit if more than one cost units are used. Nomally

Cost classification: (phân loại chi phí)

- Directly
- Indirectly

Element of cost
 - Direct cost: Xác định chi phí cho một đơn vị sản phẩm
- Indirect cost: Chi phí không thể xác định dưới dạng unit cụ thể bởi là chi phí chung cho cả
quá trình sản xuất

Material costs: - Direct material costs: những thứ cấu thành bộ phận của sản phẩm, ví dụ như sữa là
direct material of butters, lốp xe direct material của car

- Indirect material costs: những thứ không tham gia trực tiếp vào thành phẩm nhưng không
thể không thiếu trong quá trình sản xuất, ví dụ: oils, dầu mỡ bôi trơn,…

Labour costs: - Direct labour costs: những người trực tiếp tham gia sản xuất thì phải trả tiền lương
cho những người đó, wages, salaries,..  direct labour costs

- Indrect labour costs: những người không trực tiếp tham gia vào quá trình sản xuất, làm ra
sản phẩm nhưng không thể thiếu, support, vd: watchman, store keeper, lao công…

Expense costs: Direct Expense: chi phí khác không phải là labour hay material, chi phí không trực tiếp
cấu thành thành phẩm

- Indirect Expense: chi phí không định dạng được dưới dạng unit cụ thể, dung cho cả một hệ
thống hay tất cả các sản phẩm vd: lighting, power, rent.. for the production (production
overhead) #administration overhead(rent, power, lighting not for the production)

Cost behavior:

(level of activity/output)

Varial cost/ varial cost per unit

Fixed cost/ fixed cost per unit

Semi – varial cost/ semi varial cost per unit

Ethics

Nguyên tắc đạo đức cơ bản nghề nghiệp, kế kiểm

Fundamental principle 1: “intergrity”: liêm chính

- Honestly, fair dealing, truthfulness and being straightforward

2: “Objectivity”: khách quan

- No bias, conflict of interest or undue influence of others

3:”Professional competence and due care”: năng lực chuyên môn và tính thận trọng

- Professional knowledge and skill

- Carefully
- Thoroughly
- On a timely basis
- In accordance with the requirements of an assignment

4:”confidentiality””: tính bảo mật

- Be kept confidential
 - Not be disclosed
- Not be used to obtain personal advantage

5:”Professional behavior”: ứng xử chuyên nghiệp

- Complying with relevant laws and regulations

- Advoid any action that discredits the profession
- Be honest and truthful

CHAPTER 2: Calculating unit costs (chi phí giá thành 1 đơn vị)

Direct/Indirect cost

Futher points

- Direct costs are not necessarily bigger in size than indirect costs
- Indirect costs and direct cost are both important equal

Inventory valuation

Valuing inventory in financial accounts (IAS 2)

Lower between - Cost

-Net realisable value

Net realisable value = Estimated price – Estimated cost to complete and sell

Prudent principle (nguyên tắc thận trọng): - Asset:”not allow to overstate aseets”

- Liabilities:”not allow to understate liabilities”

How to value cost of inventory?

- FIFO (first in first out): nhập trước xuất trước, lô nào nhập sớm thì ưu tiên xuất đầu tiên
- Issue cost: Số dư đầu + phát sinh tăng – phát sinh giảm = số dư cuối kì
- Oldest costs  Cost of issuance = cost of goods Sold
- Recent costs  Ending Inventory

Advantages
It is a logical pricing method, wwhich
probably represents what is physically
happening in practice the oldest inventory is
likely to be used first
It is easy to understand and explain to
managers
The inventory valuation can be near to a
valuation based on replacement cost
Disadvantages
FIFO can be cumbersome to operate because
of the need to edentify each batch of material
separately
Managers may find it difficult to compare
costs and decisions when they are changed
with varying prices for the same materials
In a period of high inflation, inventory issue
prices will lag behind current market value

- LIFO

Advantage Disadvantage
Inventories are issed at a price which is The method can be cumbersome to operate
 close to current market value
Managers are continually aware of recent
cost when making decisions, because the
costs being changed to their department or
products will be current costs
because it sometimes results in several
batches being only part used in the
inventory records before another batch is
received
LIFO is often the opposite of what is
physically happening and can therefore be
difficult to explain to managers
As with FIFO, decision making can be
difficult because of the variations to prices

- AVCO (phương pháp bình quân gia quyền)

- Cách 1: bình quân gia quyền sau mỗi lần nhập (after each receipts)
- Cách 2: bình quân gia quyền cả kì dự trữ (after all receipts)

(Cost of opening inventory + total receipts purchase)/….?

Chapter 3 (nghỉ 1 buổi)

1. Absorption costing
- Chi phí trực tiếp (direct or prime cost) cộng với một phần hợp lí (fair) của chi phí gián tiếp
(indirect or overhead cost) của một mặt hàng
- There are three stages để xác định tỉ lệ chi phí chung được quy cho một đơn vị chi phí (cost
per units)

♦Allocation: chi phí của bộ phận nào (production) thì phân bổ vào bộ phận đó (service) và chi phí
chung của cả 2 bộ phận (centre cost)

♦Apportionment: (first step) phân bổ chi phí general overheads to cost centres

(second step: reapportionment) tái phân bổ costs of service cost centres to production
department

Overhead to which the basis applies Basis

Rents, rates, heating and light, repair and
depreciation of the building
Depreciation, insurance of the equipment
Personal office, canteen, welfare, wages and
cost office, first aid
Heating, lighting
Floor area
Cost of book value of equipment
Number of employees or labour hours
worked in each cost centre
Volume of space occupied by each cost
centre

Allocation  Apportionment (phân bổ chi phí về proction or service) + Reapportionment

(cost of service phân bổ vào cost of production)  Absorption

Overhead absorption

Budgeted overhead
OAR (Overhead absorption rate) ¿
Budgeted activity level
Activity level:
 - Direct material cost
- Direct label cost
- Prime cost
- Machine hour

Over and under absorption of overheads:

Chapter 4: Marginal costing and absorption costing (nghỉ học)

Làm bài tập chapter4 questionbank (nghỉ luôn)

1. Marginal cost and marginal costing

- An alternative costing system to absorption costing
- Only variable production costs are include in the valuation of units
- All fixed costs are treated as period costs
- Consists of
o Variable material
o Variable labour
o Variable production overheads
1.2 Contribution
- The different between the selling price and all the variable costs of product
- The contribution per unit does not change
- Total contribution deduct fixed costs = profit/ loss
2. Marginal costing and absorption costing compared

Marginal costing Absorption costing

Closing inventories được tính ở marginal hoặc Inventories được tính ở full production cost,
variable production cost tổng cả variable và fixed
Fixed cost thì được tính lúc ra profit
Fixed cost thì không có giá trị gì trong
inventory