Quality measures the % of raw materials and components rejected from the suppliers

% of finished goods that have been rejected as well

Also a profit center may have to sell to customers and worry about % of goods returned by customers

Also the % of goods that still have work under garentees and also wareentes

A manager of a costs center has control over revenues and lastly

Expenses and absorption of overheads

Coding analysis and recording of expenses

In costs accounting there are only three types of expenditures these are classifies as

Materials

Labour

And lastly the expenses

Expenses are all business costs that do not fall under labour or materials

Direct materials can be identifies with a specific cost unit

Many expenses are associated with general administration

Day to day running of the business

Selling

Financing of the business as well

Administration expenses are of the day to day running of the business

They are rent of the building

Telephone bills’

Rates on building

Insurance of th building

Stationery

Canteen costs

Financing costs (costs of finanacing a business may include loan interest

Lease charges for any equipment leased not bought

another classification of expenses is between asset expenditure and an expense item

asset expendire is when a non current asset is bought hence it is not taken to the statement of profit or
loss instead it is treated as an expense THEY ARE INSTEAD WRITEEN OFF AS A DEPRECIATION CHARGE
BECAUSE THEY ARE YET TO BE USED IN THE LONG RUN OF THE BUSINESS

EXPENSE ITEM ARE IINCURRED IN THE DAY TO DAY RUNNING OF THE BUSINESS E.G RENT AND NON
CURRENT EXPENSES ASSETS THEY ARE WRITTEN OFF AS DEPRECIATION IN THE STATEMNT OF PROFIT OR
LOSS HOW EVER EXPENSE ITEMS ARE WRITTEN AS THEY OCCURE

THE WAY A COST CENTER IS DEFINED HAS INFLUENCE ON THE INFORMATION THAT IS GENERATED
THERE

BY THE COSTING RECORDS ALL COSTS ARE ADDED UP TOGETHER

IT IS ASLO POSSIBLE TO DEVIDE COSTS CENTERS INTO 2 OR MORE COST COST CENTER E,G WHERE THERE
IS 2 PRODUCTION LINES THEN EACG OF THESE WILL HAVE ITS OWN COST CENTER SERVICIES OR
ACTIVITIES

IT IS CHEAPER TO RUN A SYSTEM WITH FEWER COST CENETERS BUT MANAGEMENT WILL NOT BE ABLE
TO ASSESS THE PERFORMANCE OF BUSINESS AS A WHOLE

DEAL IS GREATER NUMBER OF COST CENTER HELP IN HANDING IN VALUABLE INFORMATION TO EITHER
DROP THE PRODUCT AS A WHOLE OR INCREAS SELLING PRICES THAN A FEW COST CENTERS

SALES FUNCTION IS NOT A SINGLE COST IT CAN BE BROKEN DOWN INTO EITHER HOME SALES OR
EXPORT SALES OR CONSUMER PRODUCTS OR INDUSTRY PRODUCTS

LABOUR

MATERIAL

EXPENSES ARE TYPES OF BUSINESS EXPENSES

EXPENSES CAN EITHER BE ATTRIBUTED TO A SINGLE COST CENTER OR BE SHARED BETWEEN DIFFERENT
COSTS CENTERS IN COSTING OR COST ACCOUNTING

THE COSTS ARE MOSTLY SHARED ACCORDING TO HOW A COST CENETER IS ARRANGED IF THERE IS
MORE THAN ONE COST CENTER THEN THE CLEANING WILL BE SHARED OUT BETWEEN THE BOTH OF
THEM BUT IF IT IS A SINGLE COST CENTER THERE IS NO NEED FOR CLEANING THEN

THE PROCESS OF ATTRIBUTING AN OVERHEAD COSTS TO A COST CENETER IS CALLED ALLOCATION

SALES COMMSION ATTRIBUTED TO STAFF MEMEBERS OF A SINGLE COST CENTER IS CALLED

ALLOCATION

APPORTIONMENT MEANING
APPORTIONMENT RULES SHOULD BE WRITTEN IN MANUALS AS TO HOW TINGS ARE GOING TO BE
ALLOCATED FAIRLY ASLO IT SHOULD BE FAIR TO MANAGERS WHILE ASLOMAKING THINGS UNDULY

RENT RATES AND INSURANCE COULD BE APPORTION TO EACH FLOOR AREA A CAMPANY OCCUPIES

WHEN EXPENSES ARE SHARED EQUALLY BETWEEN DIFFERENT COST CENTERS WE CALL IT
APPORTIONSHINMENT

MAYBE BILLS,

CANTEEN,ELECTRICITY AND SO ON AND SO FORTH

CODING

Amounts need to be apportioned to ensure they are given to the correct cost center

They need to be coded correctly

The sales department is responsible for prepary dispatch notes to customers

Advertising costs

And lastly coding invoices

A sales department is made very largely of a telephpne the customer telephones the department and
they place an oder on their behalf

A sales department is also a cost ceneter as well

Sales commission is a bonus that may be fixed or based on the percentage of the order

Expenses are the selling and distribution over head

A sales department can either be a cost or profit ceneter

Meaning income is the sales made and costs would be the labour and expenses

Sales tax is not part of the sales income

Direct material

Labour and expenses can be specially allocated to a unit costs

While the indirects have to firstly be allocated to overhead cost ceneter or apportioned between a
number of different cost centers at appropreite levels

The allocation and proportion of resources requires that all production overheads are are eventually
assigned to the production cost center
At the end of the day they all need to be assigned off to a production cost center

A service cost center supports that of a production cost cener

After wards the service center overheads must be reapportioned to the production cost ceneterthis is
necessary so that overheads costs can be absorbed into cost of the output that pases through the
production cost centerthey are absorbed into production because they too are going to be output costs
that pass through production

Cost centers

Overheads are analysed on an overhead analysis sheet

First line which is the allocated costs shows the overheads allocated to cost centres

To have costs of output through the production linecost centre are costs that are incurred in the
production of tht product

Absorption is a method of putting a fair amount of over head costs into each cost unit

There is absorption for similar products but also for different products as well coz it would woud nit be
fair for rich and poor products to absorb the same over heads

Overheads apportion to a