METHOD OF COSTING

Contemporary approaches to product costing

-) Total-life-cycle product costing
-) Target costing

-) Kaizen costing

-) Cost of quality
-) Benchmarking

Job Costing Activities

No.	Activity	Department
1	Prepare suitable design for the product	Production planning
2	Prepare material requirements i.e. Bill of materials (BOM)	Production planning
3	Issue of job order	Production planning
4	Provisioning and issue of materials	Stores
5	Deploy men and resources for operations	Operations / Production
6	Prepare job cost sheet	Costing
7	Cost control	Costing

Process costing vs Job costing

Category	Process Costing	Job Costing
Product type	Identical products	Customer specific products
Environment	Continuous and mass production	Jobs are separate and independent
Cost computation	Cost per unit of product is computed	Cost per job is computed
Frequency of cost computation	Costs are computed periodically	Cost computation is made after the completion of the jobs.

TYPES OF COSTS

Operational accountability function type of performance units

- Staff costs
- Procurement costs
- Direct costs (direct)
- Material costs
- Storage costs
- Overheads (indirect)
- Cost of capital
- Production costs
- Special costs
- External services
- Administrative costs
- Costs of human society
- Distribution costs
- Costs of environmental protection

Cost Accounting not only serves to identify and track costs, it also helps people understand and make decisions with respect to efficiency and capability.

Expenses are conisder for:

+ / - Time selection

+ / - Operational

Examples include:

Purchase vs. raw materials, payment from wages, consumption v. goods and sevices, cost value v. goods and services, cost vlaue for power production, consumption factors based on factors related to production of goods and services.