PA302 COST ACCOUNTING COST ELEMENTS Prepared by :Wan Maimunah Wan Ishak Politeknik Sultan Haji Ahmad Shah, Kuantan

Students will be able to classify the elements of cost 3-2 Specific Objectives : Students will be able to classify the elements of cost Learning objective number 1 is to identify and give examples of each of the three basic manufacturing cost categories.

Manufacturing activities Cost Accumulation Raw material Labour Direct Expenses Overhead

Production Cost 2 1 3 4 m) RM DE Production OH DL Cost that cannot be charged directly to the product Eg : Depre of machine Cost that can be directly charged to product Eg : Wood in furniture industries Cost for skilled or unskilled workers who involved directly in production Eg : Carpenters/Machine operators in furniture industries Any expenditure other than RM or DL that are directly incurred for the particular product Eg : Hiring of special machine./tools

Examples : Activities DM DL DE Production OH Clothes Tailor Clothing Company Clothes Tailor Royalty on Patent Factory Supervisor Bakery ?

Specific Objectives 2 : Preparing Statement of Cost

Company XXX Statement of Cost Direct material Opening stock of DM XXX + Purchase XXX - Closing stock of DM XXX DM used XXX Direct Labour XXX PRIMARY COST XXX Production OH : Indirect labour XXX Depre of machine XXX XXX XXX + Opening stock of WIP XXX - Closing stock of WIP XXX Production Cost XXX

+ Administration OH: Clerk salary XX Manager’s salary XX XX + Selling & Distribution OH : Sales expenses XX Promotion XX XX XXX + Opening stock of FG XX _ Closing stock of FG (XX) TOTAL COST XXXX

Contoh Reflection : Do some reflection !!

Exercise : Question 1 : Cost information of a company : Direct material 2,000,000 Indirect material 50,000 Advertising 95,000 Direct Labour 650,000 Indirect labour 170,000 Production supervisor’s salary 45,000 Depre for Factory building 65,000 Depre for office building 35,000 Factory machine’s depre 20,000 Maintenance department’s cost 100,000 Administration cost 150,000 Promotion 10,000 Sales commission 5,000 Office rent for salesman office 15,000

Calculate : Total production OH cost Total direct cost Total production cost Total indirect cost

Solution : a. Total production OH cost Indirect material 50,000 Depre factory building 65,000 Depre factory machine 20,000 Indirect labour 170,000 Maintenance dept cost 100,000 Factory supervisor 45,000 Total production OH 450,000

Solution : b. Total direct cost Direct material 2,000,000 DL 650,000 2,650,000 c. Total production cost DM 2,000,000 DL 650,000 OH 450,000 Total production cost 3,100,000

Solution : d. Total indirect cost Production cost 450,000 Advertising 95,000 Depre office building 35,000 Admin cost 150,000 Promotion 10,000 Commission 5,000 Office rent for salesman 15,000 Total 760,000

Question 2 : Prepare Statement of Cost based on the following cost information : RM Sales 45,000 Purchase of raw material 12,500 DL 9,500 Production OH 5,000 Freight inwards of RM 200 Factory supervising 700 Opening stock : RM 2,000 WIP 550 FG(1100 units) 1,650 Closing stock : RM 2,300 WIP 1,000 FG(3500 units) 5,250 Advertising & marketing cost is RM0.50/unit sold. There were 30,000 units produced.

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