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Costing Method drex_definicion_de_costo_y_metodo_de_costeo_custom - Coggle…
Costing Method 
Cost Accounting as a Control Tool
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Costs play a very important role in the decision-making process. When quantitative values can be assigned to the options, management has an indicator of which option is the most economically convenient.
It is convenient to compare actual total costs with:
- Budgeted total costs: Budgeted costs are estimates of what you think costs will be.
- Standard total costs: Standard costs are measures of what you think costs should be.
- Actual total costs from previous periods: Actual costs represent what costs were.
- Actual unit costs from other departments or plants.
Absorptive Costing
In the direct or variable costing method, variable manufacturing costs are allocated to the products manufactured.
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Direct or Variable Costing
In the 1930s an alternative emerged, variable costing, improperly called direct costing. By definition, it is not direct, since direct costing is that which is identified with the product, department or function.
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Advantages of the variable costing system:
- It focuses primarily on contribution margin, which is the excess of sales over variable costs.
-When expressed as a percentage of sales, contribution margin is known as contribution rate or marginal rate, which reveals the number of cents available per monetary unit of sales to cover fixed costs and profits.-The contribution margin can be directly identified with product lines or other sectors of the business and should be charged to those lines, particularly if information is desired for long-term profit planning and decision making.
- tends to provide greater control over period costs.
- Decision Making.
Chart of Accounts
is
A list containing all the accounts that are necessary to record the accounting events. In other words, it is the systematic arrangement of all the accounts that make up the accounting system. the totality of the accounts that make up the accounting system.
serves
- as the basic structure in the organization and design of the accounting system.
- as a means of obtaining information.
- to use the same account for similar events.
- facilitates the preparation of financial statements.
The requirements that every chart of accounts must meet are:
• Integrity: must be complete (contain all the necessary accounts according to the information needs of the company).
• Flexibility: must allow you to enter new accounts.
• Systematicity: the accounts must be ordered according to a criterion that gives them an organized structure.
•Homogeneity.
Generally, the chart of accounts is complemented by the manual of accounts containing instructions for using the accounts that make up the accounting system, especially as regards which transactions or events are included in each account, when they are debited or credited and their meaning.
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