Ch 2: Costing Methods & Techniques

About This Chapter

Get a handle on costing methods and techniques with this chapter. These learning materials provide you with supplemental information to help you better understand accounting topics and formulas for school, and as an added resource, our instructors can provide answers to many of your chapter questions.

Costing Methods & Techniques - Chapter Summary

In the field of accounting, costs can be determined and forecasted in a number of ways, so it is best to understand each of the major costing methods and techniques. This chapter has been designed by our instructors to provide you with focused information on each of these methods, techniques, and formulas. In the lessons, the instructors carefully define major vocabulary words, and they also provide step-by-step examples of the costing calculations. Instructors also discuss real-world examples of these methods and techniques. When you receive the chapter, you should know enough to do the following:

  • Describe the components and purpose of cost accounting
  • Identify the advantages and method of historical cost accounting
  • Analyze the processes used in job-order costing systems
  • Define process costing
  • Compare the formulas for variable and activity-based costing
  • Examine the steps for calculating absorption costing
  • Explain how to figure out operation, multiple, and uniform costing
  • Point out examples of contract costing
  • Assess the steps for environmental full cost accounting

12 Lessons in Chapter 2: Costing Methods & Techniques
Test your knowledge with a 30-question chapter practice test
Purpose & Components of Cost Accounting

1. Purpose & Components of Cost Accounting

This lesson will introduce what cost accounting is and provide a definition. It will introduce cost elements and how costs are classified in cost accounting, then compare and contrast cost accounting to financial accounting.

Historical Cost Accounting: Definition, Method & Advantages

2. Historical Cost Accounting: Definition, Method & Advantages

In this lesson, you will learn about the concept of historical cost accounting, how it works and what the advantages of using this cost valuation method are.

Job-Order Costing System Processes

3. Job-Order Costing System Processes

In a job-order costing system, the product being manufactured is unique, and its costs can be separately identified and tracked. In this lesson, you'll learn how costs are tracked.

Process Costing: Definition & Examples

4. Process Costing: Definition & Examples

Costing techniques are used to determine how much it costs a company to manufacture a product. Process costing is the method used when comparable products are manufactured. In this lesson, learn what process costing is and how to use this technique.

Variable Costing: Method, Formula & Advantages

5. Variable Costing: Method, Formula & Advantages

This lesson discusses variable costing. It explains how variable costs are determined, how they are calculated, and advantages of variable costing. Examples of variable costing are also provided.

Activity-Based Costing: Definition, Formula & Examples

6. Activity-Based Costing: Definition, Formula & Examples

Manufacturing companies rely on product cost data to set product sales prices and determine if products are producing profits. This lesson covers activity-based costing and describes how to assign overhead costs to products using this method.

Absorption Costing: Definition, Formula & Example

7. Absorption Costing: Definition, Formula & Example

In this lesson, we'll learn about absorption costing. We'll define it and learn how to calculate it. The lesson will conclude with an example and lesson summary about absorption costing.

Uniform Costing: Definition & Example

8. Uniform Costing: Definition & Example

This lesson defines uniform costing, takes a look at its use, and goes over an example using a trade association. You will learn about uniform costing books and examine its benefits and drawbacks.

Multiple Costing: Definition & Calculation

9. Multiple Costing: Definition & Calculation

This lesson shows how multiple costing is used to tally costs for a product with components created from different operations. Learn to calculate total costs when multiple costing is necessary, and learn what industries use certain costing methods.

Operation Costing: Definition & Calculation

10. Operation Costing: Definition & Calculation

In this lesson, learn more about how to use operation costing. Companies often use this type of costing in manufacturing operations where specific jobs require costing and additional manufacturing processes don't allow for the assignment of individual costs.

Contract Costing: Definition & Example

11. Contract Costing: Definition & Example

In this lesson, viewers will understand contract costing through a detailed description and examples of how it works. After watching this lesson, the viewer should have an idea of the basic concept of how contract costing is used.

Environmental Full Cost Accounting: Definition & Example

12. Environmental Full Cost Accounting: Definition & Example

Environmental full cost accounting recognizes the economic, environmental, health and social costs of an activity. In this lesson, learn why the use of environmental full cost accounting is important during the decision-making process.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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