About This Chapter
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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Other chapters within the Accounting 303: Cost Accounting course
- Cost Classifications in Accounting
- Formulas for Cost Accounting
- Standard Costs in Accounting
- Job Order Cost System in Accounting
- Process Cost System in Accounting
- Activity-Based Costing Overview
- Product & Service Costing
- Budgetary Process
- Cost Behavior Analysis
- Cost-Volume-Profit Analysis Overview
- Cost Estimation
- Service Department & Joint Cost Allocation
- Cost Accounting for Decision Making
- Ethics in Cost Accounting
- Modern Trends in Accounting
- Required Assignments for Accounting 303
- Studying for Accounting 303