Cost Terminology_Bagian 1

Summary

The video script discusses the importance of understanding various cost terminologies in accounting for manufacturing, trading, and service companies. It differentiates between production costs, which include direct materials, direct labor, and production overheads, and periodic costs, encompassing selling and administrative expenses. The speaker emphasizes the necessity of identifying these costs for effective cost efficiency and decision-making in a business, providing examples of direct and indirect materials, and various overheads. The presentation aims to guide non-accounting professionals through cost management in a manufacturing context.

Takeaways

• 📘 The script discusses the importance of understanding various types of costs in manufacturing, trading, and service companies for effective cost management.
• 🔍 It emphasizes the need to identify and differentiate between production costs and periodic costs to make informed decisions about cost efficiency.
• 🏭 Production costs include direct material costs, direct labor costs, and manufacturing overhead, which are directly traceable to the production of goods.
• 📈 Periodic costs, also known as period costs, encompass selling costs and administrative costs, which are not directly linked to the production process but are essential for business operations.
• 🌳 Direct material costs refer to raw materials that can be visually traced to the finished product, such as wood in the case of a wooden desk.
• 👷 Direct labor costs involve the workers who are directly involved in the production process, like carpenters who assemble the desk from raw materials.
• 🛠️ Manufacturing overhead includes all production costs other than direct materials and labor, such as supervisory salaries and depreciation of production machinery.
• 📊 Selling costs are expenses incurred to obtain customer orders and fulfill their shipping needs, including advertising costs and salesperson commissions.
• 🏢 Administrative costs cover the expenses related to the general operations of the company, including salaries for management, finance, HR, and the cost of utilities like electricity and water.
• 💡 The script suggests that understanding these cost components is crucial for making decisions on cost reduction without affecting product quality or customer service.
• 📚 The presenter mentions a training on 'Cost Accounting for Effective Decision Making' as a resource for further learning on cost management strategies.

Q & A

What is the main topic of the script?

The main topic of the script is the explanation of cost terminology and concepts in accounting, specifically focusing on manufacturing, trading, and service companies.

Why is understanding the different types of costs important for a company?

Understanding different types of costs is crucial for a company to manage and reduce expenses efficiently without negatively impacting product quality or customer service.

What are the two main categories of costs discussed in the script?

The two main categories of costs discussed are production costs and periodic costs.

What are the components of production costs according to the script?

The components of production costs include direct materials, direct labor, and manufacturing overhead.

What is meant by direct materials in the context of production costs?

Direct materials refer to raw materials that can be traced directly to the product or service being produced, such as the wood used in making a wooden table.

How is direct labor defined in the script?

Direct labor is the labor that can be traced directly to the product or service being produced, such as the carpenters who directly work on crafting the wooden table.

What does manufacturing overhead encompass?

Manufacturing overhead includes all production costs other than direct materials and direct labor, such as supervisory salaries and depreciation of production machinery.

What are periodic costs and what do they consist of?

Periodic costs, also known as period costs, include selling expenses and administrative expenses, which are costs incurred for marketing, distributing, and servicing products to customers.

Can you provide an example of a selling expense from the script?

An example of a selling expense is the cost of advertising or the commission paid to sales staff.

What is an example of an administrative expense mentioned in the script?

An example of an administrative expense is the salary of the board of directors or staff in the finance department.

What is the purpose of the script's discussion on cost behavior when production levels change?

The discussion on cost behavior aims to help understand how costs might increase or decrease with changes in production levels, which is essential for cost efficiency and decision-making.