Job Order Costing [PART 1] - Yang punya catering, EO, atau konveksi, wajib nonton ini!

Summary

The video explains cost accounting, focusing on the distinction between direct and indirect costs, and how to assign them accurately to products. It details methods for cost assignment, including direct allocation for ingredients and labor, and the use of cost drivers for indirect costs. The speaker discusses various techniques like Plantwide Rate, Departmental Rate, and Activity-Based Costing, emphasizing the trade-offs between accuracy and complexity. By the end, viewers are encouraged to grasp essential cost accounting terms and consider their implications in practical scenarios, all while promoting a simple learning approach.

Takeaways

• 😀 Cost assignment involves categorizing costs to specific products, which can be done directly or indirectly.
• 🍔 Direct costs, like the purchase price of ingredients, are directly attributed to the finished product.
• 💼 Labor costs, such as wages paid for specific jobs, can also be directly assigned to products without additional drivers.
• ⚡ Overhead costs, including indirect costs like utilities and shared wages, cannot be directly assigned to products and require a cost driver.
• ⏳ Working hours can be used as a driver to allocate indirect costs to products accurately.
• 🏭 The plantwide rate uses a single average rate for all indirect costs, simplifying cost assignment.
• 🔍 For more accurate cost allocation, different rates can be applied based on the dominant activities within specific departments.
• ⚙️ The departmental rate allows for tailored allocation based on the unique needs of each division, improving accuracy in cost tracking.
• 📊 Activity-based costing (ABC) is the most precise method, analyzing costs based on specific activities and their drivers.
• 🤔 Choosing the right costing method depends on balancing accuracy with complexity and cost, deciding whether simplicity suffices.

Q & A

What is cost assignment in cost accounting?

Cost assignment in cost accounting refers to the process of allocating costs from one cost object to another, distinguishing between direct and indirect costs.

How are direct costs assigned to the final product?

Direct costs, such as the purchase price of ingredients like sausages and potatoes, are assigned directly to the final product without the use of any cost drivers.

What are indirect costs, and how are they assigned?

Indirect costs, such as wages for workers and utility expenses, cannot be directly assigned to a specific product since they are shared among multiple products. They require a cost driver for allocation.

What is a cost driver, and how is it used in cost assignment?

A cost driver is a factor used to allocate indirect costs to a product. For example, working hours can serve as a driver to assign overhead costs to the final product price.

What is the difference between a Plantwide Rate and a Departmental Rate?

A Plantwide Rate uses a single average rate for all types of indirect costs across the entire operation, while a Departmental Rate employs different rates based on the dominant areas or departments in production.

What is Activity Based Costing (ABC)?

Activity Based Costing (ABC) is a more precise cost assignment method that breaks down costs based on specific activities in each department, allowing for more accurate allocation of indirect costs.

Why might a company choose a simpler cost assignment method?

A company might opt for a simpler method, like the Plantwide Rate, due to lower complexity and costs, even if it sacrifices some accuracy compared to more detailed methods.

What are the different types of costs mentioned in the video?

The video discusses several types of costs, including Direct Costs, Indirect Costs, Fixed Costs, Variable Costs, and the concept of Cost Assignment.

What is the significance of distinguishing between direct and indirect costs?

Distinguishing between direct and indirect costs is crucial for accurately calculating product costs, which impacts pricing, profitability, and financial reporting.

What was the final message of the video?

The final message encourages viewers to understand the various cost terms and methods in cost accounting, and to apply this knowledge effectively in their learning and practices.