Process Costing- A Guide with Illustrations
What is Process Costing? Process costing is a subset of operation costing typically applicable to manufacturing entities mass-producing a homogeneous product. It is a GAAP approved system of costing. …
Costing Terms
Production vs Manufacturing – All You Need To Know
Production and manufacturing are usually understood to be the same and used interchangeably when referring to creating goods. However, production and manufacturing have minor differences among them regarding the …
Just in Time – Meaning, Features, Advantages and More
Just in Time (or the JIT) is an inventory management system that aims to make production super-efficient. Under this, the raw materials and labor are planned to arrive as …
Pareto Principle
The Pareto Principle derives its name from a respected economist Vilfredo Pareto. This principle states that 80% of the consequences are a result of 20% of the causes. Hence, …
Cost Accounting Systems – Meaning, Importance And More
Manufacturers use cost accounting systems to keep a tab on the production activities using a perpetual inventory system. In simple words, the cost accounting system is meant for simplifying …
Economies of Scale
Meaning The economies of scale are cost benefits received by a firm through a large scale production. When a firm increases its production level, the average cost per unit …
FTE- Full-Time Equivalent
What is FTE? FTE is Full-Time Equivalent, it represents the total hours worked by a full-time employee on a regular basis. The organization uses the concept for converting the …
Prime Cost – Meaning, Formula, Importance And More
Prime Cost (or Flat Cost or First Cost) is the direct cost that the company incurs in manufacturing a product. Such costs usually include direct production costs, like the …
Work in Progress – Meaning, Importance, Accounting And More
Work in Progress or WIP, as the name suggests are the goods that are not complete and are at some stage of production. The item is inclusive of entire …
Types of Cost Accounting
There are four major types of cost accounting: Standard cost accounting, Activity-based cost accounting, Marginal Cost Accounting, Lean Accounting.
