一、Accounting for materials

1.① EOQ

①Co=cost of placing one order

Ch= holding cost per unit

D=demand per annum

Q=re-order quantity

Annual stockholding

Costs =

Annual stock ordering=

②EBQ

一边生产一边消费

②Q=batch size

D=demand per annum

Ch=cost of holding one unit for one year

Co=cost of setting a batch ready to be produce

R=annual replenishment rate

2.Stock control system

①.minimum stock level

reorder level – (average usage × average lead time)

② maximum stock level

Maximum level = reorder level + reorder quantity – (minimum usage × minimum lead time)

③ average inventory = safety inventory +

④ free inventory=physical inventory + inventory on order – inventory requisitioned (not issued)

二、Accounting for labor

1. direct labor cost

①Time-based system Wages = (Hours worked × basic rate of pay per hour) + (overtime hours worked ×overtime premium per hour )

Idle time: time spent doing nothing is called idle time.

Overtime premium: overtime hours are paid at a higher rate than the basic hourly rate.

Bonus payments: a payment in addition to a basic salary, either for achieving or exceeding certain targets.

②Piecework systems Wages = Units produced × Rate of pay per unit

2. labor turnover

Labor turnover =

3. labor efficiency

①Efficiency ratio=

②Capacity ratio=

③Production volume ratio=

④上式=

三、Accounting for overheads

1.absorption costing

Prime cost / direct cost

Overheads / indirect cost

Production overheads (indirect materials, indirect labor, indirect expenses)

Non-production overheads (administration overheads, selling and distribution overheads)

①Absorption rate=

②Predetermined absorption rate=

2. under/over absorbed

①a. If Actual overhead incurred – Absorbed overhead = NEGATIVE (N), then overheads are over absorbed (O) (NO)

b.If Actual overhead incurred – Absorbed overhead = POSITIVE (P), then overheads are under absorbed (U) (PU)

②Overhead absorbed=Actual activity * absorption rate based on the budget.

Cost ledger: a manufacturing organization might record its costs in a set of ledger accounts, called cost ledger.

The ledgers not contain accounts for bank, debtors, non-current assets.

Cost control accounts, it is for recording the matching double entry whenever the entry would be to an account not contained in the cost ledger.

③Raw material, WIP or Finished goods

a. Buy: Dr raw material Cr cost control

b. issue: Dr WIP

Dr production

Dr non-production

Cr raw material

c. finished: Dr finished good Cr WIP

④Labor

a.Pay: Dr salary and wages

Cr cost control

b.Apportion: Dr WIP

Dr production

Dr non-production

Cr salary and wages

⑤Manufacturing overhead

a. Incurred: Dr production

Cr cost control

b. Absorption: Dr WIP

Cr production

c. Over-absorbed: Dr production Cr

Under-absorbed: Dr

Cr production

四、1.job costing

①Price=unit cost + profit

②price= unit cost+ （unit cost “1” *n%）

2. Batch costing

Cost per unit batch =

五、1.Normal loss

Solution procedures:

Calculate the number of normal loss units

Calculate the expected number of output units

Total the process costs

Calculate the cost per unit

Write up the process account and normal loss account

2. Abnormal loss

WIP: work-in-progress product.

Equivalent units: units of output remains in an uncompleted state can be expressed as a proportion of a completed unit.

3. Weight average method

Equivalent units: all completed units and the closing WIP work done.

Costs to be accounted for: opening stock values and current costs.

Cost per equivalent unit

Costs of finished production

Complete the process account

4.The FIFO method

Equivalent units: the completion of opening WIP, units started and completed in the period, the work done on closing WIP.

Costs to be accounted for: current cost added.

Cost per equivalent unit.

Cost of finished production: cost from opening WIP value at the beginning of the period add conversion cost added in this period, cost of finished goods which started and completed in this period, value of closing WIP.

Complete the process account