Discussion 1 Introduction To Cost Accounting 1
Discussion 1 Introduction To Cost Accounting 1
Discussion 1 Introduction To Cost Accounting 1
Example
Accounting for Cost in Creating
Ice Cream • Capital Intensive (machine-based operations)
• Raw Materials (Ingredients, Cone)
• Fruits (Delivery for supplies, for farmers)
• Machineries (those involved in creating the product)
• Laborers (those who operate the machineries; not skill intensive)
Furniture • Labor Intensive (skill-based Laborers for company operations)
• Raw Materials (Wood)
• Equipment (involved in the process of creating the furniture)
NOTE: In cost accounting, it analyzes the amount of cost required to produce certain products
and the details breaking down what and how it attributed to the total cost and product or service.
FINANCIAL MANAGERIAL
COST
ACCOUNTING ACCOUNTING
ACCOUNTING
➢ Information about the cost of a product or service is needed in financial accounting for
reporting purposes and information of the product cost and service cost is needed in
management accounting for decision making. As such cost accounting information is
required for creating financial statements under financial accounting and making decisions
for managerial accounting.
Value Chain
• A value chain is a set of activities an entity applies to be able to deliver a valuable product
to customers.
• Value chain is a set of activities or functions that allows the conversion of inputs into useful
products and services.