ADMS 2510 Chapter 3: Chapter 3.docx

• School: York University
• Department: Administrative Studies
• Course: ADMS 2510
• Professor: Alison Beavis

Document Summary

The design of costing system depends on cost-benefit trade-offs as assessed by managers. The nature of systems design is also influenced by the nature of what is to be costed. Absorption costing is a popular approach for determining cogs and the cost of inventories for financial accounting and income taxes. Job order costing requires more effort than process costing systems. A production order is issued when an agreement has been reached with the customer concerning the quantities, prices and shipment date for the order. As discussed in chapter 2, this latter category of labour costs is termed indirect labour and includes tasks such as maintenance, supervision, and cleanup. Calculating predetermined mfg over head: manufacturing overhead is an indirect cost. Some items such as property taxes for the land on which the factory is built may be paid once per year, while other items are paid for quarterly, monthly, or as acquired.