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accounting_ch_11-tracking_job_costs [2019/01/30 12:58]
kcifreo
accounting_ch_11-tracking_job_costs [2019/02/05 17:08] (current)
admin
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 You can choose how to track parts on a part-by-part basis. Some parts might be tracked using accrual accounting, some with cost accounting, and others still might be included for information purposes only and not costed at all. You can choose how to track parts on a part-by-part basis. Some parts might be tracked using accrual accounting, some with cost accounting, and others still might be included for information purposes only and not costed at all.
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 **Accrual (Financial) Tracking** **Accrual (Financial) Tracking**
  
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  \\ **Cost Accounting (Non-Financial) Tracking**  \\ **Cost Accounting (Non-Financial) Tracking**
  
-Cost accounting focuses on determining the manufactured costs of the goods sold. In Control, cost accounting tracking is a supplement to financial accounting. There are many reasons that users do not wish to track or inventory all of their parts, but the root cause tends to be that the cost of financial tracking exceeds the value. \\ As an extreme example, imagine you own a small pizza business, and one of your costs is oregano for the pizza sauce. You could track the oregano in your inventory, and each time you make a pizza you could measure the amount of oregano and deduct it from your inventory. When the pizza is done, you record your expenses and find you spent about 5 cents on oregano. Since this is a small operation, you decide that it isn't worth your time to measure the oregano and you aren't going to track in on your inventory. Hence, financial accounting is a bit of overkill for this item. \\ Control gives you the option to track the costs only, which of course can be estimated in a consumption formula. You can assign the //​computed// ​ charges to the order for cost tracking only. These computed charges don't show up on the Income Statement. Instead, the oregano already showed up when you wrote the check and did not put it into inventory. This is the essence of cost accounting in Control. \\ In Control, computed costs and financial costs can be used in the analysis of an order'​s estimated profitability. However, only the financial costs show up in the financial statements. Computed costs are simply for managerial purposes. \\ Since the costs just appear without an inventory or source, Computed Costs are not based on double-entry accounting principals. When the cost is entered and the order is in WIP or Built, the entry made is:+Cost accounting focuses on determining the manufactured costs of the goods sold. In Control, cost accounting tracking is a supplement to financial accounting. There are many reasons that users do not wish to track or inventory all of their parts, but the root cause tends to be that the cost of financial tracking exceeds the value. ​ 
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 +As an extreme example, imagine you own a small pizza business, and one of your costs is oregano for the pizza sauce. You could track the oregano in your inventory, and each time you make a pizza you could measure the amount of oregano and deduct it from your inventory. When the pizza is done, you record your expenses and find you spent about 5 cents on oregano. Since this is a small operation, you decide that it isn't worth your time to measure the oregano and you aren't going to track in on your inventory. Hence, financial accounting is a bit of overkill for this item.  
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 +Control gives you the option to track the costs only, which of course can be estimated in a consumption formula. You can assign the //​computed// ​ charges to the order for cost tracking only. These computed charges don't show up on the Income Statement. Instead, the oregano already showed up when you wrote the check and did not put it into inventory. This is the essence of cost accounting in Control. \\  
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 +In Control, computed costs and financial costs can be used in the analysis of an order'​s estimated profitability. However, only the financial costs show up in the financial statements. Computed costs are simply for managerial purposes. ​ 
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 +Since the costs just appear without an inventory or source, Computed Costs are not based on double-entry accounting principals. When the cost is entered and the order is in WIP or Built, the entry made is:
  
 |**Account** ||**Quantity** ||**Debit** ||**Credit** ​  || |**Account** ||**Quantity** ||**Debit** ||**Credit** ​  ||
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 |Cost of WIP & Built||{{:​quantityused.gif?​nolink&​}}|| ​  ​||{{:​inventoryvalueused.gif?​nolink&​}}|| |Cost of WIP & Built||{{:​quantityused.gif?​nolink&​}}|| ​  ​||{{:​inventoryvalueused.gif?​nolink&​}}||
 |Computed Cost Account||{{:​quantityused.gif?​nolink&​}}||{{:​inventoryvalueused.gif?​nolink&​}}|| ​  || |Computed Cost Account||{{:​quantityused.gif?​nolink&​}}||{{:​inventoryvalueused.gif?​nolink&​}}|| ​  ||
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 ===== Inventory v. Non-Inventory in Materials ===== ===== Inventory v. Non-Inventory in Materials =====
  
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 Each of the three cases is considered below. Each of the three cases is considered below.
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 **Don'​t Track Costs** **Don'​t Track Costs**
  
 If you are not tracking costs, Control will still allow you to track inventory. However, unless you are tracking costs there are no costs to consider. No financial or cost-tracking entries are made. If you are not tracking costs, Control will still allow you to track inventory. However, unless you are tracking costs there are no costs to consider. No financial or cost-tracking entries are made.
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 **Only Track Costs for Cost Accounting (not Financial Reports)** **Only Track Costs for Cost Accounting (not Financial Reports)**
  
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 When posting bills for inventoried,​ accrued parts, Control will adjust the inventory account and the Accounts Payable account. If the cost of the newly purchased items does not match the inventory cost, the user may choose to adjust the parts costs or not. If the part cost is NOT adjusted, the new quantity is added to inventory at the old price, and an adjustment is made into the Inventory Adjustment Expense. When posting bills for inventoried,​ accrued parts, Control will adjust the inventory account and the Accounts Payable account. If the cost of the newly purchased items does not match the inventory cost, the user may choose to adjust the parts costs or not. If the part cost is NOT adjusted, the new quantity is added to inventory at the old price, and an adjustment is made into the Inventory Adjustment Expense.
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 ===== Linking Bills to Jobs ===== ===== Linking Bills to Jobs =====