Cost Calculation and Cost Accumulation

This time we will discuss about the cost calculation system starting from determining the cost of goods to the production process, happy reading …

Table of contents :

  • Cost Calculation System
    • 1). Actual Cost System
    • 2). Determined Fee System in Advance
  • Determination of Cost of Goods
    • 1). Full Cost Calculation
    • 2). Variable Cost Calculations
  • Accumulated Costs
    • 1). Accumulated Order Cost
    • 2). Accumulated Process Costs
  • Production process
    • Share this:

Cost Calculation System

The Cost System is an organization of coordinated forms, records and reports that aim to carry out activities and is cost information for management.

In cost accounting the system that can be used to allocate and charge costs to production units can be divided into two systems, namely as follows:

1). Actual Cost System

The actual cost system or the actual cost system is a system for charging the cost of goods or orders as well as services when these costs have been incurred or the actual costs are enjoyed.

The presentation of the results will only take place when all operations have been accomplished in the relevant accounting period.

2). Determined Fee System in Advance

The predetermined cost system is a system of charging the cost of goods or orders or services produced at the cost of a predetermined cost before a product or service is executed.

At the end of the accounting period these two cost systems are recorded and then compared so that there is a variance between the actual costs and the costs determined in advance.

The variance that arises is more variance (over applied) and less variance (tinder applied).

Determination of Cost of Goods

The determination of the cost of goods is how to calculate the cost of a product or order or service, which can be done by including all production costs or only including variable production costs.


Also Read:   Cost Accounting Information Systems


In determining the cost of goods, two methods can be used, namely as follows:

1). Full Cost Calculation

Full cost calculation is a method in determining the cost of a product by taking into account all kinds of production costs, for example, such as direct material costs, direct labor and also variable overhead costs and fixed overhead costs.

2). Variable Cost Calculations

Variable cost calculation is a method in determining the cost of a product, only taking into account production costs that are variable.

In this way, fixed overhead costs are not calculated as production costs, but overhead costs will still be calculated as period costs that will be charged in the income statement for the current year.

Accumulated Costs

Cost accumulation is a method to find out how much it costs for a product and service or something related.

There are several methods that can be used in the accumulation of costs, but two methods are generally used, as follows:

1). Accumulated Order Cost

Order cost accumulation is a method used in collecting the cost of a product where costs are collected for each order or contract or service separately, and also each order or contract can be separated according to its identity.

This order cost accumulation can be applied to companies that use intermittent production processes such as; construction work, workshop, printing, catering for food and furniture and so on.

2). Accumulated Process Costs

The accumulation of process costs is a method of collecting the cost of products by collecting costs for a certain unit of time. This process cost accumulation can be applied to companies that use a continuous production process,

Examples such as; automobile assembly companies, pharmaceuticals, airlines and hospitals and so on. The actual cost system as well as the predetermined cost system can be used in the order cost collection and processing cost collection.

Production process

Production process is a process of processing input into output. The input in question is direct raw materials, direct labor and also factory overhead costs that are being processed into finished products.

In a manufacturing company the production process can be done in two ways, namely:

  1. One Stage Production Process
    2. Several Stages Of The Production Process


Leave a Comment