CH.

05
Integrated vs interlocking cost accounting system
Recommended Integrated:
- Cost and financial accounts are combined in one set
- Avoids duplication of accounting entries
Interlocking: - maintained independently.
Control Account- is a summary account, entries are made from totals of transaction for a certain period.
Job costing system- a system used when each unit is unique and must be costed separately;
Contract costing system- a system of Job Costing for large costs unit: long time to complete);
Process costing system- a system used when similar products or service are produced;
Batch costing system- a combination of Job costing and Process costing accounting.
Ledger- a book in which double-entry accounting transactions are stored or summarized
Subsidiary ledger- designed for the storage of specific types of accounting transactions.
General ledger- used to construct the financial statement of a company.

CH.06
Costing systems are appropriate : in those situations where masses of identical units or batches are
produced thus making it unnecessary to assign costs to individual or batches of output.
Normal and abnormal losses
Normal losses :
- Inherent in the production process;
- Cannot be eliminated;
- Cost should be born by the good production.
Abnormal losses:
- Are avoidable;
- Cost should not assigned to products;
- Recorded separately.
Prepare process, normal loss, abnormal loss and abnormal gain accounts when there is no ending
work in progress.

- The cost accumulation procedure follows the production flow;

- Control accounts are established for each process and cost are assigned to each provcess;

Equivalent units: estimate the % degree of completion of the work in progress and multiply this by
number of units in progress at the end of the accounting period.

CH.07
Joint products and by-products
Both arise from a joint production process .
Joint products:
- Relatively high sales value
- Crucial to the commercial viability of an organization.
By-products:
 - Low sales value
- Incidental
Split-off point in a joint cost situation- when products become separately identifiable.
Alternative methods of allocating joint costs to products
1. Physical measures (allocates joint costs to individual products in proportion to their production
volumes);
2. Market value:
1. Sales values at split-off point(allocates joint costs to individual products based on their sales
value);
2. Net realizable value( estimated by deducting the further processing costs form the sales value )
3. Gross profit %( allocates so that the overall gross profit % is identical for each product).