Costing Systems

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Costing systems are a major part of the ‘Costing Introduction Free Course’ and Accounting Trainees and cost accountants need a thorough understanding of costing systems.

You are part way through the Costing Introduction Free Course and before reading this page you should have read:
– Costing Introduction Free Course

Below is a slide show looking at start-up costs, operating costs, fixed costs and variable costs.

As an Accounting Trainee you should :
-be able to define what we mean by costing systems
-distinguish between financial and management accounting
-provide a brief definition of a budget
-classify costs by element
-classify costs by nature
-define and provide examples of : direct costs, variable cost and prime costs.

As the course progresses you will appreciate that costing systems are there to help managers:
-in determining prices of complex manufactured products
-in inventory(stock) valuations
-in decision making.
The decision making aspect will be examined in greater detail in your final year of Accounting study.

Below is the Amazon link to the relevant books covering costing systems:

Now let’s test your knowledge of costing systems – go to the quiz below.

Costing Systems: QUIZ

Question 1
The area of accounting that includes costing, which concentrates on providing internal information to assist in planning, control and decision making is called _________ _________

Question 2
A future plan for an organization showing all the detail in financial terms is called a __________

Question 3
A cost which can be directly traced to the unit of output is called a __________ cost.

Question 4
Costs which cant be directly traced to the unit of output are called _________ costs

Question 5
Rent of a bakery would be classified as an ____________ cost.

Question 6
Wages of the bakers in a bakery would be classified as ________________ costs

Question 7
Wages of the cleaners in a bakery would be classified as ________________ costs

Question 8
Costing can only be used in a manufacturing business – true or false?

Question 9
Bank loan interest is an example of a financial indirect cost – true or false?

Question 10
Wages of an employee who maintains production machines in a factory would be classified as indirect production cost – true or false?

Click the link below to move onto the next topic
-Cost Centres and Cost Behaviour


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