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Vang Company Cost Accounting

Essay by   •  July 12, 2016  •  Case Study  •  5,826 Words (24 Pages)  •  1,373 Views

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Table of Contents

Table of Figures        


1.1 Classify different types of cost.        

1.1.1. Types of costs Direct cost: Indirect cost:        

1.1.2. Element of costs Material cost Labour cost Expense        

1.1.3Overheads Administration Overheads Selling Overheads        

1.1.4. Cost Behaviour Fixed Costs Variable Costs Semi-variable Costs        

1.2. Using Different Costing Methods        

1.3. Calculate Costs Using Appropriate techniques.        


2.2. Performance indicators to identify potential improvements        

2.2.1. Cost centres        

2.2.2. Profit Centres Gross profit Net Profit        

2.2.3. Revenue Centres        

2.2.4. Investment Centres. ROI – Return on Investment. RI – Residual income        

2.3. Improvements to Reduce Costs, Enhance Value and Quality.        

2.3.1. Total Quality Management – TQM.        

2.3.2.Six Sigma        


Table of Figures

Figure 1: Cost Classification        

Figure 2: Fixed cost Graphs        

Figure 3: The Variable Cost Graphs        

Figure 3: The Semi-Variable Cost Graphs        

Figure 4: The interdependence of the departments (Vang Company case study, 2014)        

Figure 5:  The department factory overhead for Producing Departments S and P and Service Departments X, Y and Z        

Figure 6: The budget in 2009        

Figure 7: Growth of sales, costs and profits for the years 2006-2008…………………..…….

Figure 8: Routine cost of Vang Company (Vang Company case study, 2014)        

Figure 9: Weekly Variable cost (Vang Company case study, 2014)        

Figure 10: Weekly fixed cost (Vang Company case study, 2014)        

Figure 11: Weekly Admin, selling and others expenses ……………………………………….

Figure 12: Gross profit and Net profit of Vang Company        


Cost accounting is thus concerned with planning, classifying, control, summarizing costs and management for decision making for determination of costs of products or services. Therefore, cost accounting is extremely important and necessary within an enterprise.

In this report, the aim is understanding and identifying cost accounting of Vang Company. Vang Company is T- shirts manufacturing company in Danang. It set up in 2006 and it has 25 employees including 21 in production and 4 in administration and sales. The first, I identify the types of cost and classification as well as costing methods of Vang Company. Secondly, I calculate about the total costs, gross profit, net profit and administrative and selling expenses and then find performance indicators to identify potential improvements. And finally, I give some methods to reduce costs but enhance quality of products in Vang Company.

1.1 Classify different types of cost.

Cost is the price of expenditure incurred on a produced item. Costs must be classified in various different ways depending on its nature and a specific purpose. Moreover, classification involves arranging costs into groupings of similar items in order to make stock valuation, profit measurement, planning, decision making and control easier.

Figure 1: Cost Classification

1.1.1. Types of costs

Costs are classified as direct and indirect costs on the basis of their identification with particular jobs, products or processes. Direct cost:

Direct costs are costs that can be directly identified and easily traced to a particular object such as a product, the raw materials used to manufacture a product, or the labor associated with the work to produce the product. Direct material, direct labour and some expenses are included in direct expenses. Indirect cost:

Indirect cost is those expenses, which are incurred on those items, which are not directly chargeable to cost of a product or services. Typically, indirect costs are apportioned to different jobs, products or services on a reasonable basis. For example, factory manager's salary, factory rent or depreciation of machinery. Vang Company spends money of this type cost to rental of premises and wages of administrative staff.



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