Method Of Determining The Cost of Orders & Accounting Records

ACCOUNTING, ACTIVELYSHARE.COM — Cost of order method is a method of collecting production costs to determine the cost of products in companies that produce products on an order basis.

The purpose of this method is to determine the product cost of each order, both the overall cost of each order and per unit.

In this method, production costs are collected for certain orders and the cost of production per unit is calculated by dividing the total production costs for that order by the number of product units in the order concerned.

In the collection of cost of goods orders, where the costs are collected for each order / contract / service separately and each order can be identified separately.

Order Fee Characteristics

a. The nature of the production is intermittent depending on the orders received.
b. The shape of the product depends on the specifications of the customer.
c. Production costs are collected on an order cost card, which contains details for each order.
d. The total cost of production is calculated after the order is completed.
e. The production cost per unit is calculated, by dividing the total production cost by the total units ordered.
f. Cost accumulation generally uses normal costs.
g. The finished product is immediately handed over to the customer.

Conditions for Determining the Cost of Orders

According to Mulyadi in the book Cost Accounting, there are several conditions that must be met in determining the cost of the order, namely:

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