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    Materials Planning

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    Qurat Saboor
    The lesson plan discusses materials planning and accounting for direct materials. It will cover quantitative models for planning stock levels, calculating order quantities, and assumptions of the economic order quantity formula. Students will learn how to determine re-order levels, safety stock, and conduct materials requirement planning.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Materials Planning

    Uploaded by

    Qurat Saboor
    13 views2 pages
    The lesson plan discusses materials planning and accounting for direct materials. It will cover quantitative models for planning stock levels, calculating order quantities, and assumptions of the economic order quantity formula. Students will learn how to determine re-order levels, safety stock, and conduct materials requirement planning.

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    The lesson plan discusses materials planning and accounting for direct materials. It will cover quantitative models for planning stock levels, calculating order quantities, and assumptions of the economic order quantity formula. Students will learn how to determine re-order levels, safety stock, and conduct materials requirement planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views2 pages

    Materials Planning

    Uploaded by

    Qurat Saboor
    The lesson plan discusses materials planning and accounting for direct materials. It will cover quantitative models for planning stock levels, calculating order quantities, and assumptions of the economic order quantity formula. Students will learn how to determine re-order levels, safety stock, and conduct materials requirement planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Lesson Plan

    Lecturer’s name: Qurat ul Ain Saboor Date: 30th April 2020

    Course: Cost Accounting Duration: 3 hours


    Topic: Materials Planning /Accounting for Direct Materials (Part II, Chapter 3,
    Colin Drury)
    Lesson objectives: Students will be able to…
     Quantitative models for the planning and control of stocks and relevant costs
     Calculating Economic Order Quantity, Re‐Order Level and Safety Stock
     Assumptions of the EOQ formula
     Materials requirement planning

    Summary of Lesson

    Process costing is a product cost system that accumulates costs in processing


    departments and allocates them to all units processed during the period, including
    both completed and partially completed units. It is used by firms producing
    homogeneous products on a continuous basis to assign manufacturing costs to units
    in production during the period. Firms that use process costing include paint,
    chemical, oil-refining, and food-processing companies.

    Process costing systems provide information so managers can make strategic


    decisions regarding products and customers, manufacturing methods, pricing options,
    overhead allocation methods, and other long-term issues.

    Equivalent units are the number of the same or similar completed units that could
    have been produced given the amount of work actually performed on both complete
    and partially completed units.

    The key document in a typical process costing system is the production cost report
    that summarizes the physical units and equivalent units of a production department,
    the costs incurred during the period, and the costs assigned to goods both completed
    and transferred out as well as to ending work-in-process inventories. The preparation
    of a production cost report includes five steps: (1) analyze physical units, (2)
    calculate equivalent units, (3) determine total costs to account for, (4) compute unit
    costs, and (5) assign total manufacturing costs.

    The two methods of preparing the departmental production cost report in process
    costing are the weighted-average method and first-in, first-out (FIFO) method. The
    weighted-average method includes costs incurred in both current and prior periods
    that are shown as the beginning work-in-process inventory of this period. The FIFO
    method includes only costs incurred during the current period in calculating unit cost.

    Most manufacturing firms have several departments or use processes that require
    several steps. As the product passes from one department to another, the costs from
    the prior department are transferred-in costs or prior department costs. Process
    costing with multiple departments should include the transferred-in cost as the fourth
    cost element in addition to direct materials, direct labor, and factory overhead costs.

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