Production flow costing and backflush costing

Backflush costing

Production flow costing Standard costing

• Standard cost , calculated according production flow effective at chosen date

• Visibility on cost breakdown per cost element on standard cost and variances

Backflush costing cost accumulation method • Accumulates cost of resources used and consumed , per production flow and period

• Periodically, ascertains production cost and records variances for deviations between produced goods standard and actual realized rescource consumptions

• Execution can be automated to process given period lenght at a chosen frequency

Production flow cost accounting• Maintains Work in Progress situational awareness per rescources used and produced

• Allows flexible configuration for financial reporting to general ledger, for easier reconciliation and analysis of economic performances per business segment,

Production Flow cost accountingSchematic of production flow cost accounting

3

PRODUCTION FLOW

Input ( 1) Output

( 2)Cell

Raw material Inventory

Production flow Work In Progress

Finished goodsInventory

Matl Std.Cost ( 1)

Matl. Std.Cost (1)

Absorption

Variance to standard cost

Variance( 3)

Realized cost ( 3)

FG Std. Cost ( 3 )

Matl Indirect cost (1)

Matl Indirect cost(1)

FG Std. Cost (2 )

FG Std. Cost ( 2)

Cell Mfg Cost (2 )

Cell Mfg. Cost (2 )

Mfg Indirect cost ( 2 )

Mfg Indirect cost (2 )

Activity

Backflush costing

( 3 )

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