AccountingCode 9706
Materials and labour
What this topic asks you to be able to do
- accounting for the costs of materials and labour
- the way to recognise and work out the fixed, variable, semi-variable and stepped types of cost
- how to identify the elements that make up direct costs and indirect costs, and calculate each one
- how to calculate what closing inventory is worth by the first in first out (FIFO) method and by the weighted average cost (AVCO) method, under both perpetual and periodic inventory systems
- the principles behind managing inventory on a just in time (JIT) basis
- apply what you understand about accounting for materials and labour when you evaluate relevant information and reach well-informed business decisions