Cost Accounting

1899 Words Dec 25th, 2012 8 Pages
Sub Micron Devices Inc.
Management Accounting-II
Amit Bhatia(12P068)
Deependra Kumar(12P078)
Nitish Gupta(12P088)
Ravinder Gahlout(12P098)
Srinivasan Ramesh(12P108)
Vipul Garg(12P118)

Amit Bhatia(12P068)
Deependra Kumar(12P078)
Nitish Gupta(12P088)
Ravinder Gahlout(12P098)
Srinivasan Ramesh(12P108)
Vipul Garg(12P118)

Submitted By:
2012

Table of Contents Introduction 3 ASIC Division - Cost Pools 4 Cost accounting system at ASIC: 5 Internal and external customer: 6 Situation at ASIC division (as on March 1996) 7 Western Digital Proposal 7 Capacity Analysis 8 Diferential Manufacturing Cost Budget 10

Introduction
Sub Micron Devices started its operations in mind 1980s. The company was located in Phoenix, Arizona, and had 400
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b) It helps in the elimination of non-value adding activities. c) It helps in the planning and budgeting of each department separately.

The company uses another very good cost based measure which is the calculation of fixed and variable costs separately. Generally, the companies follow a simple approach of calculating unit cost for each activity, and then multiplying it by the total number of units to be produced to calculate the total cost of production. But, there are minor loopholes in this approach, which if left unnoticed, may emerge out as non-existent costs, which spoil the whole estimation. For e.g. if a company does outsourcing for one of the stages of production, then it does not have to incur fixed costs for that stage. But, it may go unnoticed by the companies which uses combined fixed and variable cost system.

Sub Micron Devices operates in semi-conductor industry wherein overhead costs are generally greater than direct material and direct labour costs. These overhead costs are calculated by assigning separate cost drivers to Fabrication and Assembly stages. The cost drivers are:

a. Fabrication - Number of moves b. Assembly - Direct labour costs
A move is defined as,”Any significant alteration done to a raw silicon wafer.” The Fabrication process consists of breaking a raw

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