Product costing Week 4 From Chapter 10 complete question 3 page 382 on why product costing is different between financial and managerial accounting What advantage does product costing offer over financial accounting Illustrate its use by using a health care example You must respond to at least two of your classmates postings to receive full credit How does product costing used in financial accounting different from product costing used in managerial accounting Product Costing is the process of tracking and studying all the various expenses that are accrued in the production and sale of a product from raw materials purchases to expenses associated with transporting the final product to retail establishments It is widely regarded as an extremely important component in evaluating and planning overall business strategies As John A Lessner indicated in the Journal of Accountancy In today s hotly competitive business environment accurate product costing has become critically important to a business s survival Anonymous 2012 Managerial Accounting is The process of identifying measuring analyzing interpreting and communicating information for the pursuit of an organization s goals investopedia 2012 Financial accounting is a specific type of accounting that is used by businesses to prepare reports on the finances of a firm for people outside of the organization such as stockholders or government agencies It is governed by specific accounting standards to insure uniformity in reporting Noffke 2012 So how does product costing used in financial accounting different from product costing used in managerial accounting Managerial accounts use the income statement to explore cost behavior that is whether costs are fixed or variable over the course of the accounting period Financial accountants use the statement to show which costs are related to products Knowing the difference between the statements can help you draft the statement you need for your specific analysis Freedman 2012 What advantage does product costing offer over financial accounting Product costing is the process of assigning costs to inventory and production based on the expenses that go into producing or buying inventory It is an especially important process for manufacturers and there are several potential costing methods that businesses choose for their simplicity accuracy or other factors If a business contracts out accounting services the accounting firm may offer in depth product costing analysis as part of its service There are several benefits to such customized costing such as accuracy project tracking decision making and project development Lacom 2012 Illustrate its use by using a healthcare example An example using healthcare would have to be that the company makes sure that they use their managerial accounting first The process of identifying measuring analyzing interpreting and communicating information for the pursuit of an organization s goals investopedia 2012 They would have to identify what is needed for the facility measure inventory of what is needed analyze and interpret the cost of the supplies needed and communicate amongst the other representatives in the management staff with the goal of keeping spending down Second they have to use their Product Costing which is the process of tracking and studying all the various expenses that are accrued in the production and sale of a product from raw materials purchases to expenses associated with transporting the final product to retail establishments Anonymous 2012 In this case finding the right places that supply the supplies that are needed and at what cost it will be for the facility Deciding how much is used of what and the expenses of how to get the product Finally they would have to make sure they use the financial accounting which is a specific type of accounting that is used by businesses to prepare reports on the finances of a firm for people outside of the organization such as stockholders or government agencies It is governed by specific accounting standards to insure uniformity in reporting Noffke 2012 Keeping track of what is being spent and what supplies are being ordered Making sure your reports are up to date can help the facility from having problems later References Anonymous 2012 Product Costing Retrieved from www referenceforbusiness com small Op Qu Product Costing html Freedman J 2012 Product Costing Financial Statement V s Managerial Accounting Retrieved from www ehow com info 8653556 product statement vs managerial accounting html Investopedia 2012 Managerial Accounting Retrieved from http www investopedia com terms m managerialaccounting asp axzz2Ez8fsrSe Locoma T 2012 The Advantages Product Costing Offers in Financial Accounting Retrieved from http smallbusiness chron com advantages product costing offers financial accounting 24883 html Noffke D 2012 What is financial accounting Retrieved from www ehow com about 4710004 what financial accounting html