AAT Level 2 Principles of Costing study guide
AAT Level 2 Principles of Costing · Work through your exam, one topic at a time.
Principles of Costing is the cost accounting unit of the AAT Level 2 Certificate in Accounting, the entry-level qualification for people starting a career in bookkeeping, accounts payable, or general finance administration. It suits learners with little or no prior accounting background, as well as working adults who record costs day to day and want a formal grounding in the underlying theory. The AAT Level 2 Principles of Costing study guide has 4 sections and about 1,261 words.
01The cost recording system: classification, cost centres and sources of data
Every cost recorded falls into one of three elements: materials , labour and expenses (everything else such as rent, fuel, depreciation). The first question is always whether a cost is direct - traceable in full to a cost unit, such as timber in a table - or indirect (overhead) , which cannot be traced economically, such as factory rent or a supervisor's salary.
349 words, about 2 min02Cost recording techniques: costing methods, cost centres and absorption
The method follows the way output is produced. Job costing builds a separate cost for each identifiable job (a bespoke kitchen).
317 words, about 2 min03Calculating and recording materials, labour and other expenses
Material cost entering the cost unit is purchase price plus carriage inwards , less trade discount, and excluding recoverable VAT. Carriage outwards is a selling and distribution cost and is never part of material cost.
306 words, about 2 min04Preparing and presenting reports on actual costs
Actual cost reports tell managers what has been spent, compare it with the plan, and prompt corrective action. A good report shows the cost centre , the period , who prepared it and who it is for, and it must be produced on time - a late report has little value.
289 words, about 1 min