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objective
Actual cost a cost that has occurred
Budgeted cost a predicted cost
Cost object anything of interest for which a
cost is desired
Illustration
Product
Service
Project
Customer
Activity
Department
in an organized manner
Cost assignment a general term that
includes gathering accumulated costs to a
cost object. This includes:
Tracing accumulated costs with a direct
Cost Examples
Direct Costs
Parts
Assembly line wages
Indirect Costs
Electricity
Rent
Property taxes
technology
Operational Design
Cost Behavior
Variable costs changes in total in proportion
Cost
Cost per
Per Unit
Unit
Change in
in
Change
Unchanged in
proportion with
with relation to output
Variable Costs proportion
Variable Costs
output
output
More output = More cost
More output =
Change
More cost
Change inversely
inversely
with
Unchanged in
Fixed Costs
with output
Unchanged in
output
More output
= lower cost
Fixed Costs
relation
to
output
relation to output More output
per unit
=
lower cost
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A Cost Caveat
Unit costs should be used cautiously. Since
Multiple Classification of
Costs
Costs may be classified as:
Direct / Indirect, and
Variable / Fixed
These multiple classifications give rise to
Multiple Classification of
Costs, Visualized
Types of Manufacturing
Inventories
Direct Materials resources in-stock and
Accounting Distinction
Between Costs
Inventoriable costs product manufacturing
Cost Flows
The Cost of Goods Manufactured and the Cost
Multiple-Step Income
Statement