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Unformatted text preview: AIM 3341 Ch.2 and 3 Notes: CH 2: Cost Object – any thing or activity for which we measure costs (Ex: individual products, product lines, projects, customers, departments) Cost Assignment – determining the costs that should attach to a cost object Cost Assignment > (Direct/ Indirect Costs) > [Cost Object] Direct Costs – easily traced (cost tracing) to individual cost objects Indirect Costs – not easily traced (cost allocation) to individual cost objects Overhead Costs – common costs for many different aspects of operations and cannot be easily related to individual products or services Opportunity Costs – the benefits we forego when we choose one alternative over the next best alternative Difficult to measure because they are associated with something that did Not occur. Always Relevant in decision making. Sunk Costs – expenditures made in the past Never Relevant for decision making. Total Fixed Costs – costs that do not change (in total) as activity levels change Total Variable Costs – costs that change proportionately with changes in activity levels Relevant Range – a span of activity for a given cost object where TFC remain constant and...
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- Spring '08
- linear cost function