7.01_econ_6.5 - 1 M Pore - 7.10 - econ 6.5.ppt...

Info iconThis preview shows pages 1–14. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 M Pore - 7.10 - econ 6.5.ppt Classification of Costs Chapter 8 2 M Pore - 7.10 - econ 6.5.ppt General Cost Terms Manufacturing Costs Direct Raw Materials Direct Labor Manufacturing Overhead Nonmanufacturing Costs Overhead Marketing Administrative Functions 3 M Pore - 7.10 - econ 6.5.ppt Various Types of Manufacturing Costs 4 M Pore - 7.10 - econ 6.5.ppt Classifying Costs for Financial Statements Matching Concept : The costs incurred to generate particular revenue should be recognized as expenses in the same period that the revenue is recognized. Period Costs : Those costs that are matched against revenues on a time period basis Product Costs: Those costs that are matched against revenues on a product basis. 5 M Pore - 7.10 - econ 6.5.ppt Example Period Costs : General and administrative expenses Marketing expenses Insurance premiums Income taxes Nonmanufacturing costs Product Costs : Direct material costs Direct labor costs Manufacturing overhead 6 M Pore - 7.10 - econ 6.5.ppt How the Period Costs and Product Costs Flow Through a Financial Statement 7 M Pore - 7.10 - econ 6.5.ppt Cost Flows and Classifications in a Manufacturing Company 8 M Pore - 7.10 - econ 6.5.ppt Product Cost Period Cost Classifying Costs for Uptown Ice Cream Shop Ice cream (cream, sugar, milk, and milk solids) $0.65 Cone 0.05 Rent 0.61 Wages 0.25 Payroll taxes 0.25 Sales taxes 0.23 Business taxes 0.08 Debt service 0.23 Supplies 0.09 Utilities 0.08 Other (insurance, advertising,professional fees) 0.05 Profit 0.13 $2.50 Unit Price of an Ice Cream 9 M Pore - 7.10 - econ 6.5.ppt Cost Classification for Predicting Cost Behavior Volume index Cost Behaviors Fixed costs Variable costs Mixed costs Average unit costs 10 M Pore - 7.10 - econ 6.5.ppt Volume Index Def : The unit measure used to define volume Examples : Automobile miles driven Generating plant kWh produced Stamping machine parts stamped 11 M Pore - 7.10 - econ 6.5.ppt Fixed Costs Def : The costs of providing a companys basic operating capacity Cost behavior : Remain constant over the relevant range 12 M Pore - 7.10 - econ 6.5.ppt Variable Costs Def : Costs that vary depending on the level of production or sales Cost behavior : Increase or decrease proportionally according to the level of volume 13 M Pore - 7.10 - econ 6.5.ppt Mixed Costs Def : Costs are fixed for a set level of...
View Full Document

Page1 / 51

7.01_econ_6.5 - 1 M Pore - 7.10 - econ 6.5.ppt...

This preview shows document pages 1 - 14. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online