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ch02 ppt Hansen6e - COST MANAGEMENT Accounting Control...

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COST MANAGEMENT 1 Accounting & Control Hansen▪Mowen▪Guan Chapter 2 Basic Cost Management Concepts
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2 Study Objectives 1. Explain the cost assignment process. 2. Define tangible and intangible products, and explain why there are different product cost definitions. 3. Prepare income statements for manufacturing and service organizations. 4. Explain the differences between traditional and contemporary cost management systems.
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3 Cost Assignment: Direct Tracing, Driver Tracing and Allocation A cost object is any item, such as products, customers, departments, projects, activities, and so on, for which costs are measured and assigned. Example: A bicycle is a cost object when you are determining the cost to produce a bicycle. An activity is a basic unit of work performed within an organization. Example: Setting up equipment, moving materials, maintaining equipment, designing products, etc.
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4 Cost Assignment: Direct Tracing, Driver Tracing and Allocation Traceability means that costs can be assigned
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