ch02 - 2-1 Basic Basic Management Management Accounting...

Info iconThis preview shows pages 1–8. 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
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2-1 Basic Basic Management Management Accounting Accounting ConceptsConceptsCHAPTERCHAPTER2-2 1.Describe the cost assignment process.1.Define tangible and intangible products and explain why there are different product cost definitions.1.Prepare income statements for manufacturing and service organizations.1.Outline the differences between functional-based and activity-based management accounting systems.ObjectivesObjectivesAfter studying this After studying this chapter, you should chapter, you should be able to:be able to:2-3 Exactly what is meant by “cost”?Cost is the cash or cash-equivalent value sacrificed for goods and services that is expected to bring a current or future benefit to the organization.I see… It’s a dollar measure of the resources used to achieve a given benefit.2-4 A cost objectcost objectis any item such as products, customers, departments, projects, activities, and so on, for which costs are measured and assigned.ExampleExample:A bicycle is a cost object when you are determining the cost to produce a bicycle.An activityactivity is a basic unit of work performed within an organization. Example:Example:Setting up equipment, moving materials, maintaining equipment, designing products, etc. 2-5 Traceability Traceability is the ability to assign a cost to a cost object in an economically feasible way by means of a cause-and-effect relationship.Direct costsDirect costsare those costs that can be easily and accurately traced to a cost object.Example:Example:If a hospital is the cost object,the cost of heating andcooling the hospital is a direct cost.2-6 Indirect costsIndirect costsare those costs that cannot be easily and accurately traced to a cost object.Example:Example:The salary of a plant manager, where departments within the plant are defined as the cost objects.2-7 Tracing Tracing is the actual assignment of costs to a cost object using an observable measure of the resources consumed by the cost object. Tracing costs to cost objects can occur in the following two ways:Direct tracingDirect tracingis the process of identifying and assigning costs that are exclusively and physically...
View Full Document

This note was uploaded on 04/06/2010 for the course ELECTRONIC 328 taught by Professor Han during the Three '04 term at Charles Sturt University.

Page1 / 28

ch02 - 2-1 Basic Basic Management Management Accounting...

This preview shows document pages 1 - 8. Sign up to view the full document.

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