chap15 - PLANNING Identify problems Identify alternatives...

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PLANNING Identify problems Identify alternatives Evaluate alternatives Choose and implement best alternatives CONTROLLING Establish expectations Create performance measures Gather results Compute variances EVALUATING Analyze results Provide feedback Reward performance Identify problems Fixed vs. Variable Fixed – A cost that doesn’t change based on changes in the level of sales or production. Examples are building rent and executive salaries. Variable – A cost that changes directly with changes in the level of sales or production. Examples are materials costs and sales commissions. Product vs. Period Product – A cost incurred as part of the production process. Operationally, consider these as the costs incurred in the factory. These costs are first reported as an asset (inventory) and then as an expense (cost of goods sold) when the product is sold. Period – A cost incurred outside the factory or production facility. These costs are reported as an expense in the period in which they are incurred. Types of Product Costs
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This note was uploaded on 06/20/2011 for the course ECON 123 taught by Professor Mrews during the Spring '11 term at Korea Advanced Institute of Science and Technology.

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