12ManagerialRules - Basic Cost Concepts Costs Basic Cost...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Basic Cost Concepts
Background image of page 1

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

View Full DocumentRight Arrow Icon
Costs
Background image of page 2
Basic Cost Terminology Cost – sacrificed resource to achieve a specific objective Actual cost – a cost that has occurred Budgeted cost – a predicted cost Cost object – anything of interest for which a cost is desired
Background image of page 3

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

View Full DocumentRight Arrow Icon
Cost Object Examples at BMW Cost Object Illustration Product BMW X 5 sports activity vehicle Service Dealer-support telephone hotline Project R&D project on DVD system enhancement Customer Herb Chambers Motors, a dealer that purchases a broad range of BMW vehicles Activity Setting up production machines Department Environmental, Health & Safety
Background image of page 4
Basic Cost Terminology Cost accumulation – a collection of cost data in an organized manner Cost assignment – a general term that includes gathering accumulated costs to a cost object . This includes: Tracing accumulated costs with a direct relationship to the cost object and Allocating accumulated costs with an indirect relationship to a cost object
Background image of page 5

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

View Full DocumentRight Arrow Icon
Full Costs Direct costs + Indirect costs Full Costs
Background image of page 6
Direct costs – can be conveniently and economically traced (tracked) to a cost object Indirect costs – cannot be conveniently or economically traced (tracked) to a cost object. costs are allocated to a cost object in a rational and systematic manner
Background image of page 7

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

View Full DocumentRight Arrow Icon
BMW: Assigning Costs to a Cost Object
Background image of page 8
Cost Examples Direct Costs Parts Assembly line wages Indirect Costs Electricity Rent Property taxes
Background image of page 9

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

View Full DocumentRight Arrow Icon
Costs of Box of Candy Direct costs Ingredients - nuts sugar, chocolate etc. Direct labor Cost of box Shipping costs Indirect costs Supervisor’s time Building depreciation
Background image of page 10
Factors Affecting Direct / Indirect Cost Classification Cost Materiality Availability of information-gathering technology Operational Design
Background image of page 11

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

View Full DocumentRight Arrow Icon
Direct and Indirect Labor Costs Direct labor includes the labor
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/08/2011 for the course ACG 3481 taught by Professor Dickinson during the Fall '08 term at University of Florida.

Page1 / 47

12ManagerialRules - Basic Cost Concepts Costs Basic Cost...

This preview shows document pages 1 - 13. Sign up to view the full document.

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