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Unformatted text preview: Costs Cost object: is any entity to which costs can be attached ex, products, processes, employees, departments and facilities Cost D river: is the basis used to assign costs to a cost object Di rect cost : A cost that can be directly traced to the unit produced. I ndirect costs: are costs that are not directly accountable to a cost object, ex: MOH, to simplify the allocation process, indirect costs are often collected in cost pools. Relevant range: is the range which fixed costs remain constant. Fixed costs: within the relevant range of production, the total amount of these costs does not change with a change in production; however the cost per unit decreases as production increases. Fixed costs are only indirect Variable costs: The per unit variable cost remains unchanged as production increases or decreases while total variable cost increases as production increases and decreases as production decreases. Variable costs are direct and indirect. M ixed costs: combine mix and variable costs, two method of estimating mixed costs -The high-low method-The regression method Common costs: shared by two or more users ex: depreciation of entire building. Linear costs function: they change at a constant rate Controllable costs: those that are controllable under the discretion of a particular manager, its dependent on the hierarchy of the organization. Avoidable costs: are those that can be avoided by not engaging in an activity or by performing it more efficiency....
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- Spring '11