Chapter 2-students(1)

Chapter 2-students(1) - ACC241 Chapter 2 Copyright 2011...

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Copyright © 2011 School of Accountancy, Arizona State University ACC241 Chapter 2
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Types of Organizations Manufacturers . . . ¡ Purchase raw materials from suppliers and use them to create a finished product. ¡ Sell finished products to customers. Merchandisers . . . ¡ Sell the goods that manufacturers produce. ¡ That sell goods to other businesses are called wholesalers. ¡ That sell goods to the general public are called retailers. Service firms . . . ¡ Provide a service to customers or clients. 1-2
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Value Chain Activities that add value to products and services and cost money R&D Design Production/ Purchases Marketing Distribution Customer Service 3
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Copyright © 2010 School of Accountancy, Arizona State University Cost Vs. Expense q Cost is the value of what you trade to get what you want. q Cost is called an Asset if: q Benefit exceeds one accounting period q Cost is called an Expense if q Benefit is consumed within one accounting period.
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Major Cost Classifications: Cost Objects Cost Object Examples An Activity Repairing equipment, testing products manufactured for quality A Product Paper towels, computers, automobiles (purchased or manufactured) A Service Performing surgery, accounting, legal A Project Designing a house, constructing a bridge A Geographic Region A state, a city, a county A Department Marketing, operations, accounting Cost object : Any activity or item for which a separate cost measurement is desired.
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Major Cost Classifications: Direct Costs and Indirect Costs Direct costs Costs that can be easily and conveniently traced to a unit of product or other cost object. Indirect costs Costs that supports more than one cost object--must be allocated to be assigned to a unit of product or other cost object .
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Real-World Examples of Direct versus Indirect Costs
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This note was uploaded on 01/12/2012 for the course ACC 241 taught by Professor Karengeiger during the Spring '08 term at ASU.

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Chapter 2-students(1) - ACC241 Chapter 2 Copyright 2011...

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