Chpt 2 notes - Cost Accounting Chapter 2 2012-01-15 An...

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Cost Accounting – Chapter 2 2012-01-15 An Introduction to Cost Terms and Purposes Basic Cost Terminology Cost: a resource sacrificed or foregone to achieve a specific objective o measured as a monetary amount paid Different relevant information is needed for different cost management problems o Information is relevant if it will change a decision Period Cost o All costs incurred to generate revenue in a specific time period except costs of goods sold Cost Object: o Any “object” such as a product, machine, service, or process for which cost information is accumulated o Can vary in size from an entire company, to program within the company, or down to a single product or service Period and Inventoriable Costs: - Period Costs: little evidence of future benefit, therefore expensed in the period incurred - Inventoriable Costs: the accumulation of all costs to manufacture or purchase inventory for resale - Production Costs: specific costs to purchase and transform raw materials into finished product using labour and equipment o Consist of Cost of goods sold (COGS) and Cost of goods manufactured (COGM) o COGS: costs incurred to manufacture products that have been sold o COGM: costs of goods transferred to inventory, whether sold or not
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Chpt 2 notes - Cost Accounting Chapter 2 2012-01-15 An...

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