Lecture_2 Ch2&6

Lecture_2 Ch2&6 - Cost Terms, Cost Behavior, Cost Flow...

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Unformatted text preview: Cost Terms, Cost Behavior, Cost Flow Lecture #2 (Chapter 2&6) Dr. Minlei Ye 1 Learning Objectives Identify three basic cost elements in the manufacture of a product. Understand cost classifications. Distinguish variable cost & fixed cost, analyze mixed cost and predict costs. Prepare a schedule of cost of goods 2 Whats the process? What are the costs? 3 Manufacturing Costs Prime Costs Conversion Costs Direct Material Direct Labour Overhead Cost Classifications General classification Manufacturing cost & Non-Manufacturing cost Financial reporting Product cost & Period Cost Assigning costs to cost objects Direct cost & Indirect cost Decision making Differential cost, Opportunity cost & Sunk cost Predicting cost behavior 5 $ Activity V a r i a b l e c o s t s Cost Behaviour Fixed Costs $ Activity Rent Cost in Thousands of Dollars 0 1,000 2,000 3,000 Rented Area (Square Feet) 30 60 Step costs 90 Relevant Range Fixed Monthly Utility Charge...
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Lecture_2 Ch2&6 - Cost Terms, Cost Behavior, Cost Flow...

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