This must be the case since total costs 175000 and

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Unformatted text preview: •••••••••••••••• Final versus Intermediate Cost Objects. For simplicity purposes, an hour of time would seem to be the best approach. The choice of an hour of time poses a small problem in that customers will most likely want to know the price for an entire job (which usually will be LI’s cost plus a markup). LI then would need to look at the customer’s project, determine the number of hours needed, and calculate a total estimated cost. In effect, then, a “job” becomes a cost object, and just as no two jobs are alike in an automobile repair garage, a law office, a custom home builder, and many other “job order” organizations, no two LI jobs would be alike. As a result, LI would need to link its cost object (an hour of service) to the customer’s cost object (a completed job). Because of this need, managers tend to distinguish between final and intermediate cost objects. A final cost object typically is the unit that fits with the price charged to a customer. Intermediate cost objects are smaller units that are su...
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This document was uploaded on 03/30/2014.

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