Advanced Cost Management - ACCT 4330
Implementing a costing system
1.
Implementing a costing system is a highly involved process that
requires tremendous detail and precision, as well as the capacity to
sustain costs - without money coming in, measuring c
Advanced Cost Management - ACCT 4330
Cost Units- What are they?
1.
A unit of cost is defined as a product or service in relation to which costs are
ascertained.
a.
A cost unit is essentially useful for breaking up costs into smaller sub
divisions
a.i.
b.
Advanced Cost Management - ACCT 4330
Costs Classified by Nature or Elements
1.
Material: The substance from which the product is made. May be
direct and indirect.
a.
Direct material: refers to those materials which become a major
part of the final product
Advanced Cost Management - ACCT 4330
Some Functional Classifications of Cost
1.
Manufacturing/ production costs: It is the cost of operating the
manufacturing division of an undertaking.
a.
Includes the cost of materials (direct) direct labour,
expenses a
Advanced Cost Management - ACCT 4330
Classification of Costs
1.
There are several useful costs classifications
a.
By Time
b.
By nature or elements
c.
By degree of traceability to product
d.
Association with the product
e.
By Changes in activity or volume
Advanced Cost Management - ACCT 4330
What are the goals of cost accounting?
1.
Cost accounting has several goals
a.
perhaps more apparanent, is the ability to show
businesses where they are spending money in pursuit of,
well money.
a.i.1.
knowledge of exp
Advanced Cost Management - ACCT 4330
What is Cost?
1.
Cost is the amount of resource given up in exchange for some
goods or services
a.
The resources you give up are the money or money
equivalents expressed in monetary units.
a.i.
b.
Formal definition in
Advanced Cost Management - ACCT 4330
Why Cost Accounting Helps Managers
1.
You see it on TV all the time: Angry manager rushes into cubicle
looking for last month's figures
a.
There may be a bit of validity to his/her fervent requests:
a.i.
knowing last m
Advanced Cost Management - ACCT 4330
*Quiz this friday*
1.
Cost accounting helps businesses determine the right time to
produce, and enhance their channels.
a.
kind of a central theme to supply side economics
a.i.
Costing information makes it easy for man
Advanced Cost Management - ACCT 4330
By Changes in Activity or Volume
1.
So costs can be classified as fixed, variable and semi-variable
a.
we learned this last week, but why is it important to have
these classifications?
a.i.
Costs come from different ac
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