Cost is the sacrifice of resources is done to benefit
Expenses are expenses charged to income during an accounting period.
The cost object is a unit or activity to which the costs are accumulated and measured. Unit or activity that may be: product, order, department, division, project.
Expenses are expenses charged to income during an accounting period.
The cost object is a unit or activity to which the costs are accumulated and measured. Unit or activity that may be: product, order, department, division, project.
Traceability of Cost Object Cost to produce:
Direct Cost
Indirect Cost
CLASSIFICATION OF COSTS
Cost Fabrication / Manufacturing Cost classified in:
Direct materials.
Direct Labor.
Factory Overhead costs are costs other than direct materials and direct labor.
Commercial costs Expenses are classified in:
Marketing costs are the costs necessary to obtain orders and provide products for customers
Administrative costs are costs required to manage the organization and provide support for employees
Prime Cost is the amount of direct materials and direct labor
Conversion Cost is the amount of direct labor and factory overhead
Production volumes are classified in:
Variable costs are costs that change in proportion to the volume of activity.
Fixed costs are costs that do not change because of changes in the volume of activity within the relevant range
Mixed costs are costs that have a variable and fixed components
Department classified in:
Common Cost is the cost arising from the use of facilities or services by two or more departments.
Joint Costs are costs incurred in the production process that produces two or more products.
Classified in the accounting period:
Capital Expenditure is the cost to benefit more than one accounting period.
Revenue Expenditure is the cost incurred to obtain benefits on the same accounting period and recorded as an expense.
Decision Making, Implementation, and Evaluation are classified in:
Differential / Marginal / Incremental Cost is the cost changes as a result of an alternative selection of a specific action.
Opportunity Cost is the income / benefits are lost if a certain alternative is selected
Sunk Cost is the cost incurred and were not relevant to the decision
Avoidable and Unavoidable Cost
Controllable / Uncontrollable Cost
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