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Презентация на тему An Introduction to Cost Terms and Purposes

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2. Basic Cost TerminologyCost – sacrificed resource to
3. Basic Cost TerminologyCost Accumulation – a collection
4. Direct and Indirect CostsDirect Costs – can
5. Cost ExamplesDirect CostsPartsAssembly line wagesIndirect CostsElectricityRentProperty taxes
6. Factors Affecting Direct/Indirect Cost ClassificationCost MaterialityAvailability of Information-gathering TechnologyOperational Design
7. Cost BehaviorVariable Costs – changes in total
8. Cost Behavior, continuedVariable costs – are constant
9. Cost Behavior SummarizedTotal DollarsCost per UnitVariable CostsChange
10. Other Cost ConceptsCost Driver – a variable
11. A Cost CaveatUnit costs should be used
12. Different Types of FirmsManufacturing-sector companies – create
13. Types of InventoriesDirect Materials – resources instock
14. Types of Product CostsDirect MaterialsDirect LaborIndirect Manufacturing
15. Distinctions Between CostsInventoriable Costs – product manufacturing
16. Cost FlowsThe Cost of Goods Manufactured and
17. Cost of Goods ManufacturedCalculates the cost of
18. Income StatementFigure carries forward from the Schedule
19. Cost Flowchart
20. Other Cost ConsiderationsPrime cost is a term
21. Different Definitions of Cost for Different ApplicationsPricing
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Basic Cost TerminologyCost – sacrificed resource to achieve a specific objectiveActual Cost – a cost that has occurredBudgeted Cost – a predicted costCost Object – anything of interest for which a cost is desired

CHAPTER 2An Introduction to Cost Terms and Purposes

Basic Cost TerminologyCost Accumulation – a collection of cost data in an

Direct and Indirect CostsDirect Costs – can be conveniently and economically traced

Cost ExamplesDirect CostsPartsAssembly line wagesIndirect CostsElectricityRentProperty taxes

Factors Affecting Direct/Indirect Cost ClassificationCost MaterialityAvailability of Information-gathering TechnologyOperational Design

Cost BehaviorVariable Costs – changes in total in proportion to changes in

Cost Behavior, continuedVariable costs – are constant on a per-unit basis. If

Cost Behavior SummarizedTotal DollarsCost per UnitVariable CostsChange in proportion with outputMore output

Other Cost ConceptsCost Driver – a variable that causally affects costs over

A Cost CaveatUnit costs should be used cautiously. Since unit costs change

Different Types of FirmsManufacturing-sector companies – create and sell their own productsMerchandising-sector

Types of InventoriesDirect Materials – resources instock and available for useWork-in-Process (or

Types of Product CostsDirect MaterialsDirect LaborIndirect Manufacturing – factory costs that are

Distinctions Between CostsInventoriable Costs – product manufacturing costs. These costs are capitalized

Cost FlowsThe Cost of Goods Manufactured and the Cost of Goods Sold

Cost of Goods ManufacturedCalculates the cost of Direct Materials UsedAccumulates the three

Income StatementFigure carries forward from the Schedule of Cost of Goods ManufacturedPeriod

Other Cost ConsiderationsPrime cost is a term referring to all direct manufacturing

Different Definitions of Cost for Different ApplicationsPricing and product-mix decisions – may

Three Common Features of Cost Accounting and Cost ManagementCalculating the cost of

Слайды презентации

Слайд 2 Basic Cost Terminology
Cost – sacrificed resource to achieve

Basic Cost TerminologyCost – sacrificed resource to achieve a specific objectiveActual

a specific objective
Actual Cost – a cost that has

occurred
Budgeted Cost – a predicted cost
Cost Object – anything of interest for which a cost is desired

Слайд 3 Basic Cost Terminology
Cost Accumulation – a collection of

Basic Cost TerminologyCost Accumulation – a collection of cost data in

cost data in an organized manner
Cost Assignment – a

general term that includes gathering accumulated costs to a cost object. This includes:
Tracing accumulated costs with a direct relationship to the cost object and
Allocating accumulated costs with an indirect relationship to a cost object

Слайд 4 Direct and Indirect Costs
Direct Costs – can be

Direct and Indirect CostsDirect Costs – can be conveniently and economically

conveniently and economically traced (tracked) to a cost object
Indirect

Costs – cannot be conveniently or economically traced (tracked) to a cost object. Instead of being traced, these costs are allocated to a cost object in a rational and systematic manner

Слайд 5 Cost Examples
Direct Costs
Parts
Assembly line wages
Indirect Costs
Electricity
Rent
Property taxes

Слайд 6 Factors Affecting Direct/Indirect Cost Classification
Cost Materiality
Availability of Information-gathering

Technology
Operational Design

Слайд 7 Cost Behavior
Variable Costs – changes in total in

Cost BehaviorVariable Costs – changes in total in proportion to changes

proportion to changes in the related level of activity

or volume
Fixed Costs – remain unchanged in total regardless of changes in the related level of activity or volume
Costs are fixed or variable only with respect to a specific activity or a given time period

Слайд 8 Cost Behavior, continued
Variable costs – are constant on

Cost Behavior, continuedVariable costs – are constant on a per-unit basis.

a per-unit basis. If a product takes 5 pounds

of materials each, it stays the same per unit regardless of whether one, ten, or a thousand units are produced
Fixed costs – change inversely with the level of production. As more units are produced, the same fixed cost is spread over more and more units, reducing the cost per unit

Слайд 9 Cost Behavior Summarized
Total Dollars
Cost per Unit
Variable
Costs

Change in

Cost Behavior SummarizedTotal DollarsCost per UnitVariable CostsChange in proportion with outputMore

proportion with output
More output = More cost
Unchanged in relation

to output

Fixed
Costs

Unchanged in relation to output

Change inversely with output
More output = lower cost per unit

Слайд 10 Other Cost Concepts
Cost Driver – a variable that

Other Cost ConceptsCost Driver – a variable that causally affects costs

causally affects costs over a given time span
Relevant Range

– the band of normal activity level (or volume) in which there is a specific relationship between the level of activity (or volume) and a given cost
For example, fixed costs are fixed only within the relevant range.

Слайд 11 A Cost Caveat
Unit costs should be used cautiously.

A Cost CaveatUnit costs should be used cautiously. Since unit costs

Since unit costs change with a different level of

output or volume, it may be more prudent to base decisions on a total dollar basis.

Слайд 12 Different Types of Firms
Manufacturing-sector companies – create and

Different Types of FirmsManufacturing-sector companies – create and sell their own

sell their own products
Merchandising-sector companies – product resellers
Service-sector companies

Слайд 13 Types of Inventories
Direct Materials – resources instock and

Types of InventoriesDirect Materials – resources instock and available for useWork-in-Process

available for use
Work-in-Process (or progress) – products started but

not yet completed. Often abbreviated as WIP
Finished Goods – products completed and ready for sale

Слайд 14 Types of Product Costs
Direct Materials
Direct Labor
Indirect Manufacturing –

Types of Product CostsDirect MaterialsDirect LaborIndirect Manufacturing – factory costs that

factory costs that are not traceable to the product.

Also known as Manufacturing Overhead costs or Factory Overhead costs

Слайд 15 Distinctions Between Costs
Inventoriable Costs – product manufacturing costs.

Distinctions Between CostsInventoriable Costs – product manufacturing costs. These costs are

These costs are capitalized as assets (inventory) until they

are sold and transferred to Cost of Goods Sold
Period Costs – have no future value and are expensed as incurred

Слайд 16 Cost Flows
The Cost of Goods Manufactured and the

Cost FlowsThe Cost of Goods Manufactured and the Cost of Goods

Cost of Goods Sold section of the income statement

are accounting representations of the actual flow of costs through a production system.
Note the importance of inventory accounts in the following accounting reports, and in the cost flow chart

Слайд 17 Cost of Goods Manufactured

Calculates the cost of Direct

Cost of Goods ManufacturedCalculates the cost of Direct Materials UsedAccumulates the

Materials Used

Accumulates the three product costs for the current

period

Adjusts the current period manufacturing costs to account for units actually completed

Слайд 18 Income Statement
Figure carries forward from the Schedule of

Income StatementFigure carries forward from the Schedule of Cost of Goods

Cost of Goods Manufactured
Period Costs are expensed as incurred

Слайд 19 Cost Flowchart

Слайд 20 Other Cost Considerations
Prime cost is a term referring

Other Cost ConsiderationsPrime cost is a term referring to all direct

to all direct manufacturing costs (labor and materials)
Conversion cost

is a term referring to direct labor and factory overhead costs, collectively
Overtime labor costs are considered part of overhead

Слайд 21 Different Definitions of Cost for Different Applications
Pricing and

Different Definitions of Cost for Different ApplicationsPricing and product-mix decisions –

product-mix decisions – may use a “super” cost approach

(comprehensive)
Contracting with government agencies – very specific definitions of cost for “cost plus profit” contracts
Preparing external-use financial statements – GAAP-driven product costs only