Cost
Cost Terminology
Cost Pool
bucket' of cost that are to be applied tothe cost object
Cost Object
Thing that the cost are attached to
How to determine cost of Cost Object
2. Assignement
1. Cost acumulation
Purpose of using Cost info
Implement decision by motivating staff to act & learn
Make decision
Actual vs Budget cost
Cost Assignment of Cost Object
Factors affecting Direct/Indirect cost Classification
Design of Operations
Available Info-gathering Tech
Materiality of cost in Q
Indirect Cost
Cost Allocation
Direct Costs
can be traced to a cost object in cost-effective way
Cost Tracing
Total Cost & Unit Cost
Unit cost change when lv of pdn change from prior yr
Manager should think in terms of total cost rather than Unit cost
can determine profitablity of @ pdt to decide which invest more resources
Cost-Behavior Pattern
Relevant Range
a band of normal activity lv which ther's a specific re/ship b/w lv of activity & cost
Cost Driver
Variable that causes the cost to change
Fixed cost - no cost driver in ST; volume in LT
Variable cost - Lv of activity or volume
Variable & Fixed Costs
