Includes: Parts
Assembly line wages
Cost-Tracing describes the assignment of
direct costs to the particular cost object.
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Indirect Costs
Indirect Costs
2-5 Cost Object
Anything for which a separate measurement of
costs is desired
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Cost Object Examples at BMW
Cost Object Product Service Project
merchandising companies, and service-sector companies
Describe the three categories of inventories commonly found in manufacturing companies
Distinguish inventoriable costs from period costs Explain why product costs are computed in different ways
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BASIC COST TERMINOLOGY,CONTS.
Cost Accumulation describes the process of accumulating costs in some organized manner through the accounting system.
Allocating：accumulated costs with an indirect relationship to the cost object
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Learning objective 2
Distinguish between direct costs and indirect costs
for diffframework for cost accounting and cost management
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Learning objective 1 Define and illustrate a cost object
Environmental, Health & Safety
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Cost And Cost Terminology
Cost Accumulation
Cost Assignment via
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Cost Object
Cost Object
Cost Object
Tracing
Allocating
CHAPTER 2
An Introduction to Cost Terms and Purposes
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LEARNING OBJECTIVES
Define and illustrate a cost object Distinguish between direct costs and indirect costs Explain variable costs and fixed costs Interpret unit costs cautiously Distinguish among manufacturing companies,
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Ⅰ Basic Cost Terminology
Cost
Sacrificed resource to achieve a specific objective It is usually measured as the monetary amount that
must be paid to acquire goods and services.
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
Following accumulation, costs are assigned to the chosen cost object. involves tracing and allocating costs
Tracing：accumulated costs with a direct relationship to the cost object
Customer
Activity Department
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Illustration
BMW X 5 sports activity vehicle
Dealer-support telephone hotline
R&D project on DVD system enhancement Herb Chambers Motors, a dealer that purchases a broad range of BMW vehicles Setting up production machines
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Ⅱ Direct Costs and Indirect Costs
Direct costs of a cost object are those that are related to a given cost object (product, department, etc.) and that can be traced to it in an economically feasible way.
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Ⅰ Basic Cost Terminology
Actual Cost
A cost that has occurred, (a historical cost)
Budgeted Cost
A predicted cost
Opportunity Cost
The next best choice foregone.