Classification of Cost Cost may be classified into different categories depending upon the purpose of classification. Some of the important categories in which the costs are classified are as follows: 1. Fixed‚ Variable and Semi-Variable Costs The cost which varies directly in proportion with every increase or decrease in the volume of output or production is known as variable cost. Some of its examples are as follows: • Wages of laborers • Cost of direct material • Power The cost which does
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Lesson-13 Elements of Cost and Cost Sheet Learning Objectives • • • To understand the elements of cost To classify overheads on different bases To prepare a cost sheet Elements of Cost Raw materials are converted into finished products by a manufacturing concern with the help of labor‚ plants etc. The elements that constitute the cost of manufacturing are known as elements of cost. The elements of cost include the following: • • • Material Labor Expenses Each of these elements is again subdivided
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Cost allocation for indirect costs Cost Pool – Set of costs that are added together before being allocated to cost objects on some common basis Cost Driver/ Allocation base Cost Object Cost Driver Rate = Total Costs in Pool/ Total Quantity of Driver Where total quantity of driver = practical capacity of driver Cost of excess capacity = Cost Driver Rate * Excess capacity Predetermined overhead rate - cost per unit of the allocation base used to charge overhead to products. Predetermined
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THE MANAGEMENT OF OVERHEAD COSTS IN CONSTRUCTION COMPANIES Brian Eksteen1 and David Rosenberg² ¹Professor of Construction Management‚ Faculty of Economic and Building Sciences‚ University of Port Elizabeth‚ P.O. Box 1600‚ Port Elizabeth‚ 6000‚ South Africa ²Senior Lecturer in Cost and Management Accounting‚ Faculty of Economic and Building Sciences‚ University of Port Elizabeth‚ P.O. Box 1600‚ Port Elizabeth‚ 6000‚ South Africa Costs not directly attributable to or recoverable from production
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Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; (3 marks total‚ 1.5 marks per part) YED= +0.7 YED= -3.4 (d) Interpret the following Cross-Price Elasticities of Demand (XED) and explain the relationship between these goods. (3 marks total‚ 1.5 marks per part) XED= + 0.75 XED= -2.5 Answer (a)Definition of income elasticity of demand is percentage change in quantity demanded‚divided by percentage change in income. Conditions: Elasticity coefficient
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reality of the different lifestyle college has to offer. The cost of college can become pricey between tuition‚ books‚ as well as living expenses. In addition‚ college offers a more advanced social environment than high school and you’re fairly responsible for transportation in college whereas in high school they provide transportation. Firstly‚ the cost of college can become extremely expensive compared to high school due to the cost of living‚ student tuition‚ and the unseen book expenses. Unlike
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2-22 Variable costs and fixed costs. Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas: a. Payment to a mining subcontractor who charges $80 per ton of beach sand mined and returned to the beach (after being processed on the mainland to extract three minerals: ilmenite‚ rutile‚ and zircon). b. Payment of a government mining and environmental tax of $50 per ton of beach sand mined. c. Payment to a barge operator. This
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Cost/Benefit Analysis Evaluating Quantitatively Whether to Follow a Course of Action You may have been intensely creative in generating solutions to a problem‚ and rigorous in your selection of the best one available. However‚ this solution may still not be worth implementing‚ as you may invest a lot of time and money in solving a problem that is not worthy of this effort. Cost Benefit Analysis or CBA is a relatively* simple and widely used technique for deciding whether to make a change. As its
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Name: Class: Cost Accounting Date: 02.12.2012 Quiz 5 1) Absorption costing: A) expenses marketing costs as cost of goods sold B) treats direct manufacturing costs as a period cost C) includes fixed manufacturing overhead as an inventoriable cost D) is required for internal reports to managers 2) Variable costing: A) expenses administrative costs as cost of goods sold B) treats direct manufacturing costs as a product cost C) includes fixed manufacturing overhead as an inventoriable
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We already know that following are the important cost concepts related to the production process of a firm: • Fixed Cost • Varibale Cost • Average Cost • Marginal Cost please refer to following page Introduction to Cost Concepts to understand various cost concepts in detail. Here we will briefly state again the meaning of above stated cost concepts for better understanding of the module on short run cost analysis. Fixed Cost is that cost which does not change (that is either goes up or
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