COST ANALYSIS OBJECTIVES INTRODUCTION MEANING DEFINITIONS TYPES OF COSTS MONETARY COSTS REAL COSTS OPPORTUNITY COSTS ECONOMIC COSTS ACCOUNTING COSTS INCREMENTAL COSTS SUNK COSTS FUTURE COSTS PRIVATE‚ EXTERNAL AND SOCIAL COSTS FIXED / SUPPLEMENTARY / OVERHEAD COSTS VARIABLE / PRIME COSTS REPLACEMENT COSTS PRODUCTION COSTS SELLING COSTS CONTROLLABLE COSTS DIRECT COSTS INDIRECT COSTS SHORT RUN COSTS CURVES LONG RUN COSTS CURVES OBJECTIVES To understand the meaning of cost. To discuss different types
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Break-even Analysis The annual maintenance coast of machine shop is P 69‚994. If the cost of making a forging is P 56 per unit and its selling price is P 135 per forged unit‚ find the number of unit to be forged to break-even. Solution: Let: x = number of units to be forged to break-even Income = 135x Expenses = 69‚994 + 56x To break-even: Income = Expenses 135x = 69‚994 + 56x 79x =69‚994 x = 886 units Steel drum manufacturer incurs a yearly fixed operating
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MANAGEMENT ACCOUNTING Information for Decision-Making and Strategy Execution SIXTH EDITION Anthony A. Atkinson University of Waterloo Robert S. Kaplan Harvard University Ella Mae Matsumura University of Wisconsin–Madison S. Mark Young University of Southern California Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City S~ Paulo Sydney Hong Kong Seoul Singapore
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CHAPTER 3 ACTIVITY COST BEHAVIOR LEARNING OBJECTIVES AFTER STUDYING THIS CHAPTER‚ YOU SHOULD BE ABLE TO: 1. Define and describe fixed‚ variable‚ and mixed costs. 2. Explain the use of the resources and activities and their relationship to cost behavior. 3. Separate mixed costs into their fixed and variable components using the high-low method‚ the scatterplot method‚ and the method of least squares. 4. Evaluate the reliability of the cost formula. 5. Explain how multiple regression
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CHAPTER 22 The Costs of Production Topic Question numbers ___________________________________________________________________________________________________ 1. Costs: explicit and implicit 1-9 2. Profits 10-23 3. Short run versus long run 24-31 4. Law of diminishing returns 32-55 5. Short-run costs 56-157 6. Long-run costs 158-193 Last Word 194-196 True-False 197-210 ___________________________________________________________________________________________________
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qxp 10/4/08 07:42 Page 1179 Glossary A abnormal spoilage spoilage that should not occur under efficient operating conditions absorption costing all manufacturing costs are assigned to products: direct material‚ direct labour‚ variable and fixed manufacturing overhead acceptable quality level (AQL) the defect rate at which total quality costs are minimised account classification method (or account analysis) the process in which managers use their judgement to classify costs as fixed‚ variable
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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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CHAPTER 6 COST BEHAVIOR TYPES OF COST BEHAVIOR PATTERNS 1. Variable Cost 2. Fixed Cost 3. Mixed / Semi-variable Cost Cost Structure – the relative proportion of fixed‚ variable‚ and mixed costs found within an organization or firm. 1. Variable Cost - its total dollar amount varies in direct proportion to changes in the activity level. Example: Number of Trucks Radiator Cost per Total Radiator
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manufacturing cost categories. LO2 Distinguish between product costs and period costs and give examples of each. including calculation of the cost of goods sold. LO4 Prepare a schedule of cost of goods manufactured. LO5 Understand the differences between variable costs and fixed costs. LO6 Understand the differences between direct and indirect costs. LO7 Define and give examples of cost classifications used in making decisions: differential costs‚ opportunity costs‚ and sunk costs. LO8
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Cost Classification Introduction: In this assignment I will be discussing how costs incurred in any organization may be classified in a number of different ways for a number of different purposes. I will also be looking to find companies that use a variety of different costing techniques and methods. I will also be discussing the comparisons between marginal and absorption costing and how the concept of activity based costing can also be compared with these. To complete the assignment I will
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