Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

COSTS

VIEWS: 7 PAGES: 10

									    COSTS


LET’S EXPLAIN
 THEM
                        COSTS
 Refers to the price    Cost accounting will
  a business will pay     become a base for
  to purchase a           both financial and
  product which they      management
  would like to sell.     accounting.
 Cost also includes     Costs are incurred
  other expenses          in service firms,
  associated with         merchandising
  selling that            firma, and in
  particular product.     manufacturing
                          firms.
       THE CATEGORIES

 MANUFACTURING
 NON-MANUFACTURING
 LABOUR
 OPPORTUNITY COSTS
 SUNK COSTS
      MANUFACTURING COSTS

 Appliedto       Applied to raw
 direct material   material
       NON-MANUFACTURING COSTS

   Marketing or         Administrative costs:
    selling costs:        include all the costs
                          that cannot be
    include all costs
                          directly included in
    needed to get the     manufacturing costs or
    product into the      in marketing or selling
    hands of the          costs.
    customer!           Serve the whole
                          organization not just
                          manufacturing!
               LABOUR COSTS
   There are two           Direct Labor Costs:
    types: direct labor,     factory-worker
    and overhead             salaries,
    costs.(could be          accountant wages
    referred to as          Overhead(Indirect
    conversation costs)      Labor)Costs:
                             janitors,
                             maintenance
                             workers
                  NOTE!!!
   As of right now         For management to
    direct costs are         be effective, they
    decreasing, but          have to understand
    overhead costs are       labor costs because
    increasing.              if poor decisions
                             are made, these
                             costs will definitely
                             be higher than
                             necessary.
            OPPORTUNITY COSTS

   It is the cost of      These costs are
    rejecting one           not entered into
    alternative for         the accounting
    another.                records, but they
                            are an integral part
                            of a manager’s
                            decision making
                            process.
                   SUNK COSTS
   It is a cost previously
    incurred and which
    would not be
    considered in a
    management
    situation.(because it
    cannot be recaptured
    or decreased.)
THE END!!

								
To top