AGBRYANI,RHEW MAE @. Bsh T-4 a eet es Chrptet costs CONCEPTS BNO CLAGSIFICATIONS COST : 218.4 cash or cach equivalent thet on. entity. used with the. expectation oF tetumn..or. -puhure._benerit. © tt is.a.value. that Is cacripiced. +0. generote prozit. a & Expenses- classipitd as. expited costs because. itis already. been used. up: & LOS. ~...0..cost. that expires..uithout: yielding ony revenue. COST OBSECT= Qny. item. “For which. management. wart. -tp accrue. expenses. PREDICTOR = there. isan impacto an. item = doecnt mean an absolute. relahionship because. the. change, can happen colacidentally.) ) COST _ DRIVER = # triagers 4 chonge it the..cost..of..on..achvity.. ica predictor with a direct. cavew-and=.thpect reahonchip +0. Cost. Ex. direc materials, direct ldbor hours worked COST CLASSIFIED AS TO RELATION TO A PRODUCT PRODUCT COST Cost incurred directiy related to the. preduchon. oF product Direct Materia) = moterials. that are econo- tnically. visible and Fé an Integral por on Fhe Finished produc. Ex. wood. For tables, Jeather for bags Direct Labor > those Compensation to the workers who are directly, invcve on the. produchin OF @ product: Ex..wages Sooners, id outtens. Factory Overhead = cost incurred in the Factory Other than direct Moteridls and direct Sabore <‘these are the Indies materials and indirect labor Ex, halls, wages OF Since it je_an_indirect coct, .come...porhbn..of. the. cosf..can_be allocated for. the manufacturing depactment..and. the ofher...Can.be..trans erred to_ another. COST CLASSIFIED tb THEIR NSTURE_AS COMMON OR SOINT 1. COMMON COST Tthece.one..the, cost. incunred...by...come.or.al..departments but they connat Specifically. Idenhpied.. the allocabion..oF .cost..per. department = They wil) use. some. basis (Ex: area. occupied For. the depreciahon oF. the. building,..kiowatt hours...for.. clectri city) 2. TOINT. COST. a these are. the Cost Incurred. for one recources that..can preduce..muitiple. Op _dipp-erent....produdts. BEevn See ee a ene COST CLASCIFIED AC TO RELAHON TORN ACCOUNTING PERIOD |. CAPITAL EXPENDITURE ath is_an_ascet 7_Expenses that are capitalizable, = these are expenses inwried tp purchase long-term asceks. te generate revenve. Over a long period op time» 2. REVENUE EXPENDITURE = Recorded. Asan. expense. = There_ore. the. chort= tern evpenses that is Used.in the. daily .perations OF the_business. COST FOR PLANNING, CONTROL, AND ANALYTICAL PROCESS |. STANDARD. Costs = Thest_are. the cost echablished in advance,..by the. tanagement er the expencec that willbe tncwrred on monvpachicing. 0 product = Budget for ditect materials, dikect labor-,.and factory. overhead. 2. OPPORTUNITY .COsT = benegihs...poreganein.choosthng..one. achion. over. another. = tnort..on._tanagement accounting (for. dtcicion-taking) rather. than Financial accounting. (3. DITFERENTIPL COST. =the. olpperence between. the. coct or two alternative. deciciong. Incremental Cost- it i ; — a eres) feet —there ig an inucage in cost tom ane opbin tyb. Decremental. cost - the. .cock.decreaces...-7om_one..alter native.t0.qnother- 4. RELEVANT. COGT. <.gleo..a. digpertntial cost =..0.cost.that_perfoine tyaparhcvior decicion =...0ny..cCost..reevanttp_0 decisiba > .0.coch ic coid. tobe relevon}...ip there ica change...in.the .flow..oF, cash, that is..caused. by. the. decision. 5,..QUT>_OF = POCKET..COST. 7.Costs..than...an. indi vidval...pay.out. of their. own...cach..recerves: =_|n_the busines, thoce work related Out- of - pocket...expenss...are.. usually. relmburced by the tmployer. (Ex. Transportahbn...Fare.,. gas. expence) &..SMNK_COST. = Opposite. oF relevant. coct. =..cost incurred .thot ill not appect. a. puburt, decision be caust.th is already been..tnade.. 3 CONTROLLABLE. COST. j 2 = .cost. that..are..olble..40..be. inglvenced..on.how..Much..challbe..cpent. the manogement..has the powsr.‘p...control..-the...cock: + Thecepore,..if. the. cast. {s.cannok. be. controlled 0°. ineiwenced. oy the. Management, +then, ft ic_annconbrollable cachFORMULAS: Total._variavle...cost.( ve) = (V) (total output) Total Cost (¥> Fo + VO./Y* FO + YX DIFFERENT METHODS OF CEPARATING MIXED CocT INT) FIXED 'P VARIRBLE’ COMPONENTS 4. SCATTERGRAPH Y= total cost. V= variable cock per: ont X= activity fevel VC total. variable cost FCs Fixed. Cost O.* FivedCact. b= Variable, cast per untt N= umber of activities = plot the actity level along the x-axis andy axison the graph. 2. HIGH-LOW POINT METHOD Step. + Get the highect ang fowert activity level with ite comecponding Coct. Get the dipperence Step.2: Compute. for variable tate... Nariable rate-= change tn cach Change tn. ackvity Step 3: Compute. por fixed coct, priced Cost = Coct of activity (highest) — (variable rate. qchivity Cnighed) ) | Ot Fixed cost = Oost of activity owest)— (Variable nate. X activity (nwest)) Step.4.2. Compute. For. total. .Coct 2. LEAT SQUARE METHOD Equation 1: Y= 9+ bx Equahion.3. XY = Sy¥a t+ bSx* scqnmiiec hs 5 Yo fa bbe yi tk he eeStep... SubcHhute....cquahon..2...pram. the..given..ddta Step.2:.Subchiute.... cquahton..3.. From. the...given...data Shep. 3:..Computt.. bor. b. (vari able...coct..per unit). by...efiminating. a Step.4:.Compoke. For Using...efther.equahion....2..or..3...Suechtuk..the..valuec. Chep.5...Compute..tor total. cost...uciing.... equation...