Ch 1 Full

1 what is cost accounting? cost accounting is a systematic procedure wherein u

measure the cost of manufacturing goods and performing services
2 goals of cost accounting
- valuation of cost of goods sold and inventory
- aiding managers make informed financial decisions

meaning of value chain? the process of turning raw materials into goods or services

7 process sa value chain

1 research and development
2 design
3 purchasing/purchase
4 production
5 marketing
6 distribution
7 customer service

fiancial vs management accounting

financial acct - reports aimed towards external parties
management/managerial acct - reports internally the financial and non-financial
information to mangers to aid them in making informed financial decisions

financial accounting
- reports externally
- objective and verifiable data
- percision is required
- historical oriented
- reports overall firm performance
- embraces acounting concepts only
- follows IFRS

management/managerial accounting
- reports aimed internally
- financial and non-financial information are sujective in nature
- timeliness is required
- future oriented
- reports product ines and sub-units
- embraces other sources of knowledge such as economics and industrial engineering
- need not follow IFRS

Scope of modern cost accounting

- cost accumulation
- cost assignment
- application of mathematical and statistical techniques
- examination of the motivational impact of acounting
- cost accounting measures finance and economics

end of presentation mssg

- be brave. take risks. nothing can substitute expirience
"Paulo Coelho"

CH 2 pt 1 of 3

what is cost? cost is the sacrifice of resources to achive future economic benefits

a (loss) is when u do not expect to recieve future economic benefits after

sacrificing your resources

it is also a (loss) if the resources was mismanaged

What is a cost pool? cost pool is an organized meaningful group of costs

- by type of cost
- by source
- by responsibility

What is a cost object? costs we assign to objects

What is a cost driver? can also be called as the ultimate cost as this is the main
factor that determines the increases or decreases of the level of total cost

CH 2 pt 2 of 3

Classification of cost

1. Manufacturing cost/Factory cost - cost related to producing or manufacturing

goods
- direct materials cost
- direct labor cost
- manufacturing overhead

2. Non-manufacturing costs - cost related to selling goods and non-manufacturing

activities
- marketing cost
- general administrative cost

Timing of recognition as expense

1 product cost
2 period cost

Accroding to financial statements cost can be recorded in:

1 statement of financial position/balance sheet
2 income statement

Cost behavior
1 fixed
2 variable
3 mixed (semi-variable)

4 Types of inventory (first three inventory ay pang manufacturing business)

1 raw materials inventory
2 work-in-process inventory
3 finished goods inventory
4 merchandise inventory

Traceability to cost object

1 direct cost
2 indirect cost

Ch 2 pt 3 of 3
Management influence
1 controllable
2 uncontrollable

Time-frame perspective
1 committment cost
2 discretionary cost

Time period of occurence

1 historical cost
2 future cost

For decision making and analytical procedures

1 oppurtunity cost
2 marginal cost
3 incremental cost
4 relevant cost
5 sunk cost
6 value-added cost

end of lecture mssg

- be patient. everything is hard until it is easy.
Saadi