SRATEGIC COST - Cost that remains in constant, in total,

regardless of changes in the level of the

activity.
Selling Cost - Hovwever, if expressed on a per unit
basis, the average fixed cost per unit
- Cost necessary to secure the rder and varies
deliver the product - Fixed cost per unit – indirect
- May kinalaman sa sale relationship to the per unit
Administrative Cost Types of fixed costs
- May kinalaman sa admin - Committed – long term, cannot be
Product Cost significantly reduced in the short term.
Ex. Depreciation on buildings and
- Directyly related to the production of equipment and real estate taxs
the product\ - Discretionary – may be altered in the
- Nilalagay sa inventory nagiging expense short- Temby current managerial
lang pag nabenta decisions. Ex. Advertising and research
- Lahat ng related sa cost and development.
Period Cost Mixed
- Indirect costs that are incurred in - Combination of variable and fixed
production elements
- Include all selling costs and -
administrative costs
Prime Cost
- Direct material + Direct Laber
Conversion Cost
- Direct Labor + Manufacturing overhead
Cost Behavior
- Refers to how cost will react to changes
in the level of activity. The most
common classifications are variable,
fixed and mixed.
Variable
- Cost that varies in total, in direct
proportion to changes in the level of
activity.
- Variable cost per unit is conastant
Fixed
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The activity base (Cost Driver)

- A measure of that causes the incurrence
of a variable cost
- Ex. Unit produced, machine hours,
miles driven, labor hours