The Basics of

Cost Accounting
terminology and purpose
 Cost
sacrificed resource in the pursuit of an
objective
Actual
past (incurred)
point to
compare
cost for
improvements
Budgete and evaluate
d efficiency
future (forecasted)
cost
Cost Object
thing on which a price is put
how do we determine the
ACCUMULATE ASSIGNcost of
particular
data in an
organized way
objects?
these costs to things
Direct
traceable
Factors Which Affect D and I

1. Materiality

Indirect
2. Technology

3. Operation Design
allocated
Perspectives
 ACCOUNTANTS MANAGERS ECONOMISTS

capital v. operating relevant v. irrelevant explicit v. implicit

cost v. expense v. loss direct departmental opportunity v. imputed
product v. period v. incremental v. marginal
indirect departmental
direct v. indirect
avoidable v. unavoidable
controllable v. uncontrollable
out-of-pocket v. non-cash
sunk v. future