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Hansen AISE IM Ch02
Hansen AISE IM Ch02
2
LEARNING OBJECTIVES
1. Describe the cost assignment process.
2. Define tangible, intangible products, &
explain why there are different product cost
definitions.
3. Prepare income statements for
manufacturing & service organizations.
4. Outline differences between functional-
based and activity-based management
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accounting systems. Questions to Think About 3
QUESTIONS TO THINK ABOUT:
Blue Ribbon Baking
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QUESTIONS TO THINK ABOUT:
Blue Ribbon Baking
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QUESTIONS TO THINK ABOUT:
Blue Ribbon Baking
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QUESTIONS TO THINK ABOUT:
Blue Ribbon Baking
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LEARNING OBJECTIVE
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LO 1
COST: Definition
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LO 1
COST ASSIGNMENT
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LO 1
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LO 1
Direct tracing
Method of identifying & assigning costs that are
exclusively and physically associated with a cost
object
Example: cost of pizza & drink for lunch
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LO 1
Driver tracing
Using observable causal factors to measure
resource consumption in assigning cost to a cost
object
Example: proportionate cost of shared lunch based on #
slices of pizza and # of drinks consumed by each person
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LO 1
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LO 1
RESOURCE COSTS
Cost assignment
process.
EXHIBIT 2-1
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LEARNING OBJECTIVE
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LO 2
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LO 2
DIFFERENCES
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LO 2
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LO 2
EXHIBIT 2-3
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LO 2
PRODUCT COSTS
Production costs include
Direct materials
Traceable to goods, services produced
Direct labor
Traceable to goods, services produced
Overhead
All other production costs
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LO 2
OTHER COSTS
Prime costs
Direct materials and direct labor
Selling & administrative costs
Noninventoriable (period) costs
Expensed as incurred in period
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LEARNING OBJECTIVE
Prepare income
3 statements for
manufacturing and
service organizations.
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LO 3
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LO 3
INCOME STATEMENT:
Manufacturing Firm
EXHIBIT 2-5
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LO 3
COST OF GOODS
MANUFACTURED
EXHIBIT 2-6
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LO 3
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LO 4
FBM
EXHIBIT 2-8
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LO 4
MANAGEMENT ACCOUNTING
SYSTEMS (ABM)
Activity-based management system (ABM)
Cost view
Driver analysis, activity analysis, performance
evaluation
A tracing-intensive system
Operational efficiency view
Focuses on managing activities and improving values
for operational efficiency
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LO 4
ABM
EXHIBIT 2-9
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CHAPTER 2
THE END
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