COSTS IN

MANAGEMENT
ACCOUNTING
Prof. Mark Jing D. Tayactac, CPA, MBA, MDM
SOME COST TERMS USED 2

IN MANAGERIAL
ACCOUNTING
 COST
 COST OBJECT
 COST DRIVER
 COST POOL
 ACTIVITY
 VALUE-ADDING ACTIVITIES
 NON-VALUE-ADDING ACTIVITIES
DIFFERENT COSTS FOR DIFFERENT 3

PURPOSES

A. AS TO TYPE
1. Product Costs
2. Period Costs
DIFFERENT COSTS FOR DIFFERENT 4

PURPOSES
B. AS TO FUNCTION
1. Manufacturing Costs
a. Direct Manufacturing Costs
b. Indirect Manufacturing Costs
2. Non-Manufacturing Costs
a. Research and Development
b. Marketing Costs
c. Distribution Costs
d. Selling Costs
e. After-sales Costs
f. General and Administrative Costs
 DIFFERENT COSTS FOR DIFFERENT 5

PURPOSES
C. AS TO TRACEABILITY/ASIGNMENT TO COST OBJECT
1. Direct Costs
2. Indirect Costs
DIFFERENT COSTS FOR DIFFERENT 6

PURPOSES
D. FOR DECISION-MAKING
1. Relevant Costs
2. Differential Costs
a. Incremental Costs
b. Decremental Costs
3. Opportunity Costs
4. Sunk/Past or Historical Costs
DIFFERENT COSTS FOR DIFFERENT 7

PURPOSES
E. AS TO BEHAVIOR (REACTION TO CHANGES IN
COST DRIVER)
1. Variable Cost
2. Fixed Cost
a. Committed Fixed Costs
b. Discretionary or Managed Fixed Costs
3. Mixed Cost
4. Step Cost
THANKS!
Any questions?