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Cost object
Anything for which cost data are desired, products, customers, jobs
Cost object example
Starbucks cup of coffee
Direct cost
easily traced to a specifed cost object
indireect cost
cannot be easily traced to specifed cost obnjects
selling cost
Ads, shipping, sales, commisions
admin costs
executive compensation, admin builiding
prime cost
direct material+direct labor
connversion costs
direct labor+moh
fixed cost: committed
long term, cannot be significantly reduced in short term
fixed cost: discretionary
may be altered in short term by current managerial decisions
relevant range
a range where we can assume total fixed cost and per unit variable cost will not change
total fixed cost
does not change
variable cost per unit
does not change
diferential cost and revenue
cost an drevenues that differ among alternatives
opportunity cost
potential benefit that’s given up when one alternative is selected over another
sunk costs
have already been incurred and cannot be changed now or in the future. these should be ignored when making decisions.
mixed cost equation
total mixed cost=total fixed cost+variable cost per unit*activty level, y=a+bx
traditional format
has gross margin, for external use
COGS equation
beginning inv+purchases-ending inventory
contribution format
has variable and fixed, for internal use
job order costing
used when there are many different products, manufactured to order, or there is a unique nature
why use job cost sheet
only way to know how much our individual jobs cost
what is the job cost sheet
a document that details all the costs associated with a specific job, including direct materials, direct labor, and overhead
POHR equation
estimated total moh cost/estimated total allocation base(hours)
why use POHR
Actual MOH for period wont be known until the end of period, but want to sell jobs before that
MOH applied
POHR*actual hours
total job cost
DM+DL+MOH
Cost of goods manufactured
include the maufacturing csot associated with goods that were finished during the period(transferred form WIP to FG)
Direct materials used in production
beg rm+purcahses-ending rm-indirect materials
total manufacturing costs added to production
dm used+DL+MOH applied
Cost of goods manufactured equation
Beg WIP+total Manu cost-end WIP
adjusted cost of goods sold
Beg FG+COGM-ending FG+unederapplied or -overapplied
underapplied OH
OH applied<OH actual
overapplied
OH applied>OH actual
what to do if overapplied
subtract, credit COG
what to do if underapplied
add, debit COG
MOH account at the end
must be zero balance
Product costs
Direct cost, indirect costs, MOH
Period cost
Selling and admin costs
Factory supervisor
Indirect labor and fixed overhead
Note 
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