ACCT2102-Lecture2(stds).ppt

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1、ACCT2102Lecture2:IntroductiontoCostTermsandPurposes1Reading:Lecturenotes&Horngrenetal.Chapter2Lectureobjectives1.Defineandexplaincostterms2.Explaindifferentcostclassifications3.Identifytypesofcostingsystems4.Insertingcostandmanagementaccountingconceptsinaf

2、inancialaccountingframeworkdevelopedinpreviousaccountingcourses(e.g.ACCT1101)2Whatisthiscourseabout?3ThreeDogBakery???MuffinsCakesBiscuitsLabour$$$Insurance$$$Rent$$$Equipment$$$Materials$$$IMPORTANT!!4Youneedtoknowandtounderstandcertainassumptions,definit

3、ionsandconceptswhichareessentialforcostandmanagementaccounting,beforeproceedingwiththeremainderofthecourse.1.CosttermsCostisthesacrificemade,usuallymeasuredbythepricepaidortobepaid,toachieveaspecificobjective(e.g.toacquiregoodsorservices).Costingmeansassig

4、ningadollarvalue,representingwhatitcoststhefirmtoproducesomething.Actualcostisthecostincurred(ahistoricalorpastcost)asdistinguishedfromabudgetedcost(futurecost).Opportunitycostisthevalueofwhatisgivenupwhenonealternativeischoseninsteadofanother.5CosttermsCo

5、stobject(orcostobjective)istheitemthatthefirmiscosting.Itmaybeawholeprocess,adepartment,aproduct/serviceorajob.FormostofACCT2102,thecostobjectconsideredwillbeaproduct(orajob).Productcostisthesumofthecostsassignedtoaproductforaspecificpurpose.Thereare3eleme

6、ntsofproductcost:Materials(DirectMaterials=DM)Labour(DirectLabour=DL)Manufacturing/FactoryOverhead(O/H)(IndirectMaterials,IndirectLabour,OtherO/H)6MorecosttermsCostaccumulationisthecollectionofcostdatainsomeorganizedwaybymeansofanaccountingsystem.Costassig

7、nmentinvolvesbothcosttracingandcostallocation.Costtracingistheassignmentofaccumulatedcoststhathaveadirectrelationshiptoaparticularcostobject(directcost).Costallocationistheassignmentofaccumulatedcoststhathaveanindirectrelationshiptoacostobject(indirectcost

8、).Theprocessof“costaccumulation”and“costassignment”requiresadistinctionbemadebetweenDirectCostsandIndirectCosts.CostDriveristhefactororvariable(suchasthelevelofactivityorvolume)thatcausesachangeoftotalcostove