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Cost Concept (3 Basic Manufacturing Cost (Product Cost) # (MO…
Cost Concept
3 Basic Manufacturing Cost (Product Cost)
#
DM (Direct Material)
DL (Direct Labor)
MO (Manufacturing Overhead)
Indirect Materials
Cleaning supplies
Indirect Labor
Maintenance Workers
Safety Guards
Predict Cost Behavior
Variable Cost
Cost Driver
Units Product
Machine Hours
Miles Driven
Labor Hours
Fixed Cost
Committed
e.g.: Taxes; Depreciation
Discretionary
e.g.: Charity Contribution; Advertising; R&D
Mixed Cost (semi-variable cost)
Y = a + bX
Y = total mixed cost
a = total fixed cost
b = variable cost per unit of activity
X = the level of activity
Analyze a Mixed Cost Using
Scattergraph Plots
Y - Total Cost (dependent variable)
X - Activity (independent variable)
High-Low Method
b = calculate Variable Cost Per Hour
= Cost (Highest - Lowest) / Unit (Highest - Lowest)
Total Fixed Cost = Total Cost - Total Variable Cost
其实是取最大值(x1, y1)和最小值(x2, y2),求 a = total fixed cost
Flaws: if have lots of data and 最高值和最小值 may not represent the data
The Least-Squares Regression Method
Nonmanufacturing Cost
Selling Cost
Administrative Cost
General Cost
Quality Cost
4 Types of Quality Costs
Appraisal Costs
incurred to identify defective products before the products are shipped to customers
Prevention Costs
support activities whose purpose is to reduce the number of defects
External Failure Costs
incurred as a result of defective products being delivered to customers
Internal Failure Costs
Incurred as a result of identifying defects before they are shipped
Uses of Quality Cost information
help managers see the financial significance of defects
help managers identify the relative importance of the quality problems
help managers see whether their quality costs are poorly distributed
Limitations of Quality Cost Information
simply measuring and reporting quality cost problems does not solve quality problems
results usually lag behind quality improvement programs
the most improtant quality cost, lost sales, is often omitted from quality cost reports
For Assigning to Cost Objects
Direct Cost
Direct Material
Direct Labor
Indirect Cost
Common Cost
Preparing Financial Statement
Product Cost = Manufacturing Cost
Prime Cost = DM + DL
Conversion Cost = DL + MO
Period Cost
Income Statements for a Merchandising Company
Traditional Format
Sales - COGS = Gross Margin - Selling & Admin. Exp. = Net Operating Income
Contribution Format
Sales - Variable Exp. [manager can control] = Contribution Margin - Fixed Exp. = Net Operating Income
Used in Making Decision
Relevant Cost
Opportunity Costs
The potential benefit that is given up when one alternative is selected over another
Differential Costs
Differential Rev.: the difference in rev. between two alternatives
Differential Cost: the difference in cost between two alternatives
(Irrelevant Cost) Sunk Costs
Have already been incurred and cannot be changed now or in the future