3.2 COST - Coggle Diagram
Incurred when a RESOURCE is USED for some PURPOSE.
The MEANINGFUL GROUPS into which costs are COLLECTED
A FACTOR that CAUSES or relates to a CHANGE in the TOTAL COST of an activity.
Any product, service, customer, activity, or organisational UNIT to which costs are ACCUMULATED for some mgt PURPOSE./any activity for which a separate measure of cost is required....anything for which a measure of consumption of resources is required
GROUP OF RELATED PRODUCTS, useful for preparing profitability reports as part of lean accounting; all the activities required to create customer VALUE for a family of products or services.
ASSIGNMENT & ALLOCATION
ASSIGNMENT The process of assigning costs to cost pools or from cost pools to cost objects
Used for assigning DIRECT COSTS
Total Direct Costs INCREASES DIRECTLY IN PROPORTION
A cost that can be CONVENIENTLY AND ECONOMICALLY traced DIRECTLY to a cost pool or a cost object
The cost of materials in the product & a reasonable allowance for scrap and defective units
LABOUR used to man the product or provide the service + some portion of NON-VALUE-ADDED time that is normal & unavoidable eg coffee break
PROCESS OF ASSIGNING INDIRECT COSTS to cost pools and cost objects, DIRECT TRACING is not economically feasible, so cost drivers used instead
A cost that is NOT CONVENIENTLY OR ECONOMICALLY TRACEABLE to a specific cost pool or cost object
eg supervisor wages
ASSIGNMENT made by using COST DRIVERS
ALLOCATION BASES: The cost drivers used to allocate or assign costs to cost objects.
The cost of materials used in man that are NOT PART OF THE PRODUCT or are NOT EASILY OR ECONOMICALLY TRACEABLE to the FINISHED PRODUCT, a component of total man o/head
Labour costs ASSOCIATED with production eg supervision, quality, control, inspection, purchasing and receiving, materials handling, janitorial labour, downtime training, and cleanup
In addition to L & M, incl: cost of facilities, equipment, any other support equipment
ALL the INDIRECT COSTS commonly combines into a SINGLE COST POOL; called FACTORY O/HEAD in man firm.
ALLOCATION BASES: The COST DRIVERS used to ALLOCATE or ASSIGN these costs to COST OBJECTS
Any cost is EITHER a direct cost or an indirect cost relative to the cost pool or cost object