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Cost Concepts - Coggle Diagram
Cost Concepts
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Inventory
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Types of inventory include: merchandise, raw material, work in process, finished goods
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Marginal Analysis
When analyzing marginal costs, analyze the least expensive methods first and the most expensive last
When analyzing marginal revenue, analyze the most revenue enhancing method first and the least revenue enhancing one last
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Direct costs make up 20% of total costs, while indirect costs make up the other 80%.
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Indirect costs are costs not related to direct labour and materials. They are not easily traceable to specific units of output.
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Differential/Incremental Costs: differences in total costs, resulting from selecting one alternative instead of other