BUSS1030 Lecture Notes - Lecture 11: Indirect Costs, Cost Accounting, Cost Driver

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1030
• Professor: Steven Hitchcock

Document Summary

Cost accounting: cost accounting involves measuring, recording and reporting costs of any cost object (e. g. product, service, department, customer, employee etc. ) Why calculate costs: to value inventory (balance sheet, to determine cost of goods sold (income statement, for contractual purposes, for management decision making (e. g. product pricing, to motivate employees ( costs = profits = wages) Full cost (a. k. a total cost = direct + indirect cost) refers to all the total amount of resources, usually measured in monetary terms, sacrificed to achieve a particular objective. Full costing refers to deducing the total direct and indirect (overhead) costs of pursuing some objective or activity of the business. Uses: to determine the minimum price of a product or service that will cover all costs i. e. for pricing. Limitations: uses past costs and restricts consideration of future costs, figures used are often estimates. If you are selling an item or output for full cost you are breaking even.