FIN 305 Lecture Notes - Lecture 11: Barista, Meh, Direct Labor Cost
20 Nov 2016
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Document Summary
Cost and management accounting (cost concepts and behavior) Purpose of financial accounting/reporting- info for (mostly external) stakeholders to make financial decisions (aka buy/hold/sell) Management accounting- info for internal stakeholders aka managers, which involves knowing stuff about costs. 3 cost concepts (ways of classifying costs: cost behavior, traceability of costs, relevant costs. How costs change as vol of biz activity changes. Ex: accept/reject proposal/initiative: cost behavior (4 types, in relation to activity/volume eg sales, production volume, number of employees, variable costs. Change in direct proportion to change in activity level. Main types of in gear costs, e. g cogs. 3 parts of cogs: direct material, direct labor, overhead (dm and dl are purely variable, overhead might not be: fixed costs. Don"t change at all, constant in short run, unaffected by change in volume of activity. E. g. rent doesn"t change with units made or sold: mixed costs.
