ACC 310F Lecture Notes - Lecture 9: Jones Family, Matching Principle, Gross Margin
Document Summary
Thus, it would be considered a product cost: travel to client site (1) this is a cost of providing the service. Thus, it would be considered a product cost: commission to sales staff (1) this is a cost of selling the service. Thus, it would be considered a period cost: salary to office administrator (1) this cost pertains to administration. Thus, it would be considered a period cost: corporate office rent (1) this cost pertains to administration. The top subtracts product from revenue to get gross margin. Period - cost of ending inventory = cost of good sold during. Then we might select the number of adults as the allocation basis, in which case the smith and the jones families each have two units of the cost driver. While we can choose any attribute to be an allocation basis, we often choose attributes that have a causal relation between the attribute and the costs incurred.
