Accounting ACCT 2620 Study Guide - Midterm Guide: Activity-Based Costing, Cost Driver, Indirect Costs

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21 Feb 2017
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Types of costs: product costs: costs incurred for creating a product -- inventoried until goods are sold, direct material, direct labor, manufacturing overhead. Indirect labor: other manufacturing related expenses, period costs: all non-product costs during the relevant period -- expensed during the period and not inventoried. Costs and the financial statements: product costs, period costs, once sold cogs income statement, until sold balance sheet (inventory, operating expenses income statement. Period costs: typically not associated with production of products for resale. Types of organizations: manufacturing convert raw materials into new products, merchandising sell products that have been manufactured, service provide a service such as airlines, hospitals, repair shops, etc. Identifying cost drivers are critical: no silver bullets. Correlation between cost and driver is key the higher the better. Indirect costs: cannot be directly traced to a cost object, can be either product or period cost, national advertising.

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