COMMERCE 2AB3 Chapter 2: Chapter Two — Cost Concepts and Cost Behaviour Analysis
10 Feb 2017
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Document Summary
Chapter two cost concepts and cost behaviour analysis. Activity index: the activity that causes changes in the behaviour of costs. Conversion costs: the sum of direct manufacturing labour costs and manufacturing overhead costs. Costs: an economic resource given up or foregone to accomplish a particular objective. Cost behaviour analysis: the study of how speci c costs respond to changes in the level of business activity. Cost object: anything for which the cost information is measured and accumulated. Cost of goods manufactured: total cost of work in process minus the cost of the ending work in process inventory. Cost of goods purchased: the net cost of merchandise purchased (after deducting purchase returns, purchase allowances, and purchase discounts) plus the cost of freight in. Direct labour: the work of factory employees that can be physically and directly associated with converting raw materials into nished goods. Direct materials: raw materials that can be physically and directly associated with manufacturing the.
