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Canada (158,223)
Accounting (526)
ACC 406 (128)
Chapter 2

Chapter 2

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Ryerson University
ACC 406
Maurizio Di Maio

Chapter 2Basic managerial accounting concepts The meaning and uses of cost Cost y Cost is the amount of cash or cash equivalent paid for goods or services that r expected to bring a current or future benefit to the organizationy Expired costs r called expenses Accumulating and assigning costs y Accumulating costs is the way that costs r measuredrecorded ex on pg 31 y Accumulating cost tells company what was spenty Companys also wants to know why the money was spent o Assigning costs is the way that a cost is linked to some cost object Cost object is smth for which a company wants to know the cost ex on pg 31 Cost object y Cost object is any item such asa product customer dept project geographic region plant for which costs r measuredassigned ex on pg 31Assigning costs to cost objects y Costs can be assigned to cost objects in aof ways o Some methods r accuratesome r simple o Choice of a method depends onof factors such as accuracy o Objective is to measureassign costs as well as possible given management objectives ex on pg 32 Cost classification y Different costs r used for different purposes y Following r the cost groups o Direct costs material and labour o Indirect costs material and labour o Prime costs o Conversion costs o Product costs o Period costs o Variable costs step costs and not o Fixed costs committed and discretionary
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