Textbook Notes (369,205)
Canada (162,462)
Accounting (533)
ACC 406 (130)
Chapter 2

Chapter 2

2 Pages

Course Code
ACC 406
Vincent Cappelli

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ACC 406 Chapter 2Basic Managerial Accounting ConceptsTHE MEANING AND USES OF COSTCost is the amount of cash or cash equivalent sacrificed for goodsservices that are expected to bring a current or future benefitExpenses Costs that are used up in the production of revenues ie that are expired costsPrice is the revenue per unit for the company revenue and price are the same cost is differentAccumulating and Assignment CostsAccumulating costs is the way that costs are measured and recorded bill arrives bookkeeper records and addition to the telephone expense and account payableAssigning Costs is the way a cost is linked to an object why the money was spentCost Objects is any item such as a product customer department project geographic region plant etc for which costs are measured and assignedex Taking a summer coursecourse is cost object cost would also include tuition books fees transportation and opportunit cost foregone wagesAssigning Costs to Cost ObjectsTracing direct costs Direct Costs are those costs that can be easily and accurately traced to a cost object Relationship between cost and the object can be physically observedIndirect Costs are costs that cannot be easily and accurately traced to a cost object Must be assigned through allocationAllocation means that an indirect cost is assigned to a cost object by using a reasonable and convenient method based on convenience or some assume casual linkageOther Categories of
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