Textbook Notes (363,556)
Canada (158,423)
Accounting (526)
ACC 410 (34)
Chapter 2

Chapter 2

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Ryerson University
ACC 410
Maurizio Di Maio

Chapter 2The Cost Function Cost categories 1 Relevance 2 Behaviour 3 Traceability 4 Function 5 Controllability Relevant revenues and cost the revenues and costs that differentiate between two alternatives that will occur in the future Irrelevant revenues and costs No difference to either alterative no bearing on decision Sunk Cost Expenditures made in the past irrelevant cost because the cost has already been incurred and cannot now be avoided Fixed Cost Behaves such that the total cost will not change within a certain range of activity Variable Cost Varies in proportion to the production level Cost object Thing or activity for which we measure costs Includes such things as individual products product lines projects customers department and even entire company Direct cost Cost that can be directly traced to a cost object easily traced to individual cost Indirect Cost Incurred for the benefit of more than one cost object not easily traced to individual cost Prime costs Direct materials and direct labour Conversion Cost Direct labour and ma
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