BUS 254 Chapter Notes - Chapter 2: Income Statement, Cost Driver, Sunk Costs

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Arsineh Garabedian

Document Summary

The sacrifice made to achieve a particular purpose. Expense: the cost incurred when an asset is used up or sold to generate revenue. Product cost and period cost : timing with which expenses are recognized: product costs (inventoriable cost) A cost assigned to goods that were either purchased or manufactured for resale. Value the inventory of manufactured goods or merchandise until the goods are sold. Shown as cost of goods sold on the income statement when goods are sold: period costs. All other non-product costs in an organization (research, selling and administrative) Not inventoried but are expenses as time passes. Product costs, kept on the balance sheet until sale, are found in three inventory: raw material materials that await production, work in process partially completed production, finished goods completed production that awaits sale. Various types of production processes example: job shop. Low production volume, little standardization, one-of-a-kind products (movie, service, custom-made home: batch, assembly line, mass customization.