RSM222H1 Chapter Notes - Chapter 2: Opportunity Cost, Variable Cost, Financial Statement

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Sunk cost (past cost not affected by a decision) Predicting cost behaviour in response to changes in activity. Assigning costs to cost objects such as departments or products. Dm + dl = prime cost: classification of idle time, overtime premiums and employee benefits. Overtime premiums: classification depends on the cause of the overtime www. notesolution. com a job-specific reason would dictate a direct job cost normal overtime cost resulting from general mgt decisions would dictate an overhead charge to all jobs. Costs can also be classified as either product costs or period costs. Product costs (or inventoriable costs): all costs that are involved in the purchase or manufacture of goods. In the case of manufactured goods, these costs consist of dm, dl, and moh. Initially, product costs are assigned to an inventory account on the balance sheet. When the goods are sold, the costs are released from inventory as expenses (typically called gocs) and matched against sales revenue.

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