Management and Organizational Studies 1023A/B Chapter Notes - Chapter 4: Cost Driver, Internal Audit, Chief Executive Officer
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MOS 1023A/B Full Course Notes
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Makes sure that the firm raise the required capital at the lowest cost. Product and period costs: product costs costs associated with getting products and services ready for sale are product costs. Always above the line for gross margin: gross margin = revenues product costs, period costs all costs that are not product costs (ex. office rent, advertising, customer service). Appear above the line for gross margin: profit before taxes = gross margin period costs. So (cid:449)he(cid:374) it"s sold they have to look at which layer it came from because the profit gained can be different for two of the same items: firms do this by using first-in-first-out (fifo) or weighted averaged. For simplicity, fifo method is used for inventory cost flow assumption. Income statement: the cost flow in merchandising firms resemble the flows for service firms, two main cost categories: costs incurred to obtain and prepare the good for sale (product.