MGMT 122 Chapter Notes - Chapter 2: Sunk Costs, Income Statement, Earnings Before Interest And Taxes
Document Summary
Costs are classified diff according to the immediate needs of management. They use different costs for different purposes- important concept. Cost classifications for assigning costs to cost objects: Cost object: anything for which cost data are desired (including products, customers, jobs, and organizational subunits) Costs are classified as either direct or indirect. Most manufacturing companies separate their manuf costs into two direct cost categories (direct materials and direct labor) and one indirect cost category (manuf overhead) Direct labor: labor costs that can be easily traced to individual units of product (sometimes called touch labor) Nonmanufacturing costs are divided into selling costs and administrative costs (nonmanuf costs also called selling, general, and administrative- sg&a) Selling costs: all costs incurred to secure customer orders and get the finished product to the customer (called order getting and order filling costs: can either be direct or indirect.
