Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



Download 1.72 Mb.
View original pdf
Page21/469
Date01.12.2021
Size1.72 Mb.
#57828
1   ...   17   18   19   20   21   22   23   24   ...   469
solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1
Attention directing – report on cost overruns relative to budget for ongoing content upgrades.
d Demotion of VP of Marketing
Problem solving – budgeted cost of marketing department with alternative management teams.
Scorekeeping – report showing breakdown of subscribers into renewals and new subscribers.
Attention directing – report highlighting subscriber growth and rates of competing Internet news services.


15
© Pearson Education Limited 2012
C HAP TE R 2
An introduction to cost terms and purposes
Teaching tips and points to stress
Costs in general
Cost assignment is a general term for attaching either director indirect costs to cost objects. The distinction between direct and indirect costs is important because direct costs are directly traced to the cost object, whereas indirect costs are often pooled and then allocated to the cost object with less precision. Management, therefore, has more confidence in the accuracy of direct costs. The text uses the term cost tracing to refer specifically to assigning direct costs to cost objects. Cost allocation is reserved for assigning indirect costs to cost objects. Cost objects include (1) activities or processes (2) outputs of processes, such as products, services and projects (3) parts of the organisation (e.g. departments or programmes) and (4) customers. Information on costs associated with these cost objects facilitates decisions such as
(1) which manufacturing process is most economical, (2) what price should be charged for the service, (3) which department uses its resources most efficiently and (4) which customers contribute most to the company’s profits. There is more to cost accounting than product costing.

Download 1.72 Mb.

Share with your friends:
1   ...   17   18   19   20   21   22   23   24   ...   469




The database is protected by copyright ©ininet.org 2024
send message

    Main page