Scribd
Upload
0 views2 pages

Cost Accounting Quick Notes - Part 3

The document outlines various cost classifications by function, including production, administrative, selling, and distribution costs. It distinguishes between cost allocation and apportionment, as well as cost centers and cost units, and discusses relevant costing for decision-making, including concepts like opportunity cost and sunk cost. Additionally, it addresses idle time and overtime in relation to overhead costs.

Uploaded by

lumber jack
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0 views2 pages

Cost Accounting Quick Notes - Part 3

The document outlines various cost classifications by function, including production, administrative, selling, and distribution costs. It distinguishes between cost allocation and apportionment, as well as cost centers and cost units, and discusses relevant costing for decision-making, including concepts like opportunity cost and sunk cost. Additionally, it addresses idle time and overtime in relation to overhead costs.

Uploaded by

lumber jack
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Cost Accounting Quick Notes - Part 3

19. Cost Classification by Function

Classification | Example

------------------------|-----------------------------

Production Cost | Direct materials, factory OH

Administrative Cost | Office salaries, admin rent

Selling Cost | Advertisement, sales commission

Distribution Cost | Packing, delivery, shipping

20. Cost Allocation vs Apportionment

- Allocation: Entire cost assigned to a single cost center

- Apportionment: Shared cost divided across departments using a basis (e.g. area, machine
hours)

21. Cost Centre vs Cost Unit

- Cost Centre: A department or section where costs are collected (e.g. welding department)

- Cost Unit: A measurable unit of product/service (e.g. per liter, per km)

22. Relevant Costing for Decisions

Used in:

- Make or Buy

- Special Order

- Shutdown Decision

Relevant Costs: Future costs that will change

Irrelevant Costs: Sunk costs, fixed costs (if unchanged)

23. Opportunity Cost

- The benefit foregone by choosing one alternative over another

- Always considered in decision-making, though not recorded in books

24. Sunk Cost


- Past cost that cannot be recovered

- Irrelevant in future decision-making (e.g., already-purchased equipment)

25. Idle Time & Overtime

- Idle Time: Paid time when no work is done (e.g. power failure) → treated as overhead

- Overtime Premium: Extra pay over regular hours → also charged to overhead

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy