Cost Accounting A Managerial Emphasis (14th edition) Ch

1、CHAPTER 2An Introduction to Cost Terms and PurposesTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-2Learning Obj

2、ectivesn1.Define and illustrate a cost objectn2. Distinguish between direct costs and indirect costsn3. Explain variable costs and fixed costsn4. Interpret unit costs cautiously n5. Distinguish inventoriable costs from period costsn6. Explain why product costs are computed in different ways for diff

3、erent purposesn7. Describe a framework for cost accounting and cost managementTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All righ

4、ts reserved.2-3Learning Objective 1Define and illustrate a cost objectTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reser

5、ved.2-4Basic Cost Terminology Actual cost is a cost incurred (a historical cost). Budgeted Cost a predicted or forecasted cost ( future cost)A cost object is anything for which a separatemeasurement of costs is desired.Cost is a resource sacrificed or forgone to achievea specific objective.To accomp

6、any Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-5Learning Objective 2Distinguish between direct costs and indirect costsT

7、o accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-6Basic Cost Terminology Direct Costs related to the particular co

8、st object and can be traced (tracked) to it in an economically feasible (cost-effective) way. Examples:nPartsnAssembly line wagesTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Fo

9、ster. Copyright 2006 by Pearson Education. All rights reserved.2-7Basic Cost TerminologyExamplesnElectricitynRentnProperty taxesIndirect Costs related to the particular cost object but can not be traced (tracked) to it in an economically feasible (cost-effective) way.To accompany Cost Accounting 12e

10、, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-8Basic Cost TerminologyCost Accumulation: The collection of cost data in some organized wayby me

11、ans of accounting system.Cost Assignment: a general term that includes both:(1) Cost tracing(2) Cost allocationTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 20

12、06 by Pearson Education. All rights reserved.2-9Basic Cost TerminologyCost tracing: the assignment of direct costs to a particular cost object.Cost allocation: the assignment of indirect costs to a particular cost object.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by P

13、earson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-10Direct and Indirect CostsExample Direct CostsExample: Paper on whichSports Illustrated magazineis printed Indirect CostsExample: Lease cost f

14、orTime-Warner buildinghousing the senior editorsof its magazine COST OBJECT Example: Sports Illustrated magazineFashion magazineCost TracingCost AllocationTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting

15、 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-11Direct and Indirect CostsExampleMaintenance Department $40,000Personnel Department$20,600Assembly Department$75,000Finishing Department$55,000Assume that Maintenance Department costs areallocated equally amo

16、ng the production departments.How much is allocated to each department?To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights rese

17、rved.2-12Direct and Indirect Costs ExampleAllocated$20,000Maintenance$40,000AssemblyDirect Costs$75,000FinishingDirect Costs$55,000$20,000To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren

18、/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-13Factors Affecting Direct/Indirect Cost Classification1. Cost Materiality The smaller the amount of a cost, the less likely it is economically feasible to trace to a particular cost object. (e.g. the cost of invoice paper)2.

19、Availability of Information-gathering Technology Improvements in information-gathering technology make it possible to consider more and more costs as direct costs. (e.g. Bar codes)3. Operational Design If a machine is used exclusively for a specific cost object, all costs related to this machine can

20、 be classified as direct cost.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-14Learning Objective 3Explain vari

21、able costs and fixed costsTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-15Cost-Behavior Patterns: Variable vs.

22、 Fixed CostVariable Cost changes in total in proportion tochanges in the related level of activity or volume.Fixed Cost remains unchanged in total for a given time period regardless of changes in the related level of activity or volumeTwo basic types of cost-behavior patterns:To accompany Cost Accou

23、nting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-16Cost Behavior Patterns ExampleBMW buys a steering wheelat $60 for each of its car.Wha

24、t is the total steering wheel cost when1,000 cars are assembled?Variable cost: Steering wheel cost is a variable cost because total cost changes in proportion to changes in the number of vehicles produced.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education

25、. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-17Cost Behavior Patterns Example1,000 units $60 = $60,000What is the total steering wheel costwhen 3,000 cars are assembled?3,000 units $60 = $180,000The total

26、 steering wheel cost increases with the number of cars assembled, but the cost per unit of a steering wheel keeps unchanged.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster.

27、 Copyright 2006 by Pearson Education. All rights reserved.2-18Cost Behavior Patterns Example Fixed costBMW incurred a total of $100,000,000 in leasing costs per year for its plant. These costs are unchanged in total over a designated range of the number of vehicles produced during a given time span.

28、To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-19Cost Behavior Patterns ExampleWhat is the leasing (fixed) cost

29、 per carwhen BMW assembles 10,000 cars? $100,000,000 10,000 = $10,000What is the leasing (fixed) cost per carwhen BMW assembles 25,000 cars?$100,000,000 25,000 = $4,000The cost per unit of a fixed cost become smaller and smaller as the number of products produced increases.To accompany Cost Accounti

30、ng 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-20Cost-Behavior Patterns: Variable vs. Fixed CostnVariable costs are constant on a per-uni

31、t basis. If a product takes 5 pounds of materials each, it stays the same per unit regardless of whether one, ten, or a thousand units are producednFixed costs per unit change inversely with the level of production. As more units are produced, the same fixed cost is spread over more and more units,

32、reducing the cost per unitTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-21Cost Behavior SummarizedTotal Dollar

33、sCost per UnitVariable CostsChange in proportion with outputMore output = More costUnchanged in relation to outputFixed CostsUnchanged in relation to outputChange inversely with outputMore output = lower cost per unitTotal DollarsCost per UnitVariable CostsChange in proportion with outputMore output

34、 = More costUnchanged in relation to outputFixed CostsUnchanged in relation to outputChange inversely with outputMore output = lower cost per unitTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by

35、Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-22Cost-Behavior Patterns: Variable vs. Fixed Cost Mixed cost (semi-variable cost) both fixed and variable elements e.g. telephone costTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearso

36、n Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-23Cost DriversThe cost driver is the level of activity or volume whose change causes the (variable) costs to change proportionately.The number of ca

37、rs assembled is acost driver of the cost of steering wheels.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-24Re

38、levant Range ExampleAssume that fixed (leasing) costs are $100,000,000 for a year and that they remain the same for a certain volume range (5,000 to 25,000 cars).5,000 to 25,000 cars is the relevant range.Relevant Range the band of normal activity level (or volume) in which there is a specific relat

39、ionship between the level of activity (or volume) and a given cost. e.g., fixed costs are fixed only within the relevant range. Costs are defined as fixed or variable with respect to a specific activity or a given time period.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006

40、 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-25Relationships of Types of CostsTwo major classifications of costs: direct/indirect, variable/fixedCosts may simultaneously be: Direct an

41、d variableDirect and fixedIndirect and variableIndirect and fixedTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2

42、-26Relationships of Types of CostsDirectIndirectVariableFixedTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-27L

43、earning Objective 4 Interpret unit costs cautiously To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-28Total Cost

44、s and unit costsnUnit costs should be used cautiously. Since unit costs change with a different level of output or volume, it may be more prudent to base decisions on a total dollar basis.nThe decision maker should think in terms of total costs rather than unit costs.To accompany Cost Accounting 12e

45、, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-29Total Costs and Unit Costs Example2007: Total costs: $40,000,000 Fixed costs: $10,000,000 Vari

46、able costs: $30,000,000 (500,000 units produced)Unit cost $40,000,000 500,000 = $80To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All

47、 rights reserved.2-30Use Unit Costs CautiouslyAssume that management uses aunit cost of $80.Management is budgeting costs fordifferent levels of production.What is their budgeted cost for anestimated production of 100,000 products?100,000 $80 = $8,000,000To accompany Cost Accounting 12e, by Horngren

48、/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-31Use Unit Costs CautiouslyWhat should the budgeted cost be for anestimated production of 100,000?Total fixed

49、 cost $ 10,000,000 Total variable cost ($60 100,000) 6,000,000Total $16,000,000Unit cost $16,000,000 100,000 = $160To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyrigh

50、t 2006 by Pearson Education. All rights reserved.2-32Learning Objective 5Distinguish inventoriable costs from period costsTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. C

51、opyright 2006 by Pearson Education. All rights reserved.2-33Different Types of FirmsnManufacturing, Merchandising, and Service companiesTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/D

52、atar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-34ManufacturingManufacturing companiespurchase materials and components andconvert them into finished goods.A manufacturing company must also develop,design, market, and distribute its products.To accompany Cost Accounting 12e,

53、by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-35MerchandisingMerchandising companiespurchase and then sell tangible productswithout changing the

54、ir basic form.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-36ServiceService companiesprovide services or inta

55、ngibleproducts to their customers.Labor is the most significant cost category.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All righ

56、ts reserved.2-37Learning Objective 6 Describe the three categories of inventories commonly found in manufacturing companiesTo accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster.

57、Copyright 2006 by Pearson Education. All rights reserved.2-38Types of InventoriesnDirect Materials resources in stock and available for usenWork-in-Process (or progress) products started but not yet completed. WIPnFinished Goods products completed and ready for saleManufacturing companies typically

58、have one or more of the following three types of inventories:To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-39T

59、ypes of InventoryMerchandising companies hold only one type of inventory the product in its original purchased form.Service companies do not hold inventories of tangible products.To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.To a

60、ccompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright 2006 by Pearson Education. All rights reserved.2-40Manufacturing CostsManufacturing consists of activities to convert raw materials into finished goods.Categories of manufacturing costs include:Classification of manufacturing costsTo