Costing Lecture 1

Front 1

To be effective though Management Accounting information should be…….

Back 1

Timely
Relevant
Sometimes forward looking
Flexible in scope – may cover a part or all of the company

Front 2

direct cost

Back 2

is a cost that would only be incurred if the product is made and can be directly related to a specific object

Front 3

indirect cost or overhead

Back 3

is a cost which cannot be directly related to a specific product and would therefore have to be apportioned on a fair basis.

Front 4

fixed cost

Back 4

is a cost that is not affected by the volume of the product produced.

Front 5

variable cost

Back 5

is a cost that changes with the volume of the product manufactured or produced.

Front 6

Fixed Stepped Costs

Back 6

Fixed costs that increase at a certain volume. For example, if I am producing cars, I may be paying rent for the factory I am using which is a fixed cost.

Front 7

Semi variable costs

Back 7

: have a fixed and variable element to them. For example, phone lines rental. I pay a fixed rental charge and then in addition pay a charge per call, therefore part of the cost is fixed and part is related to volume.

Front 8

product cost

Back 8

is a cost directly attributable to the product and would not be incurred if the product were not made.

Front 9

A period cost

Back 9

is a cost that is an expense at the time they are incurred, and would still be incurred if production temporarily stopped during that time.