ACC 406 Lecture Notes - Lecture 2: Shampoo, Gross Margin, Hair Spray

• School: Ryerson University
• Department: Accounting
• Course: ACC 406
• Professor: Kevin Palmer

Document Summary

Determining the cost of products, services, customers and other items of interest to managers are important for managerial accounting. Cost: the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization. Sometimes, one asset is traded for another asset. The cost of the new asset is measured by the value of the asset given up (the cash equivalent) Reducing the cost required to achieve a given benefit means that a firm is becoming more efficient. Costs are incurred to produce future benefits. In a profit-making firm, these benefits usually mean revenues. As costs are used up in the production of revenues, they are said to expire. The revenue per unit is called price. In our everyday conversation, we have a tendency to use cost and price to mean the same thing, because the price of an item (e. g. cellphone) is the cost to us.