GMS 701 Lecture Notes - Lecture 11: Activity-Based Costing, Purchase Order, Cost Accounting
19 Dec 2017
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Document Summary
Direct costs: costs that can be specifically and accurately assigned to a given unit of production of a product or service. Indirect costs: costs incurred that normally cannot be related directly to any given unit of production of a product or service. When evaluating costs as either direct or indirect, the issue is the ability to trace the costs directly to a unit of production. Variable costs: vary directly and proportionally with the number of units produced. Fixed costs: remain the same regardless of volume produced (over the relevant range) Semi-variable costs: partly variable and partly fixed. When evaluating costs as either variable or fixed, the issue is how costs change as volume of production changes. Assign items to a (high-dollar), b (medium-dollar), or c (low-dollar) category. A items= greatest percent of annual spend. Cost management approach for a items: more time and managerial attention, u(cid:374)dersta(cid:374)d supplier"s (cid:272)ost stru(cid:272)ture.
