ACCT 102 Lecture Notes - Lecture 1: Sunk Costs, Tax Shield, Fixed Cost
Document Summary
Indirect, fixed cost: rent (fixed: you have no idea how rent in the classroom determines how many tabletops you produce) Indirect, variable cost: glue (for the table is the cost product: you bought a bucket of glue and used some of it for the ta(cid:271)le. You do(cid:374)"t k(cid:374)o(cid:449) ho(cid:449) (cid:373)u(cid:272)h glue is used o(cid:374) ea(cid:272)h ta(cid:271)le) Costs change and change with respect to the decisions you make. If (cid:455)ou"re (cid:373)aki(cid:374)g the de(cid:272)isio(cid:374) at that poi(cid:374)t i(cid:374) ti(cid:373)e, it"s a(cid:374) i(cid:374)(cid:272)re(cid:373)e(cid:374)tal fi(cid:454)ed ti(cid:373)e. it"s (cid:272)ha(cid:374)gi(cid:374)g (cid:271)ased o(cid:374) the de(cid:272)isio(cid:374) that you make. Spending money to pay for a factory today saves you taxes in the future (tax shield) Functionality: timeliness of delivery, reliability in shipping, after-sales service. Cost concepts for decision making: relevant cost- expected future costs that differ among different courses for action, a manager must decide between a and b, alternative a, monthly salary = k, variable cost: /unit.
