BUS 254 Chapter Notes - Chapter 3: Cost Driver, Finished Good, Deutsche Luft Hansa

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Michelle Iorio

Document Summary

Product-costing system: accumulates costs incurred in a production process and assigns those costs to the final products. Needed to value inventory on the balance sheet until sold. To compute cogs on the income statement expensed when sold. Help managers with planning and to provide them with data for decision making. To decide about product prices, mix of products to be produced, quantity of output to be manufactured. Provide important data for a variety of cost management purposes. Public utilities (gas and electric companies) record product cots to justify rate increase that must be approved by regulatory basis. Hospitals keep track of the costs of medical procedures that are reimbursed by the provincial health authorities. Manufacturing firms often sign cost-plus contracts with the government: contract price depends of cost of manufacturing the product. Although there are no inventoriable goods, they need information about the costs of producing services. Record costs for the purpose of planning, cost control, and decision making.