BUS 254 Chapter Notes - Chapter 3: Batch Production, Cost Driver, Income Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Masood Kamlani

Document Summary

Chapter 3: product and service costing (page 69) Product costing system : accumulates the costs incurred in a production process and assigns those costs to the final products. Product costs are needed to value inventory on the balance sheet and to compute cost of goods sold on the income statement. Product costs are needed to help managers with planning and to provide them with data for decision making. Provide important data for a variety of cost management purposes. Use in reporting to interested organizations (page 69) Merchandising companies include the costs of buying and transporting merchandise in their product costs. Service firms and non-profit organizations (page 69) Since services cannot be stored and sold later like manufactured goods, there are no inventoriable costs in service industry firms and non-profit organizations: manufacturing cost flows (page 70, product-costing systems (page 70) Job order costing is used by companies with job-shop operations or batch production operations.