COMMERCE 2AB3 Study Guide - Final Guide: Indirect Costs, Pearson Education, Cost Accounting

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Karim Karim

Document Summary

Chapter 2 an introduction to cost terms and purposes. 2. 1 identify and distinguish between two manufacturing cost classification systems: direct and indirect, prime and conversion: cost is defined by accountants as a resource sacrificed or foregone to achieve a specific objective. Objective: lo 2-1: costs of sales is another way of phrasing cost of goods sold. Objective: lo 2-1: an actual cost is a predicted cost. Objective: lo 2-1: nearly all accounting systems accumulate forecasted costs. Objective: lo 2-1: a cost object is anything for which a separate measurement of costs is desired. Objective: lo 2-1: indirect costs cannot be economically traced directly to the cost objective. Chapter 2 an introduction to cost terms and purposes: delivery charges are typically considered to be an indirect cost because it cannot be traced to each customer. Objective: lo 2-1: a cost is classified as a direct or indirect cost based on the applicable cost object.