,
,
,
, A cost object is a term used
primarily in cost accounting
1. To value inventory for reporting purposes to describe something to
Example: A particular type of an
which costs are assigned.
item manufactured, say
2. To plan and control activities in the organisation “product A”.
Common examples of cost objects are:
3. To make decisions that will improve the • Product lines
A cost object is any activity,
organisation’s profitability • Geographic territories
unit or phenomenon for
• Customers
which cost can be
• Departments or anything else for
accumulated and measured.
which management would like to
quantify cost.
Process and procedures Total resources used
used to obtain record to achieve specified
and report cost data. aims.
Used with other Direct costs can be traced Example: The specific
accounting info by easily or physically to a material used to manufacture
management when particular cost object. product “A”.
planning and controlling
activities of the entity. Assigning direct costs to a cost object
is referred to as cost tracing.
Comparing the actual results with the expected
results, determining the causes of deviations and
making management decisions to ensure that
planned results are achieved, or to amend the initial
plan because of the changed conditions.
Indirect costs cannot be Example: The depreciation
traced easily or physically to cost of the machine used to
a particular cost object. manufacture product “A”.
, Manufacturing costs, also
In a manufacturing enterprise, total called factory costs or
operating cost consists of: production costs, are the Non-manufacturing costs
• Manufacturing, factory or total of the costs incurred fall into two categories:
production cost in the manufacturing or
• Non-manufacturing or commercial production process:
cost • Direct material
• Direct labour Costs incurred in directing
• Direct expenses Selling and distribution costs and controlling the
• Manufacturing Include all the costs related organisation.
overhead to the sale and delivery of
Monetary products. Administrative costs include:
measure of In a service organisation, the • Compensation of
resources manufacturing cost is replaced by service These costs start once the executives
given up to costs, such as salaries and other costs manufacturing of the products is • General accounting costs
acquire goods related to the employees and equipment
completed. • Secretarial costs
or services used to render the income-generating
services. EXAMPLES:
that will • Advertising
benefit the • Sales commission
enterprise at • Sales salaries
present or • Sales distribution
future date. In a manufacturing enterprise, total
operating cost consists of:
• Manufacturing, factory or
production cost
• Non-manufacturing or commercial
cost
,
,
, A cost object is a term used
primarily in cost accounting
1. To value inventory for reporting purposes to describe something to
Example: A particular type of an
which costs are assigned.
item manufactured, say
2. To plan and control activities in the organisation “product A”.
Common examples of cost objects are:
3. To make decisions that will improve the • Product lines
A cost object is any activity,
organisation’s profitability • Geographic territories
unit or phenomenon for
• Customers
which cost can be
• Departments or anything else for
accumulated and measured.
which management would like to
quantify cost.
Process and procedures Total resources used
used to obtain record to achieve specified
and report cost data. aims.
Used with other Direct costs can be traced Example: The specific
accounting info by easily or physically to a material used to manufacture
management when particular cost object. product “A”.
planning and controlling
activities of the entity. Assigning direct costs to a cost object
is referred to as cost tracing.
Comparing the actual results with the expected
results, determining the causes of deviations and
making management decisions to ensure that
planned results are achieved, or to amend the initial
plan because of the changed conditions.
Indirect costs cannot be Example: The depreciation
traced easily or physically to cost of the machine used to
a particular cost object. manufacture product “A”.
, Manufacturing costs, also
In a manufacturing enterprise, total called factory costs or
operating cost consists of: production costs, are the Non-manufacturing costs
• Manufacturing, factory or total of the costs incurred fall into two categories:
production cost in the manufacturing or
• Non-manufacturing or commercial production process:
cost • Direct material
• Direct labour Costs incurred in directing
• Direct expenses Selling and distribution costs and controlling the
• Manufacturing Include all the costs related organisation.
overhead to the sale and delivery of
Monetary products. Administrative costs include:
measure of In a service organisation, the • Compensation of
resources manufacturing cost is replaced by service These costs start once the executives
given up to costs, such as salaries and other costs manufacturing of the products is • General accounting costs
acquire goods related to the employees and equipment
completed. • Secretarial costs
or services used to render the income-generating
services. EXAMPLES:
that will • Advertising
benefit the • Sales commission
enterprise at • Sales salaries
present or • Sales distribution
future date. In a manufacturing enterprise, total
operating cost consists of:
• Manufacturing, factory or
production cost
• Non-manufacturing or commercial
cost
