Management Accounting
Task 1 – P1; Explain how an organisation can cost a product
and determine its price at any activity level.
Conor Cunningham
, Introduction to costs
• A cost centre is a department within an organisation that does not directly add to profit but still c
the organisation money to operate. Managers of cost centres including human
resources and research and development (R&D) are responsible for keeping their costs in line or
below budget.
• A profit centre is a branch or division of a company that is accounted for on a standalone basis for
purposes of profit calculation. A profit centre is responsible for generating its own results
and earnings, and as such, its managers generally have decision-making authority related to prod
pricing and operating expenses.
• Non-production overhead costs are the indirect costs of an organisation that are not classified as
manufacturing overhead. They may include administration overheads, selling overheads and
distribution overheads
• Apportionment is the division of income and expenses in certain proportion. For example, over t
or more accounts/departments and is used to separate different incomes and expenditures in
accounting.
Task 1 – P1; Explain how an organisation can cost a product
and determine its price at any activity level.
Conor Cunningham
, Introduction to costs
• A cost centre is a department within an organisation that does not directly add to profit but still c
the organisation money to operate. Managers of cost centres including human
resources and research and development (R&D) are responsible for keeping their costs in line or
below budget.
• A profit centre is a branch or division of a company that is accounted for on a standalone basis for
purposes of profit calculation. A profit centre is responsible for generating its own results
and earnings, and as such, its managers generally have decision-making authority related to prod
pricing and operating expenses.
• Non-production overhead costs are the indirect costs of an organisation that are not classified as
manufacturing overhead. They may include administration overheads, selling overheads and
distribution overheads
• Apportionment is the division of income and expenses in certain proportion. For example, over t
or more accounts/departments and is used to separate different incomes and expenditures in
accounting.
