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Ate Nics Presen

The document discusses cost concepts and classifications including product costs, period costs, direct costs, indirect costs, variable costs, fixed costs, mixed costs, and step costs. Product costs include direct materials, direct labor, and manufacturing overhead. Period costs are operating expenses not related to manufacturing.

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Katrina Devera
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48 views22 pages

Ate Nics Presen

The document discusses cost concepts and classifications including product costs, period costs, direct costs, indirect costs, variable costs, fixed costs, mixed costs, and step costs. Product costs include direct materials, direct labor, and manufacturing overhead. Period costs are operating expenses not related to manufacturing.

Uploaded by

Katrina Devera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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COST CONCEPT

AND
CLASSIFICATION
CLASSIFICATION

BYBY
BY MICHAELA
MICHAELA NICOLE
NICOLE
MICHAELA NICOLE LICTAOA
LICTAOA
LICTAOA
OBJECTIVESOBJECTIVESOBJECTIVESOBJECTIV
ESOBJECTIVESOBJECTIVESOBJECTIVESOBJECTI
VESOBJECTIVESOBJECTIVESOBJECTIVESOBJEC
TIVESOBJECTIVESOBJECTIVESOBJECTIVESOBJE
At the end of the lesson, the students should be able to:
CTIVESOBJECTIVESOBJECTI
1.Differentiate product cost from period costs.
2.Enumerate and explain the components of product costs.
3.Differentiate direct cost and indirect costs.
4.Enumerate and explain the components of product costs.
ACCOUNTINGACCOUNTINGACCO
NTING
ACCOUNTINGACCOUNTINGACCO
NTING
ACCOUNTINGACCOUNTINGACCO
NTING
ACCOUNTINGACCOUNTINGACCO
NTING
BY MICHAELA NICOLE LICTAOA
Reflects the amount of resources sacrificed for the
company to achieve a certain objective such as
creation of goods or rendering of services to earn
revenues.
Are costs identified and incurred by an entity to
manufacture a product. It includes all raw materials used, labor
cost incurred, and all other indirect costs.

 MATERIALS
 LABOR
 OVERHEAD
All raw materials and other supplies used in the
manufacturing process.

 Direct Materials: Cost of glass in lightbulb manufacturing

 Indirect Materials: Cost of glue, lubricating oils, nails,


screws, and the like.
Salaries and other benefits provided to all workers.

 Direct Labor: Cost of salaries paid to laborers of furniture associated


directly in the process.

 Indirect Labor: Salaries paid to all other factory personnel necessary to


the manufacturing process but is not directly related in the conversion
process.
all indirect costs necessary for product conversion that are not
direct materials and direct labor.
 Indirect materials
 Indirect Labor
 Depreciation of equipment in the factory
 Insurance of factory plant
 Maintenance and repairs of equipment
 Factory utilities
Direct Materials

Direct Labor

Overhead
Direct Materials
+ Direct Labor
+ Manufacturing Overhead

Total Manufacturing Cost


The entity’s operating expenses. They are called as such since they are much
associated with time periods rather than the manufacturing process. They are all other
expenses not related to manufacturing.
Expenses incurred in promoting the entity’s products and services.
and

They include salaries of sales personnel, and delivery


expenses with pictures
Administrative
Expenses
They include office utilities, depreciation of office PPE,
repairs and maintenance of office PPE, and all other
expenses in the office.

 Examples: Gunting
Assume an entity’s normal manufacturing process with a range of 5,000 to 7,000 units of goods with a
variable cost per unit of P20 and P15,000 fixed costs.

V/C unit Total variable costs Fixed costs F/C unit


At 5,000 units ₱ 20 ₱ 100,000 At 5,000 units ₱ 15,000 ₱ 3.00
At 6,000 units ₱ 20 ₱ 120,000 At 6,000 units ₱ 15,000 ₱ 2.50
At 7,000 ₱ 20 ₱ 140,000 At 7,000 units ₱ 15,000 ₱ 2.14
units
N

y = a + bx
y= total cost
a= total fixed cost
b= variable cost per unit
x= volume of activity
ACCOUNTINGACCOUNTINGACCO
NTING
ACCOUNTINGACCOUNTINGACCO
NTING

d
ACCOUNTINGACCOUNTINGACCO
NTING
ACCOUNTINGACCOUNTINGACCO
NTING
BY MICHAELA NICOLE LICTAOA
Mixed C
Refers to costs that has both variable
and fixed components.

Examples:
• Utilities, since these are charged with a base amount and
goes higher with any usage over the base amount.
Step Co
Costs that are constant on a
certain level of activity but increases on another
certain level of activity.

Examples:
• Salaries and commission of the agents that goes higher with
different ranges of activity e. g. people served.
COST CONCEPT
COST CONCEPT
AND CLASSIFICATION

BYBY
MICHAELA NICOLE
MICHAELA NICOLE LICTAOA LICTAOA

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