Basic Manufacturing Cost Categories

Machine hours, direct labor hours, and direct labor costs can all be used to allocate manufacturing overhead.

are costs that have already been incurred and cannot be changed by any decision made

Trade-offs are often seen within the three types of costs listed above. Sometimes we must choose to spend our budget more heavily on appraisal costs so that we can try to

when overhead is underapplied a must be made to the manufacturing overhead account to close it out

Into which of the three elements of manufacturing cost would each of the following be classified? (Direct Labor, Direct Materials, and Manufactured Overhead)

1. A cost is not relevant if it: A. B. C. D. E. Does not differ for each option available to the decision maker. Changes from period to period. Is a future cost. Is a mixed cost. Is a fixed cost.

A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the

In words, in the Hospital cost overrun happened by some factor which are either controllable or can be controlled by management.

Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead.

A variable cost is a corporate expense that varies with production output. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases (Variable Cost, n.d.); in the case study for all cost per event such

1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

The Operating reports include those costs that are not controllable by the individual operating manager. They would be distorted by volume changes. This means that production managers are cost center managers, held accountable for all costs incurred in or allocated to their respective areas so. It would be difficult to evaluate manager’s performance when the numbers were distorted by uncontrollable factors.

In general, cost means the amount of expenditure (actual or notional) incurred on, or attributable to a given thing.

According to an accounting textbook, cost is defined as a resource sacrificed or foregone to achieve a specific objective. It is something given up in exchange. It is necessary for project managers to understand project cost management since project costs money and consumes resources.