商务会计 企业会计B.doc

Faculty of Creative Industries Business Department of Accounting and Finance Bachelor of Business ALAF 5200 ACCOUNTING for BUSINESS RESOURCE BOOK Part B Bachelor of Business ALAF5200 Accounting for Business Learning Outcome 3 Identify information to support business decision-makers in co-ordinating and monitoring short-term operations. Identify common costing concepts Outline the behaviour of costs and their relationships to cost drivers Identify relevant costs in make-or-buy and discontinuing activity decisions Apply cost-volume-profit equations and discuss the limitations Outline the components of manufacturing costs Outline the budgeting process Analyse and interpret simple and flexed budget variances Outline the use of responsibility accounting Describe the role of budgeting in the management process. CLASSIFICATION OF COSTS – DIRECT OR INDIRECT COST BEHAVIOUR In a manufacturing business, raw materials are purchased with the intention of converting them through the manufacturing process into another product. For example, material is transformed into garments and clothing, wood is processed into furniture. To assist in calculating the cost of production, cost or expenses can be classified according to whether or not they can be traced back to a unit of production. Direct costs are costs that can be allocated to a single unit of production. They are costs directly attributable, or traceable, to specific products. Direct costs can be separated into Direct Materials, ie the raw materials used in producing a product and Direct Labour, such as the wages of an assembly line worker. Indirect costs are factory or production costs that cannot be allocated to a single unit of production. They are often also referred to as Manufacturing Overheads. Examples include factory rent and rates, indirect materials for machines, indirect labour such as factory, maintenance, stores, and quality assurance personnel. In costing one unit of production, direct costs are ea