An Introduction to Cost Terms and Purposes推荐.pdfVIP

2 An Introduction to Cost Terms and Purposes Learning Objectives What does the word cost mean to you? Is it the price you pay for something of value? A cash outflow? 1. Define and illustrate a cost object Something that affects profitability? There are many different types of costs, and at different times organizations put more or less 2. Distinguish between direct costs and indirect costs emphasis on them. When times are good companies often focus on selling as much as they can, with costs taking a backseat. But when 3. Explain variable costs and times get tough, the emphasis usually shifts to costs and cutting fixed costs them, as General Motors tried to do. Unfortunately, when times 4. Interpret unit costs cautiously became really bad GM was unable to cut costs fast enough leading to Chapter 11 bankruptcy. 5. Distinguish inventoriable costs from period costs 6. Explain why product costs are GM Collapses Under the Weight of its computed in different ways for dif- ferent purposes Fixed Costs1 7. Describe a framework for cost accounting and cost management After nearly 80 years as the world’s largest automaker, General Motors (GM) was forced to file for bankruptcy protection in 2009. Declining sales and the rise of Japanese competitors, such as Toyota and Honda, affected GM’s viability given its high fixed costs—costs that did