Lecture 1 Flashcards
What are the three types of organisation and what do they do?
Manufacturing companies: Convert raw material into goods & sell
Trade companies: Buy and sell products without alteration
Service companies: Create intangible products
What are the three main costs of manafacturing?
1) DirectMaterials
2)DirectLabour
3) ManufacturingOverhead
What is the definition of manafacturing overhead?
manafacturing overhead are Manufacturing costs that cannot be traced directly to specific units produced.
What are some examples of manafacturing overhead?
some examples of manafacturing overhead are Indirect labour and indirect materials
What are prime costs?
“prime costs” are named as such because they are the primary and essential costs directly involved in the production of goods.
What are two examples of prime costs?
Two examples of prime costs are: direct materials and direct labour
What are conversion costs?
Conversion costs are named as such because they represent the expenses incurred during the conversion of raw materials into finished goods.
What are two examples of conversion costs?
two examples of conversion costs are: direct labour and manafacturing overhead
What are product costs?
Product costs are those costs which are associated with goods or services purchased, or produced, for sale to customers. Product costs include direct materials, direct labour, and manufacturing overhead.
what are period costs?
Period costs are those costs which are treated as expenses in the period in which they are incurred.Period costs are not included in product costs. They are expensed on the statement of profit or loss.
What are semi variable costs?
semi variable costs are Costs that have both a fixed and variable element.
What are step fixed costs?
step fixed costs are Costs that are constant for different levels of activity.
what are differential costs and revenues?
Differential Costs and Revenues are Differential Costs and Revenues.
example: You have a job paying £1,500 per month in your hometown. You have a job offer in a neighbouring city that pays £2,000 per month. The commuting cost to the city is £300 per month.
Differential revenue is: £2,000 – £1,500 = £500
Differential revenue is:
£2,000 – £1,500 = £500
