Management Costing Flashcards
What is the Prime Cost?
All the direct costs that make a cost unit
Direct Materials + Direct Labour
What is a Revenue Centre?
A function, person, or item of equipment that only creates revenue
What is a Profit Centre?
A function, person or item of equipment that incurs costs as well as generates revenue.
What is Absorption Costing?
TBC
What is Activity Based Costing?
TBC
What is Marginal Costing?
TBC
How is the full cost per unit calculated (manufacturing)?
Prime cost per unit + portion of indirect production overheads
3 types of indirect cost?
Indirect Materials, Indirect Labour, and Indirect Expenses
Overheads (indirect costs) grouped by function?
Production overheads, administrative overheads, finance overheads, selling and distribution overheads
what is a Cost Unit?
a measurable item of a business’ products or services.
What are the 4 stages of Allocation and Apportionment Costing?
1 - Allocation, 2 - Apportionment, 3 - Reapportionment, 4 - Absorption
What is the purpose of Allocation and Apportionment Costing?
To allocate overhead costs to cost units.
First by allocating costs to activity levels, and then to the cost unit by way of OAR.
What is a responsibility centre?
A department, branch or function that one single manager is responsible for its performance.
These are made up of cost, revenue, profit, and investment centres.
What happens during Allocation?
A cost is fully allocated to a single cost centre
What happens during Apportionment?
A proportion of an overhead is charged to each responsibility centre that incurs part of the overhead.
