Cost terms and concepts Chapters 2&3 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH, 2007

Period and Product Figure 2.1 page 34 Sold

Cost objects costs Direct Materials Direct Labour Manufacturing overhead −Indirect material −Indirect labour Prime costs = direct costs Conversion cost Product cost and period cost Non-manufacturing costs −Selling −Administrative Sums up to all costs

Cost behaviour Figures 2.2, 2.3, 2.4 pages 35-36

Other cost terms Relevant and irrelevant costs and revenues Avoidable and unavoidable costs Sunk costs Opportunity costs Incremental (differential, or marginal) costs and revenues

Cost Assignment Figure 3.1, page 59

Two-stage process Figure 3.3, page 65 Exhibit 3.2 on page 69 Page 71

… and with ABC Figure 3.3, page 65 Exhibit 3.3 on page 73

Next, we… discuss how a costing system can be designed for products, jobs or services that are unique: job costing systems. This is in contrast to process costing, a later topic. Chapter 4