Topic A1 - Basic Cost Concepts

Today, i would like to introduce some of major key points of account management:

1. Different to Financial Accounting

- No Mandatory rule
- for internal usage
- future orientation
- detailed of
product cost and department cost

2. We have 3 types of cost:

- Manufacturing cost =  direct materials (can be traced) + direct labor (can be traced) + manufacturing overhead (CPSX) (can not be traced)
- Non manufacturing cost = selling costs + administrative costs

- Fix cost : unchanged when activities changes
- Variable cost: changed when activities changes
=> Fixed cost = Y = a + bX

 a = total fixed cost
b = variable cost per unit
X = the level of activity, for ex: number of customers for total maintenance cost

Will be calculated by The High-Low Method

Y = Highest total cost
X = Highest number of hours, customers,...
b = (Highest - Lowest) Y /   (Highest - Lowest) X
=> a