SEMI VARIABLE COST. Semi variable or semi fixed cost contains the characteristics of both variable and fixed cost and are therefore referred to as mixed costs. For planning, control and decision making , semi variable cost should be separated into fixed and variable contents. Examples of semi variable cost are electricity bills and telephone charges. Semi variable costs can be shown diagrammatically below.
Total Cost cost per ¢ unit ¢ ………………………………………. Level of Level of activity activity
OTHER COST CONCEPT Product Costs or Inventoriable Costs – costs assigned to products that were either purchased for resale (merchandising firm or retailer) or manufactured for sale (manufacturing firm) When products are sold, product costs are recognized as an expense (cost of goods sold or COGS). The costs of unsold products remain in inventory and are not expensed (i.e. not deducted from revenue in calculating net income) Period Costs – costs that are not product costs and that are associated with the period in which they are incurred Period costs such as selling and administrative costs are expensed (i.e. deducted from revenue in calculating net income) in the period they are incurred
Product Costs Versus Period Costs Expense Income Statement Inventory Cost of Goods Sold Balance Sheet Income Statement Sale Product costs include direct materials, direct labor, and manufacturing overhead. Period costs are not included in product costs. They are expensed on the income statement .
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- Spring '20
- Dr. ASRAVOR
- Inventoriable Costs, word cost