Service Companies=in business to sell intangible services, such as health care,insurance, banking and consulting, customer services company.(AVIVA)
Merchandising Companies= resell tangible products they buy from suppliers.(Zellers), 2 type of merchandise companies which are retailer and wholesaler.
Manufacturing Companies=use labour, plants, and equipment to convert raw material into new finished products.(Bombardier)
Raw material inventory=all the new raw material use din manufacturing.
Work in process inventory=goods that are partway through the manufacturing process but not yet ocmplete.
Finished goods inventory=completed goods that have not yet been sold.
Wholesalers=buy products in bulk from manufacturer, mark up the prices and then sell those products
VALUE-CHAIN:
R/D=researching and developing new or improved products or services or the process of producing them.
Design=Detailed engineering of products and services and the process for producing them.
Production or Purchase=Resources used to produce a product or service or to purchase finished merchandise intended for resale.
Marketing=Promotion and advertising of products or services.
Distribution=Delivery of products or services to customers.
Customer services=Support provided for customers after the sale.
DIRECT COST=a cost that can be easily traced to the cost object.(big amount of money or size)
INDIRECT COST=a cost that relates to the cost object but cannot easily be traced to it.(small amout of money or size)
PRODUCT COST=include only the cost incurred during the production or purchase stages of the value chain.
PERIOD COST=often called operating expense or selling, general and admnistrative expenses on the company income statement. Incurred in stages such as R/D, Design, Marketing Distribution and Customer services.
Direct Material=manufacturers convert raw material into finished goods. are the primary raw materials that become a physical part of the finished goods.
Direct Labor=is the cost of compensating employees who physically convert raw materials into the companys products.(wages,salary,production)
Manufactured overhead(MOH)=includes all non-related, and all indirect labor, indirect cost and indirect material.
PRIME COST=combination of Direct cost and Labor cost.
CONVERSION COST=combination of Direct LAbour and MOH.
DIFFERNTIAL COST=buying from 2 different car and compare the 2 prices of the cars , and the difference from these 2 car is a differential cost.
RELEVANT COST=not the same(Nissan and Toyota)
IRREVELANT COST=the same(same maintenance between Sentra and Corrola)
SUNK COST=are costs that have already been incurred, nothing you can do now can change the fact that you bough a truck, wasted money(cost)
VARIABLE COST=changes depending on the volume you use(cellphone or gas)(price x quantity
FIXED COST=stay constant in total over a wide range of activity level.
TOTAL COST=fixed cost+variable cost
Average cost=total cost/quantity
Marginal cost=change in total cost/change in quantity