A damage is generally understood to be that pass determinered in an economic activity to achieve a particularized objective, such as to consume, exchange, or produce. All types of organizationsâ" businesses, not-for-profits, governmentalâ" incur represents. To achieve missions and objectives, an organization acquires resources, transforms them in some manner, and delivers units of ingathering or service to its customers or clients. Costs are incurred to perform these activities. For provision and control, decisions are made about areas such as pricing, weapons platform evaluation, product hailing, outsourcing, and investment. Different costs are needed for contrasting purposes. In each instance, costs are determined to serveer management make better decisions.
When incurred, costs are ab initio reviewed and accumulated by some classification system. Costs with unity or more characteristics in common may be accumulated into cost pools. Costs are then re depute, differently for specified purposes, from these cost pools to one or more cost objects.
A cost object is an activity, a unit of product or service, a customer, another cost pool, or a segment of an organization for which management needs a signalize measurement and accumulation of costs. Costs assigned to a cost object are either direct or indirect. A direct cost can be traced and assigned to the cost object in an unbiased, cost-effective manner. The incurrence of an indirect cost cannot be so easily traced. Without such a direct alliance to the cost object, an indirect cost requires an in-between activity to help install a formula relationship. When the indirect cost is assigned through the use of this formula, the cost is considered allocated. The activity used to establish the in-between linkage is called the basis of allocation.If you want to get a full essay, order it on our website: Orderessay
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