Other terms
COST POOL – a grouping of individual cost items. Examples include work in process account, and factory overhead
COST DRIVER – any variable that causes a cost to be incurred. Examples include number of setups for setup costs, inspection hours for inspection costs, machine hours for machine operators’ costs.
ACTIVITY – an event, or transaction with a specific purpose. It has two classifications.
Value-Adding Activities – activities that are essential to produce the products (include assembly, cutting, mixing, finishing, etc.)
Non-value adding Activities – activities that do not make the product or service more valuable to the customer (include storage of finished units, moving from production to storage, etc.)
Ang usual na example sa amin dito (during my college days) ay always related to our study habits.
Ehem, kunwari ako yung teacher ko.
Parang study habit nyo lang yan, yung mga nakakatulong para matuto ka, value-adding activities yun. Yung pagbabasa mo ng libro, pag-practice mag-solve ng problems, pag-take ng notes, pag-rereview, yan ang mga value-adding activities para maging CPA ka. Isang exam lang, pasa ka na.
Eh yung mga non-value adding activities? Lahat ng hindi nakakatulong sayo. Yung sinasayang lang ang oras mo – pakikipag-chismisan, pag-ffacebook, twitter at Instagram na puro like at share ka lang naman, panonood ng Korean drama (hindi pa ba kayo nagsasawa?), text ng text, call ng call, wala namang sense ang pinag-uusapan.
Use your time wisely. Spend them on things that would help you achieve your goals and dreams. Do you really want to become a CPA? Choose your activities wisely. :)
ACTIVITY LEVELS. We have four.
- UNIT LEVEL – activity that should be done for each unit of products.
- BATCH LEVEL – activity for each batch of product, rather than each unit. Examples include setup, receiving, inspection, material-handling, packaging, etc.
- PRODUCT LEVEL – activity needed to support an entire product line, without regard for the number of batches or units produced. Examples include engineering cost and development costs.
- FACILITY LEVEL – activity performed for the entire production process to occur. Examples include plant maintenance, plant management, property taxes, insurance, etc.
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