Understanding Cost Terms and Purposes in Jelly Belly™ and

School: University of British Columbia - Course: COMM 294 - Subject: Accounting

Review of Cost Terms and Purposes Can you determine the potential cost objects in the "Jelly Belly™" or the "chocolate" video clips? Production machines, bag of cocoa beans, finished box of jelly bellies Can you determine what the potential direct and indirect costs might be in the "Jelly Belly™" and the "chocolate" video clips? Direct: sugar, block of chocolate, Indirect: Can you determine any potential cost drivers in the value chain relating to the "chocolate" or "Jelly Belly™" video clips? (Remember the value chain - R&D, design of products, services and processes, marketing, distribution, customer service).1.ACost Objectis anything for which a separate measurement of costs is desired. Managers want to know how much a certainthing(new product, machine, service, process,) will cost to guide their decisions. Thisthingis a cost object. 2. Cost assignment is a general term that encompassestracingaccumulated costs to a cost object andallocatingaccumulated costs to a cost object. Costtracingis the assignment ofdirect coststo a chosen cost object. Costallocationis the assigning of indirect coststo a chosen cost object.Direct costsof a cost object are costs that are relatedto the particular cost object and that can betracedto it in an economically feasible way. Indirect costsof a cost object are costs that arerelatedto the particular cost object but cannotbe traced to it in an economically feasible way. 3. Acost driveris any factor that affects total costs. Some cost drivers are financial measures found in accounting systems (direct manufacturing labour costs, # of units produced) and some are non-financial measures (the number of set-ups, number of engineering change orders, etc).

Can you determine the variable and fixed costs with respect to how the total costs of the manufacturing plant change as the number of packages of jellybeans or chocolate products change? (Hint: Think outside the box - what isn't obvious yet is present?) Can you list the different types of direct materials (DM), WIP, and Finished Goods (FG) inventory items for the 2 video clips previewed?