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Sir,
1. Please give me several example of Cost Unit and Cost item. I’m confused.
2. Is this true that the profit center does not take care of the uncontrollable cost?Thanks for your help,
Although I will answer your question, none of it is relevant for Paper F3!
You should have posted in the F2 Ask the Tutor forum.A cost unit is the unit of a product are service that you want to find the cost for.
E.g. if you make desks, then the cost unit will be a desk. If you provide consultancy then the cost unit might be one hour of work.A cost object is an activity for which you want to measure costs.
For example, the total cost for one department in a factory.‘Cost item’ can actually be used for either – normally it is taken to mean the same as cost unit.
Your second statement is not true. What you are confusing it with is that if we are measuring the performance of the manager of a centre (whether it be a profit centre, a cost centre, or an investment centre) the we should only consider the costs that they control (i.e. we should ignore uncontrollable costs).
I do trust that you are making use of our free lectures for Paper F2 🙂
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