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Video of Cost Behavior Variable Cost Fixed Cost Mixed Cost Period Cost Product Cost in Costs Accounting course by Farhat Lectures. The # 1 CPA & Accounting Courses channel, video No. 5 free certified online
What is cost behavior and how are costs classified in cost accounting? In this cost and managerial accounting lecture, Professor Farhat explains product versus period costs, the three elements of product cost, and the main cost behavior patterns — fixed, variable, mixed, and step costs — along with the concept of sunk costs. CPA and CMA candidates and accounting students will find this essential BAR exam foundation.
Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students.
Video Timeline & Key Concepts:
0:00 — Introduction
0:45 — Product vs. period costs
6:40 — Elements of product cost: materials, labor, and overhead
13:42 — Fixed costs
16:42 — Variable costs
19:10 — Mixed costs
20:26 — Step costs
22:05 — Sunk costs
Frequently Asked Questions:
What is the difference between product and period costs?
Product costs are inventoriable costs tied to manufacturing and flow through inventory to cost of goods sold, while period costs are operating expenses such as administration and marketing that are expensed immediately.
What are the three elements of product cost?
The three elements are direct materials, direct labor, and manufacturing overhead, which includes indirect costs such as utilities and factory supervision.
How do fixed and variable costs behave?
Fixed costs stay constant in total but decrease per unit as output rises, while variable costs change in total with volume but stay constant per unit.
What is a sunk cost?
A sunk cost is a cost that has already been incurred and cannot be recovered, so it should be ignored when making future decisions.
Is this tested on the CPA exam?
Yes. Cost behavior and cost classification are tested in the BAR section and on the CMA exam.
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