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50 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Cost
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Sacrifice of resources.
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Expense
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Cost charged against revenue in an accounting period.
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Outlay Cost
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Past, present , future cash outflow
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Opportunity Cost
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Forgone benefit from the best alternative course of action
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Cost of goods sold
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actual costs of goods that were sold, not sales or administrative costs
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Product Costs
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Costs assigned to the manufacture of products and recognized for financial reporting when sold.
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follow product through inventory
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Period Costs
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non manufacturing costs -expensed as they are incurred
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Direct Manufacturing Costs
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Product costs that can be feasibly indentified with units of production
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Indirect Manufacturing Costs
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all other products costs- ie depreciation of a plant
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Direct Materials
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Raw Materials - identified directly, at relatively low costs, to the product
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Direct Labor
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workers who can be identified directly, at reasonable costs, with the products
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Manufacturing Overhead
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All other costs of transforming materials into a finished products
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Indirect Labor:supervisors, maintenance
Indirect Materials:lubricants,light bulbs, parts Other Manufacturing Costs: depreciation, taxes, insurance |
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Prime Costs
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direct costs = direct materials and direct labor
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direct materials = direct costs - direct labor
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Conversion Costs
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Direct Labor + Manufacturing Overhead
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Conversion Costs - Direct Labor = Manufacturing Overhead
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Conversion Costs
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costs to convert direct materials into final product
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direct labor and manufacturing overhead. conversion costs are manageable
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Period Costs (nonmanufacturing costs)
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marketing costs and administrative costs
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advertising, sales, shipping, executive, clerical salaries, legal and financial
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Cost Allocation
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assigning indirect costs to products, services, people, business units
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Cost Object
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any end to which a cost is assigned
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ie. unit of product or service, department, or customer
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Cost Pool
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Collection of costs to be assigned to the cost objects
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ie. department costs, rental costs, or travel costs
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Cost allocation rule
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process to assign costs in the cost pool to cost objects
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Direct costs
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any cost than unambigously that can be assigned to a cost object
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Indirect Costs
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cannot be directly related to a cost object
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Work in Process
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Product in production but not yet complete
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Finished Goods
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Product fully completed but not yet sold
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Inventoriable Costs
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Costs added to inventory accounts.
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Fixed Costs
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costs the remain unchanged as volume activity changes
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Variable Costs
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costs that change in direct proportion to the change in volume activity
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Relevant Range
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Activity levels within which a given total fixed costs or unit variable cost will be unchanged
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Semivariable Costs(Mixed Costs)
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has both fixed and variable costs
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ie. electric utility fixed monthly plus kilowatt-hour charge
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Step Cost
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semifixed costs -increase in steps
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ie. supervisor for firefighters, 1-for 4, 2 for 8, Nurses are step costs
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Full Absorbtion Cost
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All variable and fixed manufacturing costs
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used to compute a products inventory value unde GAAP
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Full Absorbtion Cost -components
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Direct Materials
Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead |
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Full Cost
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Sum of all costs manufacturing and selling a unit of product
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(includes fixed and variable costs)
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Full Costs - components
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Direct Materials
Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead |
+ Variable Market and Administrative Costs
+Fixed Marketing and Administrative Costs |
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Gross Margin
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difference between revenue and cost of goods sold
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per unit = Sales price - full absorbtion costs
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Contribution Margin
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Sales price - variable costs per unit
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amount availabe to cover fixed costs and earn a profit.
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Basic Inventory Formula
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Beginning Balances
Add: purchases Less: ending inventory =Cost of Goods Sold |
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Inventory Example
Beginnig Work In Process Direct materials + Beginning Balance + Purchases =Direct Materials Available for use -ending balance Direct materials =Direct Materials used |
+ DIrect Labor
Manufacturing overhead + Factory Depreciation + Factory Supervision + Factory Untilities + Indirect Labor + Indirect Supplies + Property Taxes = Total Manufacturing Costs |
+ Beg Work in Progress
=Total Work in Process - Ending Inventory Work in Process =Cost of Goods Manufactured + Finished Goods Beg Bal = Finished Goods Avail for Sale - Less Ending Finished Goods =Cost of Goods Sold |
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Cost of Goods Sold=
Work in Process Begin inventory Manufacturing Costs: Direct Materials Begin Inventory Add Purchases Direct Materials = Direct Materials Available for Sale Less ending Direct Materials = Direct Materials Used |
Add Direct Labor
Add Manufacturing Overhead +Building and Machinde Depreciation + Utilities Factory +Factory Supervisors +Indirect Factory Labor +Indirect Materials +Property Taxes Factory =Total Manufacturing Costs |
+ Beginning Work in Process
= Total Work in Process - Less Ending Work in Process =Cost of Goods Manufactured +Finished Goods Beg Bal = Finished Goods Avail for Sale -Finished Goods Ending Inventory =Cost of Goods Sold |
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Cost of Goods Sold
+Work in Process Beginning Inventory + Direct Materials Used + Direct Labor |
+ Manufacturing Overhead
= Total Manufacturing Costs + Beginning Work in Process =Total Work in Process -Less Ending Work in Process = Cost of Goods Manufactured |
+ Finished Goods Beginning Bal
= Finised Goods Avail for Sale - Finished Goods Ending Inventory = Cost of Goods Sold |
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Manufacturing Overhead=
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Total Manufacturing Costs -
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Prime Costs (direct materials and direct labor)
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Transportation in is part of Cost of Goods Purchased
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Shipping is an operating expense
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Shipping is not part of Cost of Goods Sold
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Manufacturing Costs =
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Direct Materials + Direct Labor + Manufacturing Overhead
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Gross Margin
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Fixed plus variable Manufacturing Costs
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keyword Manufacturing
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Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process = Cost of Goods Manufactured
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Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
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Cost of Goods Manufactured
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= Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process
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The difference between variable and fixed costs:
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Unit variable costs are fixed over the relevant range, while fixed costs change in the long-term.
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The equivalent unit concept refers to the actual amount of work during the period stated in terms of work required to complete an equal number of whole units
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True
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If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in -Process Inventory is always 100%.
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True, materials are added at the beginning.
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How would property taxes paid on a factory building be classified in a manufacturing company?
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Fixed, product cost
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