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26 Cards in this Set
- Front
- Back
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costs that are related to a particular object and can be traced back to it in a feasible manner
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direct costs
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costs that are related to a particular object but cannot be traced back to it in a feasible way
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indirect costs
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Name 3 factors that will affect the classification of a cost as direct or indirect
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- the materiality of the cost in question
- avialable information gathering technology - design of operations |
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changes in total in proportion to changes in the related level of total activity or volume
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variable costs
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remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume
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fixed costs
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a variable, such as the level of activity or volume, that casually affects costs over a given time span
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cost driver
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the band of normal activity level or volume in which there is a specific relationship between level of activity or volume and the cost in question
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relevant range
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explain why unit costs must be interpreted with caution
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an overreliance on unit cost in a situation could lead to insufficient cash being avialable to pay costs if volume declines in terms of variable, fixed, and total costs rather thaan unit cost
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what are the 3 different types of inventory that manufacturing companies hold
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- direct materials
- work in process - finished goods |
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all costs of a product that are considered as assests in the balance sheet when they are incurred and that become costs of goods sold only when product is sold
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inventoriable costs
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all costs in the income statement other than cost of goods sold, are treated as expenses in the period incurred not for future though
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period costs
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the acquisition costs of all materials that eventually become part of the cost object and can be traced back to the cost object
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direct material costs
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the compensation of all the manufacturing labor put into a job, and can be traced back to the cost object
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direct manufacturing-labor costs
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all direct manufacturing costs
=DM costs+DML costs |
prime costs
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all manufacturing costs other than direct material costs
=DML costs+MOH costs |
conversion costs
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all manufacturing costs that are related to the cost object but cannot be traced to that cost object
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manufacturing overhead costs
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the difference between variable costing and absorption costing
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- under variable costing, fixed manufacturing costs are treated as an expense of the period, excluded from inventoriable costs
-under absorption, fixed manufacturing costs are inventoriable costs |
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do companies make choices about variable costing vs. absorption costing
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yes... variable costing for short run decisions, absorption costing for long run decisions
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a grouping of individual indirect costs items
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cost pool
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a specific term for assigning direct costs
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cost tracing
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a specific term for assigning indirect costs
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cost allocation
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a systematic way to link an indirect cost or group of indirect costs to a cost object
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cost allocation base
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in this system, the cost object is masses of identical or similar units of a product or service
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process costing
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in this system, the cost object is a unit or multiple units of a distinct product or service
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job costing
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a costing system that traces direct costs to a cost object by using the actual direct cost rates times the actual quantities of direct cost inputs
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actual costing
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a costing system that traces direct costs to a cost object by using the actual direct cost rates times the actual quantities of direct cost inputs and allocates indirect costs based on the budgeted indirect cost rates times the actual quantities of the allocation bases
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normal costing
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