Acc 222 Test One Vocab Set

Front 1

Cost Object

Back 1

Anything for which cost data is desired.

Front 2

Direct Cost

Back 2

A cost that can be easily and conveniently attributed to a specific cost object.

Front 3

Indirect Cost

Back 3

A cost that cannot be easily and conveniently traced to a specific cost object.

Front 4

Common Cost

Back 4

A cost incurred to support a number of cost objects but cannot be tied to them individually.

Front 5

Raw Materials

Back 5

Materials that go into the final product

Front 6

Direct Materials

Back 6

Materials that become and integral part of the finished product and whose costs can be traced to the finished product.

Front 7

Indirect Materials

Back 7

Insignificant materials (Glue, Part of manufacturing overhead)

Front 8

Direct Labor

Back 8

Labor costs that can be easily attributed to individual units of product (I.e. assembly line workers)

Front 9

Indirect Labor

Back 9

Labor Costs that cant be traced to particular products.

Front 10

Manufacturing Overhead

Back 10

All manufacturing costs that aren't direct materials or direct labor. (indirect material, indirect labor, depreciation)

Front 11

NonManufacturing Costs (SG&A)

Back 11

Selling Costs and Administrative Costs, are charged directly to the income statement

Front 12

Selling Costs

Back 12

All costs incurred to secure customers orders (i.e. advertising)

Front 13

Administrative Costs

Back 13

Costs associated with general management of an organization. (Expenses)

Front 14

Product Costs

Back 14

All costs involved in acquiring/making a product (Direct Labor, Direct Materials, Manufacturing Overhead).

Front 15

Period Costs

Back 15

Everything that isn't a product cost. (Rental costs, SG&A). Selling Expenses plus Administrative expenses

Front 16

Prime Cost

Back 16

Direct Materials Plus Direct Labor cost.

Front 17

Conversion Cost

Back 17

Costs incurred to turn materials into finished products. Direct Labor cost plus Manufacturing Overhead cost.

Front 18

Cost Behavior

Back 18

Refers to how a cost reacts to changes in the level of activity.

Front 19

Cost Structure

Back 19

The relative propensity of each type of cost in an organization (variable, mixed, fixed)

Front 20

Variable Cost

Back 20

Varies in direct proportion to changes in level of activity. (Change in cost over Change in activity)

Front 21

Activity Base

Back 21

A measure of what causes the Variable cost.

Front 22

Fixed Cost

Back 22

Remains constant regardless of level of activity.

Front 23

Relevant Range

Back 23

Range of activity within which the assumption that cost behavior is strictly linear is reasonably valid.

Front 24

Mixed Cost

Back 24

Contains both variable and fixed cost elements.

Front 25

Account Analysis

Back 25

Accounting classified based on prior knowledge.

Front 26

Gross Margin

Back 26

Sales minus COGs

Front 27

Costs of Goods Sold

Back 27

Reports product costs. =Beginning Inventory+Purchases-Ending Inventory

Front 28

Contribution Margin

Back 28

Sales minus Variable Cost, goes towards fixed expenses.

Front 29

Differential Cost

Back 29

A difference in costs between two alternatives.

Front 30

Sunk Cost

Back 30

A cost already incurred, not a differential cost.

Front 31

Predetermined Overhead Rate

Y=A+BX

Back 31

y= Total Manufacturing Cost

a= Total Fixed Manufacturing Overhead Cost

b= Estimated Variable Cost Per Unit

x=Estimated Allocation Base Total

Front 32

High-Low Method to Find Variable Cost

Back 32

Cost at High Activity-Cost at Low Activity/High Activity Level-Low Activity Level

Front 33

Absorption Costing

Back 33

All manufacturing costs, both fixed and variable, are assigned to units of product.

Front 34

Job-Order Costing

Back 34

Used when many different products with many different features are produced each period.

Front 35

Job Cost Sheet

Back 35

Records the Manufacturing Overhead, materials, and labor charged to that job.

Front 36

Allocation Base

Back 36

A measure such as direct labor hours or machine hours that is used to assign overhead costs to products and services.

Front 37

Predetermined Overhead Rate

Back 37

Estimated Total Manufacturing Overhead Cost/Total Allocation Base (in hours)

Front 38

Cost Driver

Back 38

A factor that causes overhead costs.

Front 39

Work in Process

Back 39

Units that are partially completed and require further work before they are ready for sale.

Front 40

Finished Goods

Back 40

Completed goods that aren't sold yet.

Front 41

Manufacturing Overhead T Account

Back 41

Actual on left, applied on right. Has a normal debit balance.

Front 42

On the Balance Sheet

Back 42

Raw Materials, Finished Goods, Work in Process

Front 43

Income Statement

Back 43

Costs of Goods Sold, Selling and Administrative Expenses

Front 44

Depreciation in the Accounts (Direct Materials)

Back 44

Debit to Manufacturing Overhead, Credit to Accumulated Depreciation

Front 45

Depreciation in the Accounts (Indirect Materials)

Back 45

Debit Depreciation Expense, Credit Accumulated Depreciation.

Front 46

Unit Product Cost

Back 46

Decides how much should be moved from finished goods to the costs of goods sold expense account.

Front 47

Contribution Income Statement

Back 47

All variable expenses are subtracted from sales to find a contribution margin. Fixed expenses are then subtracted from this margin to find the net loss or profit from the period.

Front 48

Traditional Income Statement

Back 48

Uses absorption costing. Separates costs into period and product costs. Sales - Cogs = Gross Margin. Gross Margin - S&A Costs= Operating Income.

Front 49

Per Unit Variable Cost

Back 49

Remains constant at all levels of volume.

Front 50

Total Variable Cost

Back 50

Changes proportionally as volume changes.

Front 51

Total Fixed Cost

Back 51

Remains the same at all levels of volume.

Front 52

Per Unit Fixed Cost

Back 52

Goes down as volume level increases.

Front 53

Overhead Control Account

Back 53

Temporary account that begins with a balance of zero and ends with it. Everytime overhead is spent it is debited. Credit when we apply overhead to the work in process account. Ending Credit = Overhead Applied.

Close the account by doing what will make the account equal zero.