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22 Cards in this Set
- Front
- Back
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3 product (inventoriable) costs
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direct materials, direct labor, and manufacturing overhead
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Prime costs
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direct labor + direct materials
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Conversion costs
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direct labor + manufacturing overhead
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Product costs flow
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to WIP inventory, which becomes finished goods, which are eventually sold, creating COGS
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Direct cost
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a cost that can be traced to a cost objective (e.g., a product line, a department, a division)
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Indirect cost
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a cost that is incurred for more than one cost objective (e.g., supervisor salary)
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fringe benefits for an employee are considered part of
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direct labor
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Fixed cost
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a cost that remains constant regardless of the level of output (e.g., sales or number of units produced)
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Relevant range
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the range of activity within which we expect to operate (e.g., a time range for which fixed costs would be relevant)
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Variable cost
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a cost that varies in direct proportion to changes in volume
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In cost accounting, we care about what
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costs will be
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Mixed cost
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a cost with both a fixed and variable component
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Overtime and idle time are treated as ___. This helps us figure out what units should be costing us.
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overhead
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Selling and admin expenses
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period costs rather than product costs
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Committed fixed cost versus discretionary fixed cost
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(a cost that you have committed to) versus (decide relevant range at management’s discretion)
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Unit-level drivers explain changes in cost as
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units produced change
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Non-unit-level drivers explain how costs change as
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factors other than the number of units produced changes
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Total variable selling cost =
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Variable rate × Units sold
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Unit selling cost =
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Total selling cost/Units sold
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Committed resources are supplied
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in advance of usage. An explicit or implicit contract is used to obtain a given quantity of resource, regardless of whether that amount is fully used or not. Because the amount of committed resource supplied may exceed the firm’s demand for it, unused capacity is possible
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committed fixed expenses are acquired
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by paying cash up front or by entering into an explicit contract that requires periodic cash payments. (Buying or leasing buildings and equipment are examples of this form of advance resource acquisition)
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discretionary fixed expenses
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costs incurred for the acquisition of short-term activity capacity
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