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53 Cards in this Set

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Administrative Costs
all executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling
common cost
a cost that is common to a number of objects but cannot be traced to them individually
conversion cost
direct labor + manufacturing overhead
cost behavior
the way in which a cost reacts or responds to changes in levels of business activity
cost object
anything for which cost data are desired

i.e. products, productlines, customers, jobs, ...
cost of goods manufactured
the manufacturing costs associated with the goods that were finished that period
differential cost
a difference in cost between any two alternatives
differential revenue
the difference in revenue between two alternatives
Direct cost
a cost that can be easily and conveniently traced to the particular cost object under construction
direct labor
those factory labor costs that can be easily traced to individual units of product
direct materials
those materials that become an integral part of a finished product and can be conveniently traced into it
fixed cost
a cost that remains constant, in total, regardless of the changes in level of activity within the relevant range
Incremental cost
an increase in cost between two alternatives
indirect cost
a cost that cannot be easily and conveniently traced to the particular cost object under construction
indirect labor
the labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be easily and conveniently traced to a direct product
indirect materials
small items such as glue and nails - are traceable only at a great cost or inconvenience
Manufacturing overhead
all costs associated with manufacturing except direct materials and direct labor
marketing or selling costs
all costs necessary to secure customer orders and get the finished product or service into the hands of the customer
Period costs
costs that are taken directly to the income statement as expenses in which period they occur
prime cost
direct materials cost + direct labor cost
Product costs
all costs involved in the purchase or manufacure of goods
== direct labor, direct materials, & manufacturing overhead
Raw materials
any materials that go into the final product
Relevant range
the range of activity within which assumptions about variable and fixed costs are accurate
schedule of costs of goods manufactured
schedule showing the direct materials, direct labor, and manufacturing overhead costs associated with WIP in a certain period
sunk cost
any cost that has already been incurred and that cannot be changed by any decision made now or in the future
variable cost
a cost that varies, in total, in direct proportion to changes in the level of activity. Variable costs are constant per unit.
Absorption costing
a costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a finished unit of product
allocation base
a measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects
bill of materials
a document that shows the type and quantity of each major item of materials required to make a product
cost driver
a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs
job cost sheet
a form prepared for each job that records the materials, labor, and overhead costs charged to the job
job-order costing system
a costing systems used in situations where many different products, jobs, or services are produced each period
materials requisition form
a detailed source document that specifies the type and quantity of materials that are to be drawn from that storeroom and identifies the job to which the cost of materials shall be charged
normal cost system
a costing system in which overhead costs are applied to jobs by muliplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
overapplied overhead
a credit balance in the manufacturing overhead account that arises when the amount of overhead cost applied to WIP is greater than the amount of overhead cost actually incurred
overhead application
the process of charging manufacturing overhead cost to job cost sheets and to the WIP account
Process costing system
a costing system used in those manufacturing situations where a single, homogeneous product is produced for long periods of time
time ticket
a detailed source document that is used to record an employee's hour-by-hour activities during the day
depreciation
The allocation of cost for plant and equipment
Depletion
The allocation of cost for natural resources
Amortization
The allocation of costs for intangible assets
Average Accumulated Expenditures
Approximation of average amount of debt if all construction funds were borrowed
Revenue - donation of asset
Account credited when assets are donated to a corporation
Nonmonetary exchange
Basic principle is to value assets acquired using fair value of assets given
natural resources
wasting assets
intangible assets
operational assets that represent rights
copyright
exclusive right to benefit from creative work
trademark
exclusive right to display a word, symbol, or an emblem
goodwill
purchase price less fair market value of net identifiable assets
Segregation of Duties (3)
1. Human resources should be seperated from time keeping
2. Employees should not have access to payroll files
3. The payroll department should not create the checks
Employee time issues (4)
1. Electronic payroll devices should be used to track time
2. Shop supervisors should approve job time tickets
3. Reconcilliations should be conducted between time tickets applied to jobs and the clock
4. All employees must be trained on the correct way to handle the recording of time to specific jobs
Conversion Cycle Inventory Issues (6)
1. Inventory Requisistions
2. Trained to move raw materials into WIP
3. Shop should have written inventory procedures
4. necessary signatures before moved from WIP to finished goods
5. High $ placed in steel cages
6. Physical count should be done once a year
Other control issues (3)
1. Control fictitious employees -- Review new employees
2. Payroll should use -- Reasonableness checks
3. Monitor timekeeping procedures