Accounting Test 1

Front 1

Cost Allocation

Back 1

the process of dividing a total cost in parts and assigning the parts to relevant cost objects

Front 2

Direct Labor

Back 2

Wages paid to production labors who's efforts can be traced easily

Front 3

Downstream Costs

Back 3

Costs incurred after the manufacturing process is complete, such as delivery costs and sales commissions

Front 4

Indirect Costs

Back 4

Cost that can either cannot be easily traced to a cost object or for which it is not economically feasible to do so

Front 5

Direct Cost

Back 5

Cost that can easily be traced to a cost object

Front 6

Overhead

Back 6

Costs associated with producing products or providing services that cannot be traced directly to those products or services in a cost effective manner

Front 7

Period Costs

Back 7

General, selling, and admin costs that are expensed in the period in which the economic sacrifice is incurred

Front 8

Product Costs

Back 8

All costs related to obtaining or manufacturing a product intended for sale to customers.

Front 9

raw materials

Back 9

physical commodities transformed into products through the manufacturing process

Front 10

Upstream Costs

Back 10

Costs incurred before beginning the manufacturing process, such as research and development costs

Front 11

Contribution Margin

Back 11

the difference between sales revenue and variable cost

Front 12

Cost Behavior

Back 12

How a cost changes relative to changes in some measure of activity

Front 13

Cost structure

Back 13

relative proportion of a company's variable and fixed costs to total cost

Front 14

Fixed Cost

Back 14

Cost that remains constant in total regardless of changes in volume of activity

Front 15

high-Low method

Back 15

method of estimating the fixed and variable components of a mixed cost.

Front 16

Multiple regression analysis

Back 16

a statistical tool that permits analysis of how a number of independent variables simultaneously affect a dependent variable

Front 17

Variable Cost

Back 17

cost that in total changes in direct proportion to changes in volume of activity

Front 18

Break even point

Back 18

sales volume where total revenue equals total cost

Front 19

Contribution Margin per unit

Back 19

the sales price per unit minus variable cost per unit

Front 20

Contribution margin ratio

Back 20

the contribution margin per unit divided by sales price per unit. used for break even sales volume

Front 21

Cost Volume Profit Analysis

Back 21

management tool that reflects the interrelationships among sales prices, volume, fixed costs, and variable costs.

Front 22

equation method

Back 22

sales-vcosts-fixedcosts=profit

Front 23

Margin of safety

Back 23

difference between break even sales and budgeted sales expressed in units, dollars, or as a percentage. amount in which sales can fall before incurring a loss

Front 24

Target pricing

Back 24

strategy that sets the selling price by determining the price at which a product that will satisfy market demands will sell and then developing that product at a cost that results in profit

Front 25

Allocation Rate

Back 25

Total Cost to be allocated / cost driver

Front 26

Cost Driver

Back 26

Any factor that causes a cost to be incurred

Front 27

Cost Object

Back 27

items for which managers need to measure cost: products, processes, departments, etc

Front 28

cost tracing

Back 28

assigning specific costs to the objects that cause their incurrance

Front 29

contribution margin ratio

Back 29

cm/unit
______
sales price

Front 30

Margin of Safety formula

Back 30

budgeted sales- break even sales / budgeted sales

Front 31

operating leverage

Back 31

contribution margin/ net income