Chapter 19 Definitions

Front 1

1. Absorption costing – also called full costing

Back 1

a costing method that includes all manufacturing costs- direct materials, direct labor, and both variable and fixed manufacturing overhead- in unit product costs. Absorption costing is also referred to as the full cost method; also called full costing.

Front 2

2. Contribution format

Back 2

an income statement format that is geared to cost behavior in that costs are separated into variable and fixed categories rather than being separated according to the functions of production, sales, and administration.

Front 3

3. Contribution margin income statement

Back 3

income statement that separates variable and fixed costs; highlights the contribution margin, which is sales less variable expenses.

Front 4

4. Contribution margin report

Back 4

a performance report that lists sales less the variable costs, ending with the contribution margin; fixed costs are excluded.

Front 5

5. Controllable costs

Back 5

costs that a manger has the power to control or at least strongly influence.

Front 6

6. Fixed overhead cost deferred in inventory

Back 6

the portion of the fixed manufacturing overhead cost of a period that goes into inventory under the absorption costing method as a result of production exceeding sales.

Front 7

7. Fixed overhead cost recognized from inventory

Back 7

the portion of the fixed manufacturing overhead cost of a prior period that becomes an expense of the current period under the absorption costing method as a result of sales exceeding production.

Front 8

8. Uncontrollable costs

Back 8

costs that a manger does not have the power to determine or strongly influence.

Front 9

9. Variable costing (also called direct or marginal costing)

Back 9

a costing method that includes only variable manufacturing costs- direct materials, direct labor, and variable manufacturing overhead – in unit product costs; also called direct or marginal costing.